Daily Brief - 7 June 2024

Chinese property stocks drop 20% after investor doubts

Chinese property stocks have fallen 20% since mid-May due to concerns about the effectiveness of government support measures. On Thursday, a key index of developer shares dropped 3.3%, with major firms like Sunac and CIFI experiencing significant losses.

While initial reactions to the new policies were positive, investors are now sceptical about their impact on demand and excess housing inventory. May's home sales showed a slight improvement but remain weak overall.

Analysts suggest more government actions could come in July, but expectations for major changes are low.

HSBC considered selling its stake in troubled Thames Water

HSBC explored selling part of its debt related to Thames Water but decided to hold off for now. The bank is waiting for a crucial ruling by regulator Ofwat on July 11, which will set price controls for the utility.

Talks between Thames Water and its creditors are paused due to the upcoming UK general election. Concerns about Thames Water's large debt have grown, especially after its shareholders refused to inject more capital.

HSBC, along with nearly 20 other banks, is preparing for potential debt negotiations with Thames Water.

Julius Baer shares plummet by 7.13%, post EFG takeover rumours

Julius Baer shares fell by 7.13% due to speculation of a potential takeover of EFG International, whose shares spiked 5.30% following the news. Reports suggest an announcement might come as soon as Friday.

Analysts are divided on the potential deal's benefits, with some seeing financial sense in the merger while others doubt the returns. The merger could create a wealth manager overseeing over 500 billion Swiss francs in assets.

Talks between the banks have been intermittent, and there's no certainty a deal will occur.