On July 12th, the Hong Kong real estate sector soared!

In terms of Hong Kong stocks, the mainland real estate sector rose by up to 6.21% at one point. As of the deadline, Shimao Group rose more than 11%, Seazen rose nearly 9%, Longfor Group rose more than 7%, and China Vanke, Sunac, Yuexiu Property and other companies followed the upward trend.

Overall, policy support and improved transaction data are the main factors supporting the rise of the sector.

In terms of external news, the US inflation data for June was lower than expected, which further strengthened the market's bet on a Fed rate cut.

Some analysts believe that a Fed rate cut will lead funds to flow from the US to other markets, including Hong Kong, which will enhance the liquidity of the Hong Kong stock market. At the same time, due to the inflow of funds and market expectations, the valuation of Hong Kong real estate stocks is expected to rise significantly.

Bullish signals appeared in the real estate market in June.

After the release of the '517' real estate policy, first- and second-tier cities responded quickly, promoting the implementation of the new policy. As the policy effect gradually became evident and real estate companies sprinted for mid-year performance, bullish signals emerged in the real estate market.

Monitoring data from the CRIC Research Center shows that both new and second-hand housing transactions rebounded in June.

New home sales reached a new monthly high for the year. The data shows that in June, the overall transaction volume of 30 key cities was 13.35 million square meters, a 17% increase from the previous month and a 52% increase compared to the first quarter average. Among them, Shanghai, Guangzhou and Shenzhen all saw a month-on-month increase of over 35%.

Both second-hand home sales rose on a month-on-month and year-on-year basis. The data shows that in June, the estimated transaction area of second-hand homes in 22 key cities was 14.28 million square meters, a 7% increase from the previous month and a 24% increase from the same period last year. The cumulative transaction area for the first half of the year is expected to be 72.21 million square meters, a year-on-year decrease of 8%, narrowing the decline compared to before.

Among them, 60% of cities saw a month-on-month increase in transactions, with Shanghai and Guangzhou leading the way with an increase of around 40%, and Beijing, Hangzhou, Nanjing and other cities steadily rebounding with an increase of around 10%.

Although transaction volumes in many cities have fallen in July, this institution predicts that due to favorable policies at the central and local levels since May, the market is still in a cycle of releasing inventory demand, and given the current supply and demand and transaction status, stability is likely to continue in the near future, on par with June. Based on last July's low point for the year, the expected year-on-year decline for July is expected to narrow significantly or even turn positive.

Institutions: Waiting for a turning point in the fundamentals.

Recently, many regions have successively introduced optimized real estate policies, aiming to promote the stable and healthy development of the real estate industry through a series of measures.

On July 8th, the Kunming Municipal People's Government Office issued a notice on the measures to optimize the stable and healthy development of the Kunming real estate market, proposing a total of 25 main measures in five aspects, including optimizing the supply structure, strengthening project planning services, improving factor guarantee quality and efficiency, promoting the disposal of existing housing stock, etc.

On July 11th, Wengan County, Qiannan Prefecture, Guizhou Province issued 16 measures to promote the stable and healthy development of the real estate market in Wengan County, proposing to implement stage-specific home purchase subsidies and establish regular group purchase discount activities. At the same time, it proposed to lower housing transaction taxes and fees, and support enterprise-to-residential commercial conversion, etc.

Looking ahead, with more real estate policies being implemented and optimized, the real estate market is expected to reach a turning point.

Soochow Securities believes that the turning point in real estate policies has been reached, and it is waiting for a turning point in the fundamentals. On May 17th, 2024, four ministries jointly published a series of unprecedented 'de-inventory' policies, confirming the turning point in policies. According to past cycle experience, the fundamentals will turn around 5-8 months after major real estate policy relaxation.

BOCOM International pointed out that since Beijing's new real estate policy was launched on June 26th, all first-tier cities in the country have issued different degrees of real estate optimization policies. Sales data for June has seen a significant improvement with the help of favorable policies, and it is expected that with further lifting of policies, the overall purchasing sentiment will continue to marginally recover, and the fundamentals of the industry will also improve. Sales are expected to slightly rebound in the fourth quarter.

In terms of investment, Caixin Securities recommends that (1) the current real estate support policies are continuing to exert force, and there is still room for further intensification in the future. From the deployment of the Central Economic Work Conference, the "three major projects" will be the focus of this year's tasks, and attention can be focused on central enterprises in the infrastructure sector with China State Construction Engineering Corporation, Power Construction Corporation of China, and others as representatives of the middle letter; (2) With the promotion of stable demand and guaranteeing the completion of construction projects, the real estate market sales are expected to show marginal improvement. Attention can be paid to large state-owned real estate companies with sound fundamentals such as Vanke, Poly, and China Merchants Shekou Industrial Zone Holdings; (3) Against the background of the continuous promotion of the real estate financing coordination mechanism, head private enterprises such as Longfor and Jinke that have been listed in the "white list" of real estate financing are expected to welcome credit repair.

Edited by Jeffrey