According to the report released by Huatai Securities, the proportion of public fund and northbound fund holdings in real estate has decreased, but the decline has narrowed, with the former's holdings decreasing by 6% on a month-on-month basis, reaching a new low since 2013, and the latter's holdings decreasing by 2% on a month-on-month basis, continuing to reach a new low since 2017. The concentration of holdings of public funds has slightly decreased, and the number of stocks with a total holding amount of more than 0.5 billion yuan has increased by 2. The overall sales market is still waiting for a recovery, and house prices are under pressure. The performance of urban markets is differentiated, with better fundamentals in core cities, and investment competition will become more intense. I am bullish on high-quality real estate companies that have ample inventory and strong replenishment capabilities in mainstream cities, and have stable operations.

Here are the main points of HuaTai Securities:

The proportion of real estate stock holdings in public funds decreased, reaching a new low since 2013.

According to Wind's data, the total market value of fund holdings in the real estate sector in 24Q2 was 47.6 billion yuan, a decrease of 6% on a month-on-month basis. The market value of holdings in the real estate sector accounted for 0.83% of the market value of stock investments, a decrease of 0.03 percentage points on a month-on-month basis, reaching the lowest level since 2013. The proportion of the real estate sector to the standard industry configuration in 24Q2 was 0.51 percentage points lower, a decrease of 0.07 percentage points month-on-month, and at the 55th percentile since 2013. The real estate sector performed poorly in 24Q2, with the Shenwan real estate industry index falling 12.1% cumulatively and ranking 22nd out of 31 first-level industries in Shenwan. Although the new housing market is still weak in the second quarter, under the stimulation of the policies of 430 and 517, the industry's policy game is played out. From April 1 to 24, from April 25 to May 22, and from May 23 to June 30, the increases were -12.4%, +28.4%, and -21.8%, respectively. The market has risen under policy stimulation, and the effect of policy landing is still to be verified. After rising rapidly, it has turned to a weak shock.

The concentration of holdings has decreased slightly, with the number of stocks with a total holding amount of more than 0.5 billion yuan increasing by 2.

According to Wind's data, the top five real estate stocks in terms of market value held by public funds in 24Q2 were Poly Developments, China Merchants Shekou, China Vanke, China Overseas, and Zhuhai Huafa Properties, which is consistent with the data for 23Q4 and 24Q1. The proportion of the top five real estate stocks in the total market value of holdings in the sector is approximately 34%, a decrease of 0.5 percentage points on a month-on-month basis, and has been declining for seven consecutive quarters. Among the top 20 real estate stocks in terms of the market value held by public funds, the stocks which have seen more increases in fund shares compared to their circulating shares are China Overseas, Zhuhai Huafa Properties, Yuexiu Property, Gemdale Corporation, Hainan Airport Infrastructure, China OVS PPT, and China Vanke A, while the stocks which have seen more decreases in fund shares compared to their circulating shares are China Merchants Property Operation & Service, Hangzhou Binjiang Real Estate Group, China Merchants Shekou, Seazen Holdings, and China Overseas.

The proportion of northbound funds in real estate continued to decline, reaching a new low since 2017.

In 24Q2, the total market value of real estate stock holdings by northbound funds was 13.3 billion yuan, a decrease of 2% on a month-on-month basis, accounting for 0.27% of the cumulative capital usage of the Shanghai-Hong Kong Stock Connect, a decrease of 0.01 percentage points on a month-on-month basis, and continuing to reach a new low since 2017. The five real estate stocks with the highest market value held by northbound funds are Poly Developments, China Merchants Shekou, China Vanke, Youngor Group, and Greattown. Among the top 20 real estate stocks in terms of the market value held by northbound funds, the stocks which have seen more increases in fund shares compared to their circulating shares are Poly Developments, Youngor Group, China Merchants Shekou, Greattown, China Vanke A, and Shanghai Lingang Holdings, while the stocks which have seen more decreases in fund shares compared to their circulating shares are Xiamen C&D Inc., Shenzhen Overseas Chinese Town, Zhuhai Huafa Properties, and Seazen Holdings.

Risk warning:

Industry policies, downward industry fundamentals, and operational risks faced by some real estate companies.