GF Securities report states that the sales area of ​​new and second-hand houses in mainland China in September slightly decreased month-on-month, showing a weaker performance year-on-year compared to August. Due to the concentrated record-filing at the end of the quarter, last week, the sales area of new houses in 38 cities tracked by the CSI 300 Index increased by 143% weekly, decreased by about 10% year-on-year, and decreased by about 40% year-on-year after adjusting for the number of working days (down 25% from two weeks ago); during the same period, the sales area of second-hand houses in 15 cities increased by 90% on a monthly basis, increased by about 40% year-on-year, and decreased by about 10% year-on-year after adjusting for the number of working days (down 3% from two weeks ago). In September, the sales area of new and second-hand houses decreased by 1% and 6% respectively compared to August, with year-on-year declines of about 30% and low single-digit percentages after adjusting for the number of working days (down 11% and up 16% in August, respectively), overall indicating a low business confidence level.

The Bank pointed out that last week, the mainland released five real estate policies during the financial support for high-quality economic development conference, including lowering the interest rates on existing housing loans. The Central Political Bureau meeting set the tone of "promoting the stabilization and recovery of the real estate market," which exceeded market expectations. On the evening of September 29, Shanghai, Shenzhen, and Guangzhou implemented reductions in down payment ratios, optimized or eliminated restrictions on home purchases and sales constraints. The continuous introduction and implementation of policies reflect joint efforts in supporting the macroeconomy and real estate demand. Referring to previous adjustments in home purchase and loan restrictions, the Bank believes that the implementation of policies in first-tier cities this time is expected to provide certain support to the transaction volumes of new and second-hand homes. The continuance of the improvement trend in sales volume and price expectations in the medium term still requires further observation of fiscal policies.

GF Securities recommends seizing trading opportunities in the development sector within the policy window. Last week, the stock prices of A-share and H-share developers covered by the report increased by 22.5% and 35.7% respectively, outperforming the CSI 300 Index and Hang Seng China Enterprises Index by 6.8 and 21.3 percentage points. Looking ahead, the Bank believes that in the short term, the capital markets may show relatively high enthusiasm in implementing measures to achieve stabilization and recovery, especially on the level of fiscal policy intensification (such as supporting inventory, land acquisitions, etc.). The Bank recommends paying attention to trading opportunities generated by potential policy adjustments. Recommended Hong Kong-listed stocks in the development sector: China Resources Land (01109.HK), Longfor Group (00960.HK), China Overseas Property (01908.HK), Greentown China (03900.HK).

GF Securities believes that the current price levels of conservative property companies are slightly lower than the peak in mid-May, and compared to May, some conservative property companies have increased dividend payout rates or made clear intentions for the medium-term performance, further improving shareholder returns. However, considering the current valuation levels (conservative property companies trade at an average P/E ratio of 13.8 times this year and a dividend yield of 4.2% for 2024), in the short term, the property management sector may have less flexibility compared to the development sector. During the policy trading window, the Bank suggests mainly considering conservative property companies with relative cost-effectiveness, such as Poly Property Services (06049.HK), Wumart Cloud (02602.HK), and China Overseas Property (02669.HK).