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<Research>JPM: Mortgage Subsidies Alone Insufficient to Turn CN Property Mkt Around; No Investor Overreactions Observed
Recommend 13 Positive 15 Negative 12 |
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The recent rise in China's property sector was mainly triggered by market rumors of the Chinese government considering providing mortgage subsidies, JPMorgan wrote in its research report. Although such rumors have been circulating for some time, the latest of them suggests the figure could reach as high as RMB400 billion. Overall, the broker believes this policy direction is possible, but if the authorities fail to build buyer confidence in stable housing prices, such measures or any other policies aimed at improving buyer affordability will not be sufficient to reverse the situation. Objectively speaking, RMB400 billion only accounts for about 5% of annual new residential sales, and historically, the accuracy rate of market rumors is only about 40%. Following these rumors, CHINA VANKE (02202.HK)'s stock price surged by over 10%, but major state-owned enterprises like CHINA RES LAND (01109.HK) and CHINA OVERSEAS (00688.HK) only rose by up to 1%, reflecting that the stock price increase was mainly driven by short covering, especially since CHINA VANKE has been a particularly popular short target. Accordingly, investors do not seem overly excited about this policy. JPMorgan kept its top picks as CHINA RES LAND, CHINA RES MIXC (01209.HK), and CHINA JINMAO (00817.HK). If there is a policy-driven rally, the broker believes LONGFOR GROUP (00960.HK) can offer the best risk-return profile. AAStocks Financial News |
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