China's property crisis is going to get worse before it gets better, according to the boss of Asia-focused bank Standard Chartered PLC (LSE:STAN)
In an interview with CNBC, Bill Winters added that investing in China is “difficult” currently with both consumer and investor confidence subdued.
“We know that the underlying source of a lot of the confidence questions is the property market, and the property market has not yet completely bottomed out, so it’s been a slow grind down.
“There are some signs from time to time that we’re seeing an increase in activity, but at the same time, it doesn’t feel like we’ve really found a true bottom in terms of price.”
The danger, he said, is that when a property bubble bursts it often sparks a financial crisis.
Beijing has made some piecemeal efforts to stimulate the economy but has not gone into crisis mode to ease its property downturn, which Winter said was an effort to avoid racking up huge debts.
“I think we’re seeing these continuous, small stimulus programs, monetary and fiscal policy, driven to make sure that we don’t get into really a bad spiral from which it would be difficult to recover.
"Our expectation is that the stimulus will be enough, but not excessive,” he said.
That might mean the situation remains uncomfortable for a while, but he added: “That’s going to be a good thing”.
Shares in Standard Chartered rose by 1.5% to 761.6p.