China’s Deepening Housing Problems Spook Investors
Stocks in Hong Kong and mainland China drop after developer Country Garden flags more debt problems
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China’s latest property crisis is threatening to spill over into the broader economy, worrying investors and causing a broad market selloff.
Chinese stocks fell in Hong Kong and mainland China on Monday, with real-estate developers, electric-vehicle manufacturers and other companies in economically sensitive sectors declining the most. The Hang Seng Index, which is loaded with Chinese companies, dropped 1.6%, taking its year-to-date loss to 5.1%. China’s CSI 300 of large-cap stocks fell 0.73%, and is also in the red for 2023.
The financial struggles of Country Garden Holdings, China’s top surviving privately run developer, have been front-and-centre since it missed interest payments on two U.S. dollar bonds a week ago. The property giant said over the weekend that trading in 11 of its yuan-denominated domestic bonds has been suspended, and that it intends to discuss repayment plans with investors. Country Garden’s Hong Kong-listed shares, which had been relegated to penny-stock status last week, fell another 18%on Monday.
China’s property sector has gone from being a major contributor to the country’s overall growth to a drag on its economy. New home sales increased in the first few months of 2023, providing a glimmer of hope that the worst of the housing downturn was over. The market turned in April, and nationwide sales at China’s top developers have slumped since. Country Garden’s latest problems are likely to turn off potential home buyers, further delaying a housing recovery.
Data released last week showed that China was slipping into deflation. Households, which have racked up high levels of savings, are also borrowing less.
Chinese banks extended the equivalent of $47.8 billion in new loans in July, down nearly half from the same month a year ago. It was also the lowest monthly total in more than a decade, according to data provider Wind. The July figures reflected slightly higher corporate lending and a drop in lending to households.
The loan data was “a big letdown,” as it reflected a lack of demand for borrowing, said May Ling Wee, a Chinese equities portfolio manager at Janus Henderson Investors. “Animal spirits are very low in China, and the government may need to do some pump-priming,” said Wee.
China’s economic troubles are also weighing on its currency. The offshore yuan depreciated past 7.28 to the U.S. dollar on Monday, and is close to its weakest level this year.
The country is scheduled to release a barrage of economic data on Tuesday, including monthly updates for real-estate investment, factory output and retail sales.
Problems are also cropping up in other financial-asset classes in China. Three publicly listed companies said in recent days that they didn’t receive payments they were promised on wealth-management products sold by Zhongrong International Trust, which is part of Zhongzhi Enterprise Group, a large domestic Chinese conglomerate. The missed payments are making investors worried about China’s sprawling trust industry, which has been a source of funding for property developers in the past.
Country Garden admitted to having liquidity problems last week and said it expects to post a big first-half loss. A default by the 31-year-old developer could have a bigger impact on China’s economy than the slow-motion fallout from China Evergrande Group’s debt crisis that began in 2021, some economists predict.
The company withstood the earlier slump that took down Evergrande and Sunac China, which together with Country Garden had been China’s three biggest privately run developers. “Country Garden’s default would mean a complete reshuffle and reorganisation of China’s real-estate industry,” said Wang Shengzu, global head of asset management at Haitong International.
When Evergrande defaulted on its international debt, China’s economy was in much better shape. The country was enjoying a boom in exports, and global investors widely believed that growth and domestic demand were being suppressed by its strict Covid-19 pandemic restrictions. China has since lifted those restrictions, but its economy has sputtered.
Before the downturn, Country Garden’s annual contracted sales were close to that of Evergrande’s by total value, but the former’s larger presence in China’s less prosperous cities meant it sold more homes at cheaper prices.
Country Garden also has a lot of unfinished property projects, as it was common for Chinese developers to sell partially built homes along with commitments to complete them in a few years. The company’s contract liabilities, a proxy for its unfinished projects, totalled the equivalent of $92.3 billion at the end of 2022, according to Country Garden’s last financial report.
The property sector is at a critical juncture, said Larry Hu, chief China economist at Macquarie Group. Plunging sales are a result of weak consumer confidence, and it is going to be hard for non-state-owned developers to survive in the absence of government help, he added. “Policy is the only game in town,” he said, referring to expectations that Chinese authorities will act to stop the market’s continued slide.
Shares of China’s homegrown electric-vehicle manufacturers dropped Monday, after Elon Musk’s Tesla cut prices in the country for two versions of its top-end Model Y car. Domestic rival BYD declined 6.1% in Hong Kong, while Nio, XPeng and Li Auto fell 2% to 3%.
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Gold miners are emerging as a compelling way to navigate market uncertainty, with analysts pointing to strong cash flows, attractive valuations and rising profit margins. As gold prices stabilize above US$4,000 an ounce, mining stocks could offer investors both downside protection and long-term upside.
3 min
Gold is one of the market’s go-to hedges in rocky times. Don’t forget that gold miners’ stocks are too.
The stock market’s gains in 2026 belie the rocky macroeconomic picture: elevated inflation, heightened geopolitical tensions, and jitters about the artificial-intelligence trade. That backdrop, in theory, should be the time for gold to shine. Instead, the price of the yellow metal has tumbled more than 5% so far, after last year’s blistering 65% rally. In part, the U.S. dollar’s recovery has stymied gold, which benefited from the greenback’s weakness in 2025.
Even with the precious metal’s recent weakness, gold mining stocks could be the best way to profit from this year’s uncertainty.
Gold miners “are a valuable hedge against macro risks that would likely be damaging for equities,” BCA Research’s Noah Weisberger and Rishabh Shah wrote this week.
Concerns about the Federal Reserve’s next moves to tackle inflation, the increasingly crowded AI trade, and steep valuations for tech stocks are just some of the drivers that could help gold’s price get on even footing— and lead to even bigger gains for miner stocks.
These stocks’ prices tend to outpace gold’s moves, because the companies have fixed operational costs. So when gold’s price rallies, their profit margins soar, and vice versa. For instance, the VanEck Gold Miners GDX +7.39% exchange-traded fund has fallen 11% this year as the metal has slumped.
Now, gold’s price just needs to stabilize to help miners’ stocks take off, and that seems to be happening. The precious metal has recently found support above the $4,000 level, and has stuck in a narrow range since the end of June. But its price rose ever so slightly in July, ending a four-month losing streak for the metal. Technical analysis also suggests that gold is due for a comeback.
Barron’s recently wrote that the pullbacks for both gold miners and the metal itself are overdone. Senior technical analyst Doug Busch noted that the VanEck ETF is on the “verge of a breakout” and has the potential to hit $11o in early 2027, up more than 40% from its current price.
Gold miners also have more than their role as a market hedge going for them. Their fundamentals are solid, too, says Chris Mancini, portfolio co-manager of the Gabelli Gold Fund.
“Precious metals miners are generating substantial amounts of free cash flow given profit margins of over $2,000 per ounce, and are returning this cash to shareholders through buybacks and dividends,” he said in an email.
“Buying the miners is a cheap way to get exposure to the price of gold,” he added. His fund owns Newmont NEM +6.71%, a Barron’s stock pick last year, and Agnico Eagle Mines as top holdings, as well as miners Northern Star Resources, Endeavour Mining, and Kinross Gold K+8.59%.
Miners are better businesses than they used to be, the BCA team added.
“Capex is more disciplined, margins are high and rising…and they are largely independent of the AI story,” Weisberger, BCA’s head of equities, and Shah, a senior analyst, wrote.
That last part is key. AI is disrupting the software industry and many other services and information-oriented businesses, and investors have piled into AI stocks. But ChatGPT, Claude, Grok, and other large-language models aren’t going to replace the need to mine for metals.
“Equity portfolios can benefit from exposure to quality that is uncorrelated to AI risk, and gold miners fit the bill,” the BCA team said.
They recommend that investors buy the VanEck Gold Miners ETF, which owns top miners such as Agnico, Barrick Mining ABX +7.24%, and Newmont.
An important bonus for big gold miners’ stocks is that their valuations are attractive after the gold’s pullback, too. The VanEck ETF is now trading at just a little more than nine times next year’s earnings estimates. That’s a big discount to its five-year average price-to-earnings ratio of 14, according to FactSet.
What’s more, the ETF is currently valued at a more than 50% discount to the S&P 500 SPX -0.17%, which is trading for about 19 times earnings estimates for 2027. Mining stocks have typically traded at just a 25% discount to the broader market over the past five years. So there is significant upside for the group if valuations move back toward normal levels.
One factor that complicates mining stocks as a market hedge, of course, is if stocks bounce back, which has been the case so far in August.
But both the market and economic outlooks remain cloudy, and investors remain nervous about the Fed’s next moves and AI stocks. Gold miners should do just fine, even if the anxious mood on Wall Street persists.
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