Housing policies are being rolled out intensively, driving the strength of real estate stocks

Real estate stocks have become an undeniable force in the recent Hong Kong stock market. The performance of Hong Kong's real estate stocks has been eye-catching. On May 22nd, the upward trend of Hong Kong's real estate stocks expanded, with Zhuguang Holdings surging nearly 27%, Country Garden Services and Shimao Group rising over 12%, and Vanke Enterprise and Ronshine Services rising nearly 10%.

An article published in the magazine "Seeking Truth" by the Party Group of the National Development and Reform Commission mentioned that it is necessary to coordinate the resolution of local debt risks and stabilize development, establish a long-term mechanism for preventing and resolving local debt risks, and establish a government debt management mechanism that is compatible with high-quality development. It is necessary to strengthen economic security capabilities, improve the regulatory system for real estate enterprises, promote the construction of public rental housing, and accelerate the establishment of a new model for real estate development to promote the stable and healthy development of the real estate market. In addition, the central bank announced the cancellation of the lower limit policy for commercial personal housing loan interest rates for first-time and second-time home buyers nationwide.

Recently, more than 50 cities have expressed support for "replacing old with new" in housing. Moreover, the Hangzhou Linan District Housing and Urban-Rural Construction Bureau recently issued an announcement that, upon research by the Linan District People's Government, a batch of commercial housing will be acquired to be used as public rental housing. The housing sources are required to be located within the scope of Hangzhou Linan District.

Under the influence of policies, it is expected that the gradual restoration of market confidence will lead to stabilization in sales, and the land market will see adjustments in the scale, pace, and direction of land supply. From the perspective of the sales market, the intensive implementation of recent policies has helped restore market expectations and boosted the vitality of market transactions.

Overview of major real estate stocks

This round of market performance is in the policy catalysis stage, and its sustainability depends on changes in the industry's fundamentals.

· Investment Opportunities

1. Revaluation of quality real estate companies: The market may currently underestimate the value of certain quality real estate companies, which have revaluation potential.

2. Industry transformation: Future opportunities in the real estate sector will come from changes in the supply logic. Companies that can transform in time will gain new growth opportunities.

3. Core competitive advantages: Seek out companies with core competitive advantages, particularly those with outstanding product development and cost control capabilities.

· Risks to Watch

1. Liquidity pressure: If real estate sales continue to decline, it may put liquidity pressure on companies.

2. Credit risk: Some real estate companies may face significant cash flow pressure and have credit risk.

3. Gap between market expectations and reality: Short-term risks may come from the gap between market expectations and actual sales, i.e., "strong expectations, weak reality".

4. Policy implementation: The pace of policy implementation may be slower than expected, affecting market sentiment and industry development.

· Allocation Strategies:

1. Avoid credit risk: Mainly allocate to national leading companies and local quality real estate companies in economically strong regions with high population inflows.

2. Long-term holding: Select the companies with the fastest transformation and the best business models in the industry for long-term holding.

3. Focus on macroeconomy and policies: Pay attention to the macroeconomic recovery trend, policy implementation, and sales data.

· Investor Recommendations:

1. Select quality real estate companies: Investors should select quality real estate companies and avoid smaller companies that may face further credit risk.

2. Pay attention to industry dynamics: Closely monitor macroeconomic conditions, policy changes, and industry sales data to adjust investment strategies in a timely manner.

3. Long-term perspective: From a long-term perspective, invest in companies with good business models and transformation potential.

3. Risk management: Be aware of market volatility driven by emotions and the uncertainties of policy implementation, and allocate assets reasonably to mitigate risks.

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