Institutional investors generally bearish on China’s real estate, have limited positions – Morgan Stanley 

 

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Institutional investors are generally bearish on the outlook for Chinese real estate and have limited positions in mainland homebuilder and property management stocks, said Morgan Stanley in a report after meeting with more than 50 institutional investors over the past two weeks.

Most institutional investors don’t expect a major stimulus and are concerned about whether the current easing measures will have a significant impact on property sales, especially the contagion risk from a possible debt default by Country Garden, it said. 

They have also reduced their holdings in the Chinese property sector, standing on the sidelines and waiting for more signals about policy and actual market improvement, it said.

Morgan Stanley said that institutional investors are still not discussing much about mainland real estate stocks, and seem to be avoiding privately-owned real estate companies. In terms of property managers, China Resources Mixc Lifestyle Services attracted attention due to its retail relevance, followed by China Overseas Property Holdings and Poly Property Services, which have solid earnings growth and lower valuations.

ONEWO was under some spotlight due to its improving operational performance, while Country Garden Services remained a major short-sale candidate.