China’s real estate climate index
China’s real estate climate index measures the aggregate business activity in land sales and real estate. The index is useful for revealing trends in the Chinese (MCHI) real estate industry. Figures above 100 indicate economic growth, and readings below 100 indicate a slowdown in China’s real estate market.
Index increases marginally in June
The previous chart shows the movement in the China real estate climate index. The data are reported on a monthly basis by the National Bureau of Statistics of China. In June, China’s real estate climate index came in at 92.63. This is a marginal increase over May’s 92.43 reading. This is only the third time since December 2013 that the index has increased month-over-month.
Index still below 100
Although the index increased in June, it’s still below 100. China’s real estate climate index has been below 100 since October 2011.
China’s real estate sector is a key driver of global steel demand. China’s construction industry accounts for more than a quarter of global steel consumption. A slowdown in the Chinese real estate industry is negative for the iron ore import trade as well as for dry bulk shipping.
Dry bulk shippers carrying iron ore and other materials over long distances include Diana Shipping (DSX), Golden Ocean Group (GOGL), Scorpio Bulkers (SALT), and Star Bulk Carriers (SBLK). The Guggenheim Shipping ETF (SEA) will also feel the effects of a real estate slowdown in China. It invests in major shipping companies around the world. Golden Ocean Group forms 4.9% of SEA’s holdings.
The SPDR S&P Metals and Mining ETF (XME) also gives investors exposure to iron ore, coal, and other commodities.
Visit Market Realist’s Dry Bulk Shipping page to learn more about the industry.