News that China started building 9.86 million public housing units in the January-September period should be taken as a positive for cement companies; but the sector is facing profit-taking after strong rallies in the past two sessions.
Sector leaders Anhui Conch Cement is down 4.2% at HK$20.35 after rebounding 17.5% over Thursday and Friday; China National Building Material is down 4.4% at HK$6.94 after a 28.5% rally.
The Chinese government aims to start building 10 million public housing units this year, so the 9.86 million starts in the first nine months should be taken as a good figure. Still, any positive boost from the public housing front is likely being offset by concerns over the private housing market, which is reeling from Beijing’s relentless property curbs while fears are growing that it’s entering an inevitable downtrend, which will hurt demand for cement.
Source: Dow Jones