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<Research>Citi: HK Property Stocks Benefit From Rent Flexibility & Rate Cut Expectations; Top Picks HLD/ SWIRE PPT/ LINK
Recommend 11 Positive 17 Negative 10 |
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Citi Research noted in a report that it is positive on the rental income of Hong Kong property developers, which has a certain degree of flexibility. The broker expected the US Federal Reserve to cut interest rates at its September interest rate meeting, and the market has already received positive feedback as the cash inflow is supported by more flexible rents than expected. At the same time, Hong Kong's northbound trips to Shenzhen and Zhuhai remained stable at around 550,000 per weekend, with a 12% WoW drop during the 31 August - 1 September weekend after the summer holidays. Overall retail sales decline narrowed, particularly in consumer discretionary, while luxury retail consolidation continued. Negative interest spreads have narrowed as housing rents have risen (currently yielding 3.3 to 3.4%). The broker's US economist expected a 50 bps interest rate cut in September and November by the US Fed. Expectations of rate cuts would bode well for the local property sector, with REITs and developers likely to face profit-taking opportunities. While the industry will continue to face problems in the long term, there are still a few companies that are defending a stable dividend and doing some buybacks. The broker's top sector picks are HENDERSON LAND (00012.HK), SWIREPROPERTIES (01972.HK) and LINK REIT (00823.HK). AAStocks Financial News |
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