KUALA LUMPUR, Sept 8 (Bernama) -- Bursa Malaysia closed almost flat on Tuesday as buying interest rotated away from index heavyweights towards smaller-cap construction stocks, with sentiment affected by geopolitical uncertainty, said an analyst. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) eased 0.39 of a point to 1,714.40 from Monday’s close of 1,714.79. The benchmark index opened 1.65 points lower at 1,713.14 and moved between 1,710.44 and 1,714.50 throughout the trading session. The broader market was almost evenly balanced, with decliners leading gainers 548 to 546, while 598 counters were unchanged, 1,107 were untraded and 25 were suspended. Turnover expanded to 4.13 billion units valued at RM3.14 billion from 3.60 billion units valued at RM2.45 billion on Monday.
China’s housing market crisis, which has wiped out an estimated US$18 trillion (RM75.86 trillion) in household wealth, remains the biggest obstacle to achieving the country's 5% growth target. Most economists in a recent Bloomberg survey agree that ramping up the government's housing rescue package offers the best chance to propel growth and stave off a prolonged economic slowdown.
Despite China's efforts to revive the property market with a 300 billion yuan (RM179.29 billion) program to help firms buy unsold homes from developers, progress has been slow. Only 29 out of over 200 cities have engaged in the plan, well below expectations, with unemployment rising and youth joblessness hitting new highs in August.
The real estate slump, which has lasted for years, has led to millions of job losses, hurt consumer confidence, and reduced demand for products like steel. Analysts argue that larger-scale intervention is necessary, with estimates suggesting a one trillion to five trillion yuan package could decisively address the issue. However, the Chinese government has rejected more ambitious proposals, like the US$1 trillion plan from the International Monetary Fund, deeming it too costly and risky.
China’s hesitation to inject more support into the real estate sector stems from its desire to shift growth toward technology and manufacturing. The government has urged banks to lend to developers and support stalled housing projects but stopped short of providing direct funding.
Fiscal policy has also dragged on growth, with government spending falling 2.9% in the first eight months of 2024. Land sales revenue, a key funding source for local governments, plunged 41.8% in the January-August period, adding strain to already tight budgets.
Economists forecast real GDP growth at 4.8% this year, near the lower end of the government’s target. However, nominal growth, factoring in falling prices, is projected at just 4.25%. They predict that China’s property downturn could persist for another two to five years, urging for faster and more decisive policy support, particularly on budget spending and property measures.
Local governments are considering measures like buying unsold homes with special bond issuance funds, reducing mortgage rates, and lifting remaining home purchase restrictions. However, officials remain cautious due to expectations of further property price declines.
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