BHP’s CEO expects a recovery in China’s property sector next year

BHP CEO Mike Henry said he expects China’s real estate sector to rebound next year amid favorable government policies.

While acknowledging that the country’s real estate sector is a “weak spot” for steel demand, Henry is optimistic about the suite of measures the Chinese government recently announced.

“The government has recently enacted policies to support the real estate sector… We expect to see a turnaround in the real estate sector over the next year,” Henry said.

In recent months, China has launched a series of measures aimed at stabilizing the country’s real estate sector, which is believed to have once accounted for around 25% to 30% of the country’s GDP. For example, Beijing canceled the national minimum mortgage interest rate and reduced the minimum down payment rate for first-time buyers to 15%, compared to 20% previously.

In May, the central bank also announced it would allocate 300 billion yuan ($42.25 billion) to financial institutions to lend to local state-owned enterprises to purchase unsold apartments that have already been completed.

On Saturday, China’s Housing Minister Ni Hong said there is still “great potential and room” for China’s real estate sector to expand as the country continues to urbanize and demand for good housing continues to rise.

BHP reported a 2% rise in its annual core profits on Tuesday, attributing the rise to “solid operational performance and higher commodity prices in key commodities”.

Henry noted, however, that there is still “a bit of volatility” in China’s steel demand, which has been 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 automobiles.

Australian shares of BHP were 1.97% higher in Tuesday trading.