Chinese property developers’ rally unlikely to sustain, private developers’ share placements rise – JPMorgan

 

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China’s property sector have gained 18% since its August low amid policy easing, outperforming the 5% gain for the Hang Seng Index, JPMorgan said in a note.

Mainland property sales data is expected to improve over the next 1 – 2 months and with strong easing momentum, the short-term exuberance in the market will continue for some time, however, the recent easing won’t be a game changer and the rally will unlikely sustain over the long term and may end when sales data start to weaken, it said.

JPMorgan predict that high beta private-run developers such as Longfor Group and Seazen to offer more upside in the near term. While the broker is bullish on state-owned developers such as China Resources Land, China Resources Mixc Lifestyle Services and China Overseas Property, it sees more upside in China Overseas Land and Investment and Poly Property Services.

With the reopening of the equity financing window after the first-half results, the risk of share placements by private-run developers is rising, especially for non-financially distressed enterprises such as Seazen, JPMorgan said.