Hong Kong Real Estate : Investors Prefer SHK PPT (00016.HK) Amidst Sluggish Recovery

Hong Kong Real Estate : Amidst a sluggish recovery in Hong Kong’s real estate market, HSBC Global Research predicts unsatisfactory company performance. The broker highlights three major concerns: a rising office mortgage cap rate, exponential interest rate increases, and a weakened RMB impacting profitability.

The investment and tenant prices have suffered as middlemen adjust to the current market conditions. Investors show a preference for SHK PPT (00016.HK) -0.650 (-0.655%) due to its predictable profits. Meanwhile, WHARF REIC (01997.HK) gained 0.200 (0.483%) after executing short sales worth $56.59 million at 26.387%. These short sales earned a substantial $19.63 million at 10.97%.

Here’s a look at HSBC Global Research’s ratings and target prices for Developers and Landlords (Table):

Company Stock Code Rating Target Price (TP)
Hongkong Land N/A N/A N/A
Henderson Land 00012.HK N/A N/A
Kerry PPT 00683.HK N/A N/A
Hang Lung PPT 00101.HK N/A N/A
Wharf Holdings 00004.HK N/A N/A

Hongkong Land and CHAMPION REIT experienced a rise of 0.50 points or 1.748%, and $216,14K was sold short at 6.508%. In contrast, Henderson Land rose 0.100 (0.413%). However, the current surplus of offices compared to renters makes short selling $15.41 million at a 30.203% ratio riskier, as office cap rates may rise, causing rents and prices to suffer.

Hong Kong Real Estate

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As interest rates continue to rise, the second half of 2023 may see a decline in earnings forecasts. This could affect companies like Kerry PPT (00683.HK) -0.020 (-0.118%), where short sales amounted to $577,75K at a ratio of 3.645%, and HYSAN DEV (00014.HK) -0.100 (-0.531%). The survey reveals that Henderson Land profited the most from short sales.

Furthermore, the weakening of RMB is expected to impact China-focused corporations, such as Hang Lung PPT (00101.HK) +0.020 (+0.167%). Additionally, Kerry PPT and Wharf Holdings (00004.HK) +0.060 (+0.325%) experienced $887,96K in short sales, with an 8.532% ratio.

Please note that HK pricing quotations are 15 minutes delayed, and the short sale data is as of July 28, 2023, at 16:25.

CICC points out two themes that may strengthen China’s real estate policy over the next three to six months.

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