CICC Forecasts Inclusion of ZIJIN GOLD INTL, BEONE MEDICINES, PICC P&C, and AKESO in HSI; STANCHART Likely to Take HANG SENG BANK's Place
Annual Review Announcement: The Hang Seng Indexes Company will announce the results of its annual review of major Hong Kong stock indices on February 13, which will impact the eligible stocks for Southbound Stock Connect.
Potential New Additions: CICC forecasts that ZIJIN GOLD INTL, YUM CHINA, and BEONE MEDICINES are likely to meet the inclusion criteria for the Hang Seng Index, while several other companies may fill the gap left by HANG SENG BANK's removal.
Market Capitalization Considerations: Companies like STANCHART, SWIREPROPERTIES, and SINO LAND are also potential candidates for inclusion based on market capitalization and industry coverage, though their inclusion remains uncertain.
Southbound Stock Connect Adjustments: CICC anticipates that 44 stocks, including JD INDUSTRIALS and CHUANGXIN IND, will become eligible for inclusion in Southbound Stock Connect, while 25 stocks may be removed from the list.
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HSI Rises 197 Points at Midday as SHK PPT Jumps Nearly 7%; TENCENT and MEITUAN-W Surge
Market Performance: Hong Kong stocks rebounded in the morning session on the 27th, with the HSI rising 197 points (0.75%) to 26,578, following a decline of 384 points (1.4%) the previous day. Total half-day turnover reached $121.827 billion.
Homebuilder Gains: SHK PPT saw a significant increase of 6.8% after reporting a 17% rise in interim underlying profit and a dividend hike to $0.98, which surprised brokers positively. Other homebuilders like New World Dev and Sino Land also experienced gains.
Tech Sector Updates: BIDU-SW rebounded 0.7% despite a 42% YoY decline in non-GAAP net profit, while Meituan-W's share price rose 2.1% despite delays in its launch plans. Tencent and Netease also saw increases of 2.8% and 2.8%, respectively.
Chip Stocks Movement: SMIC's stock fell by 0.8%, while HUA HONG SEMI dropped 2%. Other chip-related stocks like InnoScience and Biren Tech also experienced declines of 3.4% and 3.9%, respectively.
<JPM's Perspective> Despite Surprise Over HK's Luxury Home Stamp Duty Increase for Properties Over $100M, Firm Views It as a Positive Redistributive Fiscal Measure
JPMorgan's Reaction to Stamp Duty Increase: JPMorgan expressed surprise at the increase in stamp duty rates for properties over $100 million in the 2026-27 Budget, noting it would only impact 0.3% of transactions.
Impact on Ultra-Rich Homebuyers: The additional 2.25% cost is seen as negligible for ultra-rich buyers, as a slight increase in home prices could easily offset this expense.
Policy Intent: The stamp duty hike is intended as a redistributive fiscal policy, aimed at taxing the ultra-rich to provide subsidies for lower-income groups rather than suppressing the property market.
Stock Recommendations: JPMorgan's top stock picks among developers include SHK PPT, HENDERSON LAND, and SINO LAND, while also mentioning HANG LUNG PPT and SWIRE PROPERTIES among landlords.
G Sachs: HK Budget Shows Positive Outlook for Property Market; SHKP, HLD, and SINO Preferred
Hong Kong Budget Overview: The Hong Kong government did not announce major stimulus measures for the residential market in the Budget, which has shown signs of recovery since mid-2025, leading to a more positive outlook.
Fiscal Surplus Projection: Due to strong capital market activities and economic recovery, the fiscal surplus for FY2025/26 is now projected at HKD2.9 billion, aided by higher-than-expected stamp duty and corporate tax revenues.
Market Sentiment and Developer Profitability: Despite the lack of stimulus, Goldman Sachs believes that improved economic conditions, favorable immigration policies, and low land sale prices will enhance market sentiment and profitability for developers.
Stock Recommendations: Goldman Sachs has upgraded its home price growth forecast for 2026 to 12% and issued Buy ratings for SHK PPT, HENDERSON LAND, and SINO LAND, reflecting optimism in the Hong Kong residential market.
HSBC Research: Budget Supports Property Market; SHK PPT, Henderson Land, and Sino Land Favorably Viewed
HSBC's Outlook on Hong Kong Property Market: HSBC Global Research predicts a continued supportive policy stance for Hong Kong's real estate market, highlighting potential opportunities in REITs and favoring homebuilders like SHK PPT, Henderson Land, and Sino Land.
Impact of Stamp Duty Increase: Following the government's increase in stamp duty on luxury residential properties, some developers experienced a stock price drop of about 2%, but this correction is viewed as healthy amid a strong year-to-date uptrend in the sector.
Limited Market Impact: The stamp duty hike is expected to have a minimal effect on the overall market, accounting for only 0.3% of total trading volume, with the government's intention likely focused on increasing fiscal revenue rather than suppressing the housing market.
Positive Long-term Perspective: HSBC believes that the government's housing policy remains supportive, especially in light of the broader land and housing strategy outlined in the 2026-27 Budget.
<Study>JPM Ratings and Target Prices for Developers (Table)
SHK PPT Performance: SHK PPT shares increased by 3.76%, with a short selling ratio of 39.4%. Analysts upgraded the stock rating from Neutral to Overweight, raising the target price from HK$109 to HK$162.
CK Asset Update: CK Asset shares rose by 1.03%, with a short selling ratio of 35.8%. The stock remains rated Neutral, with a target price increase from HK$41 to HK$48.5.
Henderson Land Insights: Henderson Land shares saw a 1.90% increase, with a high short selling ratio of 53.3%. The stock is rated Overweight, with a target price adjustment from HK$33 to HK$39.
New World Development and Sino Land: New World Development shares increased by 2.32% and are rated Neutral, with a target price rise from HK$9.5 to HK$10.7. Sino Land shares also rose by 1.33%, rated Overweight, with a target price increase from HK$12.5 to HK$14.5.
JPM Increases HK Home Price Growth Prediction for This Year to 10-15% and Upgrades SHKP to Overweight Rating
JPMorgan's Revised Forecast: JPMorgan has increased its forecast for Hong Kong home prices from 5%-7% to 10%-15% for this year, with an additional expected rise of about 5% next year, indicating a shift to an "expansion" phase in the market.
Valuation Changes: The broker noted a transition in valuation metrics from "dividend yield" to "NAV discount" in the current bull market, leading to an upgrade of SHK PPT to Overweight with a target price of HKD162.
Optimism for Other Developers: JPMorgan expressed positive outlooks for SINO LAND and HENDERSON LAND, highlighting SINO LAND as suitable for yield-seeking investors and suggesting a better entry point for HENDERSON LAND around mid-March.
Target Price Adjustments: The broker raised target prices for Hong Kong developers it covers by 13-49%, reflecting overall optimism in the sector.
HSI Rises 197 Points at Midday as SHK PPT Jumps Nearly 7%; TENCENT and MEITUAN-W Surge
Market Performance: Hong Kong stocks rebounded in the morning session on the 27th, with the HSI rising 197 points (0.75%) to 26,578, following a decline of 384 points (1.4%) the previous day. Total half-day turnover reached $121.827 billion.
Homebuilder Gains: SHK PPT saw a significant increase of 6.8% after reporting a 17% rise in interim underlying profit and a dividend hike to $0.98, which surprised brokers positively. Other homebuilders like New World Dev and Sino Land also experienced gains.
Tech Sector Updates: BIDU-SW rebounded 0.7% despite a 42% YoY decline in non-GAAP net profit, while Meituan-W's share price rose 2.1% despite delays in its launch plans. Tencent and Netease also saw increases of 2.8% and 2.8%, respectively.
Chip Stocks Movement: SMIC's stock fell by 0.8%, while HUA HONG SEMI dropped 2%. Other chip-related stocks like InnoScience and Biren Tech also experienced declines of 3.4% and 3.9%, respectively.
<JPM's Perspective> Despite Surprise Over HK's Luxury Home Stamp Duty Increase for Properties Over $100M, Firm Views It as a Positive Redistributive Fiscal Measure
JPMorgan's Reaction to Stamp Duty Increase: JPMorgan expressed surprise at the increase in stamp duty rates for properties over $100 million in the 2026-27 Budget, noting it would only impact 0.3% of transactions.
Impact on Ultra-Rich Homebuyers: The additional 2.25% cost is seen as negligible for ultra-rich buyers, as a slight increase in home prices could easily offset this expense.
Policy Intent: The stamp duty hike is intended as a redistributive fiscal policy, aimed at taxing the ultra-rich to provide subsidies for lower-income groups rather than suppressing the property market.
Stock Recommendations: JPMorgan's top stock picks among developers include SHK PPT, HENDERSON LAND, and SINO LAND, while also mentioning HANG LUNG PPT and SWIRE PROPERTIES among landlords.
G Sachs: HK Budget Shows Positive Outlook for Property Market; SHKP, HLD, and SINO Preferred
Hong Kong Budget Overview: The Hong Kong government did not announce major stimulus measures for the residential market in the Budget, which has shown signs of recovery since mid-2025, leading to a more positive outlook.
Fiscal Surplus Projection: Due to strong capital market activities and economic recovery, the fiscal surplus for FY2025/26 is now projected at HKD2.9 billion, aided by higher-than-expected stamp duty and corporate tax revenues.
Market Sentiment and Developer Profitability: Despite the lack of stimulus, Goldman Sachs believes that improved economic conditions, favorable immigration policies, and low land sale prices will enhance market sentiment and profitability for developers.
Stock Recommendations: Goldman Sachs has upgraded its home price growth forecast for 2026 to 12% and issued Buy ratings for SHK PPT, HENDERSON LAND, and SINO LAND, reflecting optimism in the Hong Kong residential market.
HSBC Research: Budget Supports Property Market; SHK PPT, Henderson Land, and Sino Land Favorably Viewed
HSBC's Outlook on Hong Kong Property Market: HSBC Global Research predicts a continued supportive policy stance for Hong Kong's real estate market, highlighting potential opportunities in REITs and favoring homebuilders like SHK PPT, Henderson Land, and Sino Land.
Impact of Stamp Duty Increase: Following the government's increase in stamp duty on luxury residential properties, some developers experienced a stock price drop of about 2%, but this correction is viewed as healthy amid a strong year-to-date uptrend in the sector.
Limited Market Impact: The stamp duty hike is expected to have a minimal effect on the overall market, accounting for only 0.3% of total trading volume, with the government's intention likely focused on increasing fiscal revenue rather than suppressing the housing market.
Positive Long-term Perspective: HSBC believes that the government's housing policy remains supportive, especially in light of the broader land and housing strategy outlined in the 2026-27 Budget.
<Study>JPM Ratings and Target Prices for Developers (Table)
SHK PPT Performance: SHK PPT shares increased by 3.76%, with a short selling ratio of 39.4%. Analysts upgraded the stock rating from Neutral to Overweight, raising the target price from HK$109 to HK$162.
CK Asset Update: CK Asset shares rose by 1.03%, with a short selling ratio of 35.8%. The stock remains rated Neutral, with a target price increase from HK$41 to HK$48.5.
Henderson Land Insights: Henderson Land shares saw a 1.90% increase, with a high short selling ratio of 53.3%. The stock is rated Overweight, with a target price adjustment from HK$33 to HK$39.
New World Development and Sino Land: New World Development shares increased by 2.32% and are rated Neutral, with a target price rise from HK$9.5 to HK$10.7. Sino Land shares also rose by 1.33%, rated Overweight, with a target price increase from HK$12.5 to HK$14.5.
JPM Increases HK Home Price Growth Prediction for This Year to 10-15% and Upgrades SHKP to Overweight Rating
JPMorgan's Revised Forecast: JPMorgan has increased its forecast for Hong Kong home prices from 5%-7% to 10%-15% for this year, with an additional expected rise of about 5% next year, indicating a shift to an "expansion" phase in the market.
Valuation Changes: The broker noted a transition in valuation metrics from "dividend yield" to "NAV discount" in the current bull market, leading to an upgrade of SHK PPT to Overweight with a target price of HKD162.
Optimism for Other Developers: JPMorgan expressed positive outlooks for SINO LAND and HENDERSON LAND, highlighting SINO LAND as suitable for yield-seeking investors and suggesting a better entry point for HENDERSON LAND around mid-March.
Target Price Adjustments: The broker raised target prices for Hong Kong developers it covers by 13-49%, reflecting overall optimism in the sector.
