Mainland developers poised to outperform HSI

Business | Kevin Xu and Reuters 12 Dec 2019

Morgan Stanley expects shares of mainland developers to outperform the Hang Seng Index next year, due to policy and credit easing and increasing contracted sales.

It said the Politburo meeting earlier this month did not mention the real estate industry, indicating a milder regulation.

Shares of mainland developers closed higher yesterday. Sunac China (1918) added 2.72 percent to HK$43.4. China Resources Land (1109) went up by 2.37 percent to HK$36.75. Country Garden (2007) climbed 1.06 percent to HK$11.48.

This came as mainland media reported that the government of Zhangjianggang in Suzhou, Jiangsu province scraped restrictions on property sales, albeit without an official announcement.

Meanwhile, Midea Real Estate (3990) will raise about HK$755 million by placing shares with existing shareholders at HK$19.10 per share, 6.83 percent discounted from the closing price on Tuesday.

The company intends to use the net proceeds for possible business development or investments when opportunities arise and to supplement the general working capital.

In other news, The Asian Development Bank cut its growth estimates for China for this year and the next to 6.1 percent and 5.8 percent, respectively, from the 6.2 percent and 6 percent forecasts announced earlier, on the Sino-US trade tensions and as high pork prices cut into consumer spending.

"While growth rates are still solid in developing Asia, persistent trade tensions have taken a toll on the region and are still the biggest risk to the longer-term economic outlook", ADB chief economist Yasuyuki Sawada said.

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