Politburo statement on real estate slightly exceeds expectations, the sector to remain volatile until more decisive policies – BofA Securities
MACRO POLICY & REGULATION REAL ESTATE VIEWS & ANALYSIS
Politburo statement on real estate slightly exceeds expectations, the sector to remain volatile until more decisive policies – BofA Securities
MACRO POLICY & REGULATION REAL ESTATE VIEWS & ANALYSIS

Politburo statement on real estate slightly exceeds expectations, the sector to remain volatile until more decisive policies – BofA Securities

 

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The recent Politburo meeting’s statement on the real estate sector slightly exceeds investor expectations, with no mention of “housing for living and not for speculation”, leading to expectation the central government is providing more room for cities to support upgrading or second home demand in the near term, said BofA Securities in a note. 

The lack of detail in the statement is not unusual as details are usually provided after the statement is issued, it said.

BofAS expected investors to be in a wait-and-see mode after a number of policy disappointments over the past year and it continued to believe it will take more than just accommodative real estate policies to sustain the recovery of the real estate market, and is more concerned about the liquidity of private developers, it said. 

Overall, BofAS believed the sector to remain volatile until investors see more decisive policies to boost the economy. 

The company maintained its Buy rating on high-quality developers such as China Resources Land, China Overseas and Longfor Group, which have strong fundamentals and can withstand the industry downturn. It reiterated the Underperform rating for Country Garden and slashed the target price by 43% from HK$2.3 to HK$1.3, expecting the developer to have a cash need of 44 billion yuan in 2023, which is 50% of its unrestricted cash as of the end of 2022 and suggested a tight liquidity position.