00123 Overview

Chinese Developer Stocks Surge: Chinese developer stocks, including COUNTRY GARDEN and LONGFOR GROUP, saw significant gains today, with COUNTRY GARDEN up 8.065% after paying USD398 million to creditors as part of its debt restructuring.

Easing Housing Purchase Restrictions: The Shanghai Municipal Housing and Urban-Rural Development Management Committee announced new measures to ease housing purchase restrictions, including an increase in the loan ceiling for housing provident funds to RMB2.4 million, effective tomorrow.

Sales Decline: BOCOMI's report indicates a significant drop in sales for China's top 100 developers, with a 46.5% month-over-month decrease in January 2026, totaling RMB182.2 billion, and a 53.1% decline for 20 major listed developers.

Market Outlook: Despite the sales decline, BOCOMI expects favorable policies in 2026 aimed at stabilizing the market and improving demand, particularly in the secondary market, which is anticipated to outperform the primary market.

Top Developers: Among the top 10 developers in January, nine were state-owned enterprises (SOEs), with Poly Developments leading in sales.

Investment Recommendations: BOCOMI maintains a positive outlook on CHINA RES LAND and YUEXIU PROPERTY, rating them as 'Buy' due to their strong sales performance and execution capabilities.

Market Performance: The HSI closed slightly up at 26,847, while the HSCEI and HSTECH saw minor declines, with total market turnover dropping to $285.433 billion.

Sector Struggles: Software and dotcom sectors faced significant losses, with major companies like TENCENT and MEITU experiencing declines of 3.96% and 11.4%, respectively.

Resource Stocks Rise: Gold and silver prices rebounded, with companies like CHINAGOLDINTL and ZHAOJIN MINING seeing gains, while coal stocks like YANKUANG ENERGY surged by over 10%.

Financial Sector Movements: HSBC and AIA saw slight increases, while HKEX experienced a minor decline; Chinese property developers generally performed well, with several stocks rising between 5% and 10%.

Earnings Forecast: China's real estate sector is expected to see a significant decline in earnings for covered companies in 2025, with firms like CHINA RES LAND, CHINA OVERSEAS, and C&D INTL GROUP projected to experience a 15-20% year-on-year decrease.

Market Sentiment: Despite the anticipated earnings drop, CICC maintains a positive outlook on the real estate sector for 2023, suggesting potential for positive returns and good value in stock selection for 2026.

Company Performance: Some companies, including GREENTOWN CHINA and YUEXIU PROPERTY, may report marginal profits, while others like LONGFOR GROUP and URBAN CONS DEV could face slight losses, with a few firms expected to see steady core profits.

Stock Ratings: CICC has kept its ratings and target prices unchanged for various Chinese developers, highlighting stocks such as BINJIANG GP and SEAZEN HOLDINGS as outperformers in the market.

Market Sentiment and Predictions: Morgan Stanley attributes the recent rise in Chinese property developers to improved investor sentiment and increased residential sales, but warns that optimism may be misplaced as seasonal factors and policy effects could lead to a decline in sales and property prices.

Investment Ratings Overview: The report includes investment ratings and target prices for various Chinese property developers, indicating a mix of "Overweight," "Equalweight," and "Underweight" ratings based on their performance and market conditions.

Impact of Lunar New Year: The firm anticipates that the upcoming Lunar New Year holiday will negatively impact residential sales, further complicating the market recovery.

Policy Stimulus Likelihood: With the recent uptick in sales in Tier 1 cities, the chances of additional policy stimulus to support the property market are considered to be diminishing.

Citi's Ratings for Chinese Property Developers: Citi has provided investment ratings and target prices for various Chinese property developers, with ratings ranging from "Buy" to "Sell/High Risk" based on their performance and short selling ratios.

Target Prices Overview: Target prices for selected developers include Agile Group at HKD 0.53, C&D International Group at HKD 22.5, and China Overseas at HKD 17.2, reflecting varying levels of investor confidence.

Citi's Ratings for Brokerage Platforms: The investment ratings for Chinese brokerage platforms and project managers also indicate a "Buy" recommendation for companies like KE Holdings and Greentown Management, with target prices set at USD 22.6 and HKD 3.45, respectively.

Market Reactions and Short Selling: The report highlights significant short selling activity across various stocks, indicating market volatility and investor caution, particularly in the context of the Chinese real estate sector.