In May, new home prices in China dropped 3.5% compared to the same month last year, an improvement from the 4.0% decline in April. Month-to-month, prices decreased slightly by 0.2%, having been stable the previous month. Guangzhou has introduced new measures to boost its housing market. These include completely lifting restrictions on property purchases, resales, and pricing. However, the overall property troubles in China continue, and no clear solution is in sight. We expect additional data from China soon, but the results might vary. These new figures could offer more insight into China’s economic condition. The latest figures show that while the rate of decline has slowed, the market is still under significant pressure. A 3.5% drop in new home prices over the past year, although less severe than April’s decline, highlights the seriousness of the situation. The monthly decline of 0.2% may seem small, but it’s notable against a backdrop where prices had already ceased to rise. Even brief stability did not last. In major cities like Guangzhou, authorities are now taking actions that would have seemed unimaginable a few years ago. The decision to completely lift restrictions on home purchases and resales signals a change in policy and urgency. This step indicates that previous efforts to boost demand either fell short or didn’t work quickly enough. Now, the housing market might not respond dependably to mild stimulus or light regulations. This policy shift suggests that deeper changes are needed—it shows that the landscape has shifted. These developments also mean we must re-evaluate expectations about long-standing property values. The confidence that supported pricing over the last decade is no longer certain. The market is slowly processing this change, which affects pricing models, particularly for investors reliant on loans or synthetic positions. Zhao has stated that more economic data will be released soon. Expectations vary, meaning the data could be both positive and negative. This uncertainty can lead to misinterpretations, especially if the results impact current predictions on interest rates or expected support measures. We should prepare for increased two-way risks. Caution in positioning is warranted—the housing indicators reflect broader trends in lending, buyer and developer confidence, and household spending intentions. Whether or not these stabilize could shape expectations for industrial activity and overall policy direction. The likelihood of further easing measures has risen. If stronger support is announced, it might pressure short positions. On the other hand, if the National Bureau’s data appears even weaker, then hedges tied to financial or real estate risks could retain their value longer than expected. Recently, derivative volumes have risen, reflecting shifts in response to this uncertainty. Options skew remains sensitive, with activity focused on shorter time frames, which often indicates bets on significant moves following unexpected data rather than a clear directional belief. Traders with macro exposure related to these themes might benefit by focusing on strategies that reward volatility rather than trying to predict direction. The recent widening of rangebound strategies suggests this mindset—flows have shifted towards straddles and strangles instead of straightforward calls or puts. Participants should keep an eye on valuation changes in response to unofficial policy signals—Beijing frequently tests the waters with proposed ideas. Prices often adjust before official announcements are made. Overall, we see the policy easing in Guangzhou not just as a local step, but as a sign that more actions might be accepted or encouraged in other major cities. Markets typically anticipate these trends, and historically, they begin factoring in changes weeks in advance. This pattern is likely to continue. Han’s team believes that the more significant impacts of property market adjustments will be reflected in lending trends, especially within shadow financing. Keep an eye on those indicators in the upcoming credit report, as they often precede signs of stress or relief in non-bank lending. As we await more data, positioning for unpredictable outcomes remains wise. It’s not about forecasting a recovery; rather, it’s recognizing that the willingness to implement one may be increasing. This alone makes pricing less stable and more responsive to subtle changes.

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