[20081112]Comments on the impact of China stimulus package on the real estate
Comments on the impact of China stimulus package on the real estate industry
In our view, the China stimulus package plan unveiled on November 9 and the Premier Wen’s speech on November 10 should have a positive effect on the real estate industry.
1. Housing prices are unlikely to correct sharply, considering the Chinese economy would not slump as the government is giving highest priority to the economic growth.
2. It is the low-rent housing, rather than the price-ceiling housing or affordable housing, is addressed in the economic stimulus package. As we has analyzed, the low-rent housing and affordable housing have a limited impact on the housing market, as both of them are an essential part of the property industry, while the price-ceiling housing might have a negative impact.
3. There is a growing consensus among the Chinese top officials about the housing industry, which may help stabilize the industry.
4. The Chinese government would adopt easy monetary policies, suggesting that the assets prices are unlikely to correct markedly. The property shares may be the primary beneficiaries of such monetary policies, no matter whether the money is used to buy stocks or houses. Therefore, the housing prices hinge on the effectiveness of the stimulus package plan.
5. We are reiterating that the investors should not be over-concerned about the impact of low-rent housing on the real estate market, as the current size of low-rent housing is quite small.
6. We believe the housing prices are not high in China. In our view, the longer and sharper correction would be helpful for a more significant and healthy rally in the future.
7. Performance of property companies should diverge noticeably going forward. Mid/small players may be adversely impacted more markedly and the industry concentration may improve further. In our view, the value investors may buy the stocks of industry bellwethers and hold them for long. In the A-share market, investors are advised to buy Gemdale, CMPD, Poly, Vanke, Financial Street and Shanghai Jinqiao Export Processing Zone Development. In the H-share market, we advise investors to take profits. Investors may keep an eye on the stocks with a P/B ratio below 0.5x. In particular, we strongly recommend Beijing Capital Land (2868.HK) and Greentown (3900.HK). |
发表于 2008-11-12 11:35
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