HSBC Research released a report stating that they are surprised by the speed of recovery in China's real estate market and continue to believe that the rebound in second-hand transactions will gradually spread to the primary market. Sales of housing units in June rose significantly on a monthly basis, reflecting the positive impact of the policy announced in May. According to preliminary market sales data, China Overseas Land & Investment Ltd. (00688.HK), China Resources Land Ltd. (01109.HK), and Yuexiu Property Co. Ltd. (00123.HK) performed better than the industry. The bank believes that this strong momentum should ease concerns about the effectiveness of loose policies in the market and expects new home sales to recover in the second half of the year. The bank also believes that mainland property prices are still recovering, but may still be under pressure at present.

The bank stated that China's real estate companies have made positive progress in financing, which has led it to reaffirm its constructive view on improving the credit environment and resolving tail risks in the industry. They are bullish on developers with strong state-owned enterprise backgrounds, continuous land supply, high exposure rates in first-tier cities, and sufficient high-end project reserves. The bank recommends buying China Overseas Land & Investment Ltd., China Resources Land Ltd., Greentown China Holdings Ltd. (03900.HK), and Yuexiu. The bank is also bullish on KE Holdings Inc. (BEKE.US) and believes that the company is expected to benefit from the increase in transaction volume in the first and second-hand markets.