According to HSBC's global research report, housing sales in 30 major cities in China maintained strong momentum in the fourth quarter of last year, rising 69% quarter-on-quarter to a three-year high, and up 12% year-on-year. Sales in December reached a 21-month high, 52% higher than the sales volume in June following the first round of policy easing in May.

The report states that among the 30 major cities, second-tier cities recovered the fastest, with sales up 182% compared to levels before the September relaxation of policies. In the fourth quarter of last year, sales in Wuhan, Suzhou, and Nanjing rose year-on-year by 86%, 44%, and 26%, outperforming Shanghai and Peking's increases of 16% and 6%. The second-hand sales in several major cities rose to a four-year high in December, indicating strong demand and potential revival of the primary market. Second-hand housing prices have also stabilized, with Centaline's first-tier city inquiry index reflecting a decrease in the inclination to cut prices.

The firm recommends Longfor (01109.HK), Yuexiu (00123.HK), Longhu (00960.HK), KE Holdings (BEKE.US)(02423.HK), and CHINA RES MIXC (01209.HK), all giving a 'Buy' rating.