Morgan Stanley: Turning cautious on the Hong Kong property industry, next year's fundamentals may deteriorate.
Morgan Stanley said that although Hong Kong property stocks are relatively cheap in historical terms, next year's fundamentals may deteriorate, leading to a shift from an attractive industry viewpoint to a cautious one.
It is expected that Hong Kong property sales will decline by 5%-15% in 2022, and house prices will fall by 2%. Previously, the consensus expectation was an increase of 3%-10%.
Although the industry is limited in supply, the potential new regulations are still unknown and will only be negative.
Additional demand may come from the border opening between Hong Kong and the Mainland, but it can only affect 10% of the high-end market sales.
The preference order for the industry is office buildings, retail, and residence, as office rent has declined 27% from its peak two years ago, which is expected to drive demand. Previously, residence was in the first place.
Downgrade shk ppt and sino land from overweight to equal weight, downgrade henderson land and new world dev from equal weight to underweight.
$HSI Sub Indices – Property (800154.HK)$ $SHK PPT (00016.HK)$ $SINO LAND (00083.HK)$ $HENDERSON LAND (00012.HK)$ $NEW WORLD DEV (00017.HK)$
$HSI Sub Indices – Property (800154.HK)$ $SHK PPT (00016.HK)$ $SINO LAND (00083.HK)$ $HENDERSON LAND (00012.HK)$ $NEW WORLD DEV (00017.HK)$
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