BHP CEO Mike Henry has expressed optimism about a potential recovery in China’s property sector over the next year, driven by supportive government policies. While acknowledging current challenges, Henry believes that recent measures implemented by the Chinese government could lead to a significant turnaround.
Speaking on the matter, Henry highlighted that the property sector remains a “weak point” for steel demand in China, a crucial market for BHP’s commodities. However, he emphasized the positive impact of recent government interventions aimed at stabilizing the sector. “The government has enacted policies recently that are meant to support the property sector,” Henry stated. “We expect that we could see a turnaround in the property sector in the year ahead.”
In recent months, the Chinese government has introduced a series of measures designed to bolster the struggling property market, which previously accounted for approximately 25% to 30% of the country’s GDP. Key initiatives include the removal of the nationwide minimum mortgage interest rate and a reduction in the minimum down payment ratio for first-time homebuyers from 20% to 15%. Additionally, in May, the central bank allocated 300 billion yuan ($42.25 billion) to financial institutions to provide loans to local state-owned enterprises for purchasing unsold, completed apartments.
China’s Minister of Housing, Ni Hong, recently reinforced this optimistic outlook, stating that there is still “great potential and room” for the property sector to expand as urbanization continues and demand for quality housing grows.
BHP, one of the world’s largest mining companies, reported a 2% increase in its annual underlying profits on Tuesday, attributing the growth to solid operational performance and higher commodity prices. Despite some volatility in China‘s steel demand, largely influenced by the property sector, Henry pointed out that other sectors, such as infrastructure, shipping, and automobiles, continue to show robust growth and contribute to steel demand.
As a reflection of this optimism, BHP’s Australian shares rose by 1.97% in Tuesday trading.
Henry’s outlook on China’s property sector suggests that while challenges remain, the steps taken by the Chinese government could pave the way for a more stable and prosperous year ahead for both the property market and related industries.
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