China Merchants International released a Research Report indicating that recent channel surveys have found a release of suppressed rigid housing demand, while investment demand has almost disappeared. Therefore, it is believed that the current recovery in the mainland housing market sales is mainly driven by rigid and replacement demand, which is more in line with the country's long-term development goals for the Real Estate Industry.

The bank forecasts that the total new housing sales this year will decrease by 20% year-on-year to 7.4 trillion yuan, and will drop 11% next year to 7 trillion yuan, with the transaction volume of second-hand houses reaching 7.1 trillion and 7.5 trillion yuan respectively. Looking ahead, the market still expects the effects of the policies already implemented will take time to materialize, but overall the market is moving towards healthy development, maintaining a view of "outperforming the market" for the domestic Real Estate Industry.

The bank recommends that investors pay attention to property companies with stronger operational capabilities, including CHINA RES LAND (01109.HK), SEAZEN (01030.HK), and LONGFOR GROUP (00960.HK). It is believed that KE Holdings (02423.HK)(BEKE.US), as an absolute leader, will benefit in the long term from the increase in the Turnover Ratio of second-hand homes. At the same time, bullish on the long-term development of property management stocks, pay attention to CHINA RES MIXC (01209.HK), GREENTOWN SER (02869.HK), POLY PPT SER (06049.HK), BINJIANG SER (03316.HK), and Wande Cloud (02602.HK).