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<Research>JPM: Recent Hike in CN Developers Driven by Rising Policy Expectations; HK Landlords Offer Better Risk-Reward
Recommend 12 Positive 33 Negative 19 |
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Over the past 3 trading days, the China and Hong Kong property sectors have risen by 7% and 5% respectively, outperforming the HSI's 3% increase during the same period, JPMorgan released a research report saying. The broker believed that the rise in Chinese developers is mainly driven by heightening policy expectations amid deteriorating data, and the outperformance may continue until the next government meeting in late November or December. If no new policy narratives or measures are introduced by then, the sector may underperform again. However, the current industry fundamentals indicate an increasing probability of new policy support. JPMorgan's top picks remain CHINA RES LAND (01109.HK), CHINA RES MIXC (01209.HK) and CHINA JINMAO (00817.HK). In the policy-driven rebound, the broker considered LONGFOR GROUP (00960.HK) to have the best risk-reward ratio. Regarding Hong Kong homebuilders, JPMorgan attributed the rise to stronger confidence in the real estate market recovery. Although the broker maintained a positive view on the property market, residential stock valuations have fully reflected the anticipations of a complete recovery. For instance, SHK PPT (00016.HK) has reached historical highs if adjusted for dividends, while the second-hand property price index is still 26% below its peak. At this stage, JPMorgan believed that property developers and landlords offer better risk-reward. The broker's top picks are SWIREPROPERTIES (01972.HK), HANG LUNG PPT (00101.HK), LINK REIT (00823.HK) and WHARF REIC (01997.HK). Among developers, it preferred SINO LAND (00083.HK) and HENDERSON LAND (00012.HK). AASTOCKS Financial News Website: www.aastocks.com |
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