Finance
BHP’s CEO expects a turnaround in China’s real estate sector in the coming year
The company logo adorns the side of BHP’s Melbourne headquarters on February 21, 2023. – The Australian multinational, a leading producer of metallurgical coal, iron ore, nickel, copper and potash, said net profit increased by 32 year-on-year percent decreased. year to US$6.46 billion in the six months to December 31. (Photo by William WEST/AFP) (Photo by WILLIAM WEST/AFP via Getty Images)
William West | Episode | Getty Images
BHP CEO Mike Henry said he expects China’s real estate sector to recover in the coming year thanks to favorable government policies.
While acknowledging that the country’s real estate sector is a “weak point” for steel demand, Henry is optimistic about the series of measures recently announced by the Chinese government.
“The government has recently issued policies designed to support the real estate sector… We expect that we could see a turnaround in the real estate sector in the coming year,” Henry said.
In recent months, China has introduced a slew of measures to stabilize the country’s real estate sector. which once reportedly accounted for about 25% to 30% of the country’s GDP. For example, Beijing scrapped the nationwide minimum mortgage interest rate and lowered the minimum down payment ratio for first-time buyers to 15%, compared to 20% previously.
In May the The central bank also announced that it would allocate 300 billion yuan ($42.25 billion) to financial institutions to provide loans to local state-owned enterprises for the purchase of unsold apartments that have already been completed.
Chinese Housing Minister Ni Hong said this on Saturday there is still “great potential and space” for China’s real estate sector will expand as the country continues to urbanize and the demand for good housing continues to grow.
BHP reported a 2% rise in annual underlying profit on Tuesdayattributing the growth to “solid operating performance and higher commodity prices in key commodities.”
However, Henry noted that there is still “a bit of volatility” regarding Chinese steel demand, which is under pressure from the real estate sector.
But the CEO said there are still other sectors in China that contribute to steel demand and are growing quite healthily, such as infrastructure, shipping and automotive.
Australian shares of BHP were 1.97% higher in Tuesday trading.
