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 |
| CHAMPION REIT | 02778.HK | N/A | N/A |
| Henderson Land | 00012.HK | N/A | N/A |
| Kerry PPT | 00683.HK | N/A | N/A |
| HYSAN DEV | 00014.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.
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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.
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