Morgan Stanley issued a report yesterday, expecting property prices to fall by 10% in the next nine months, and retail sales in the third quarter fell 13%
The bank will calculate the benchmark target price of real estate stocks according to the previous decline cycle of the property market, that is, the stock price is 40% to 60% of the net asset value per share.
The report pointed out that if the residential property price fell by 13% year-on-year and the retail sales fell by 14% year-on-year in comparison with the 2016 down cycle, the real estate stocks are still about to be calculated based on the net asset value per share discount rate. 15% decline. If the peak of the 2018 period is used as the benchmark, when the US interest rate continues to decline, the RMB is stable, and the mainland tourists are growing normally, as a basis for the discount, real estate stocks still have a 25% upside. If the dividend yield factor is included, the potential increase from the current level may be 35%.
Bearish economic growth prospects
Morgan Stanley pointed out that Hong Kong property stocks outperformed the Hang Seng Index by 4.9 percentage points in the first half of this year, benefiting from low interest rates and strong residential demand. The Central Plains City Leading Index was also boosted by about 9% in the first half of the year. However, from the beginning of July to the present, real estate stocks underperformed the HSI by 5.4 percentage points, mainly due to the decrease in Chinese tourists and the depreciation of the Renminbi.
Morgan Stanley has already been bearish on Hong Kong’s economic growth. It has lowered Hong Kong’s economic growth forecast for 2019 from the original 1% to a retrograde of 0.3%, and the worst may fall back by 1.5%, the worst performance in a decade. The bank believes that Sino-US trade disputes have not stopped, the global and Chinese economic downturns and frequent social events in Hong Kong have affected Hong Kong’s tourism, consumption, investment and trade in the second half of this year.
Bank of America Meilin material prices weakened
On the other hand, Bank of America Merrill Lynch also issued a report yesterday saying that it still has a wait-and-see attitude toward the withdrawal of the Hong Kong government. It believes that the stock price of real estate stocks will continue to fluctuate in the future, and the recovery of the fundamental factors of the industry will still take time. The property expects that the residential property price at the end of this year will fall by 10% from the high of the year. The annual property price is expected to fall slightly by 2%.
In addition, Bank of America Merrill Lynch expects that property prices in Hong Kong will further weaken in the first quarter of next year and will stabilize in the second half of next year. It is expected that property prices will remain flat year-on-year next year.
Recently, foreign banks have sang real estate stocks. JP Morgan Chase has also issued a report recently stating that in the worst case, property prices in Hong Kong have fallen by 30%, office rents have fallen by 40%, property stocks still have room to fall, and six property stocks have been lowered. Investment rating.