BofA Securities' Positive Outlook: BofA Securities maintains a non-consensus positive view on the Chinese real estate industry, anticipating proactive policy-making that could create investment opportunities despite current pressures and low investor positioning.

Preferred Companies: The report favors companies with strong execution capabilities, including CHINA RES LAND, CHINA OVERSEAS, and C&D INTL GROUP, while also expecting CHINA RES MIXC to benefit from consumer stimulus measures.

Earnings Forecast Adjustments: BofA lowered its median EPS forecast for Chinese property developers by 8% for 2025-27, projecting a 20% decline in 2025 earnings, with a weaker-than-expected rebound anticipated in 2027.

Target Price Reductions: Due to downbeat prospects, BofA cut its target price for Chinese property developers by 12%, maintaining an Underperform rating for several companies, including CG SERVICES and POLY DEVELOPMENTS.

Property Sales Performance: In December, China Overseas reported contracted property sales of approximately RMB39.832 billion, reflecting a 1% year-on-year decrease, while the sales area increased by 2.4% to around 1.3324 million square meters.

Cumulative Sales Data: For 2025, the total contracted property sales reached around RMB251.231 billion, with a corresponding sales area of about 10.56 million square meters, showing year-on-year declines of 19.1% and 8.1%, respectively.

Market Performance: The Hang Seng Index (HSI) rose by 468 points (1.8%) to 26,815, while the Hang Seng Tech Index (HSTI) increased by 126 points (2.2%) to 5,868, and the Hang Seng China Enterprises Index (HSCEI) gained 147 points (1.6%) to 9,296.

Top Gainers: Notable gainers included PING AN (+5.1%), HKEX (+2.7%), and TENCENT (+2.1%), with PING AN reaching a new high at $72.1.

Significant Movements: CHINAHONGQIAO and JD HEALTH saw substantial increases of 6.4% and 6.1%, respectively, with CHINAHONGQIAO also hitting a new high at $35.34.

Short Selling Activity: High short selling ratios were observed in several stocks, including XIAOMI (25.9%) and KUAISHOU-W (13.4%), indicating significant market interest in these companies.

Current Market Trends: In December 2025, second-hand home prices in major Chinese cities continued to decline month-over-month, though at a slower rate, while the year-over-year drop in sales also eased, according to a Morgan Stanley report.

Future Outlook: Morgan Stanley predicts that China's housing policies will remain subdued in the near term, with a high volume of second-hand listings likely to continue affecting buyer sentiment and putting pressure on home sales and prices.

Investment Preferences: The firm favors strong mall operators like CHINA RES LAND and SEAZEN HOLDINGS, which are expected to benefit from the emphasis on consumption in the 15th Five-Year Plan and supportive REIT policies.

Stock Performance Differentiation: Despite a cautious outlook on the real estate market recovery, Morgan Stanley anticipates a divergence in stock performance between the overall industry and quality companies with strong self-rescue capabilities, such as C&D INTL GROUP and CHINA OVERSEAS.