Hong Kong Property Sector - Upcoming new launches: how much of a concern?

What we recommend

    We reaffirm our Positive stance on theHong Kong Property Sector. Thoughproperty stocks have performed wellYTD, we still see room for theirvaluations to improve and also expectthe physical property market’s outlookto improve in the coming months. Westill prefer Property Investors butbelieve Property Developer shares arestill undervalued and advise takingadvantage of the recent consolidationin their share prices to accumulateholdings. Our top Developer picks areHenderson Land (12 HK, HKD55.10,Buy [1]0) and SHK Properties (16 HK,HKD117.90, Buy [1])). The key risk toour sector call is a deterioration inHong Kong’s economic outlook.

    How we differ

    Unlike some in the market, we believethat in recent years, the Hong Kongproperty sector has merely undergonean adjustment rather than a multiyeardownturn. We believe theresidential market has more or lesscome out of its adjustment with a newequilibrium or “New Normal” startingto form.