Despite the STI (-0.6%) declining yesterday, developers with exposure to China outperformed the index. While both Yanlord (+1.4%) and CapitaMalls Asia (1%) ended the day positive, CapitaLand slipped by 0.3%.

Home prices rise despite curbs
China’s biggest real estate website owner, Soufun Holdings said that the average home prices in May climbed 0.8% from April. Compared to a year ago, this is a 6.9% increase. The increase in home prices could imply that the government’s efforts to tighten property curbs have failed to deter buyers.

In their statement released, the company mentioned that “against the backdrop of rising land prices, shortages in home supply in key cities and expectations of looser monetary policy, expectations for rising home prices are still relatively strong”.

The National Bureau of Statistics is scheduled to release May price data on June 18.

News of rising home prices boosted the performance of Chinese developers. However, the gains were overshadowed by other Chinese stocks which fell after manufacturing indexes came in lower than previous months. The China A50 futures ended the day 0.6% lower.

Small companies pull down PMI readings
HSBC gave their final reading of the manufacturing PMI on Monday, and it slipped to 49.2, down from April’s final reading of 50.4. This PMI figure is the lowest since October 2012. With the reading below 50, it could signify that factory activity in China is shrinking and investors are worried that the world’s second largest economy could be losing steam.

The HSBC manufacturing PMI takes into account both large and small companies it seems that the smaller companies are dragging the index down. Over the weekend, the government announced the actual manufacturing PMI figure and it showed that the official PMI for smaller companies fell to 47.3 in May even when the broader gauge rose to 50.8.

Source: Macquarie Research - 4 Jun 2013