HK retail recovery on way: Morgan Stanley

Finance | Victor Zhong 4 Dec 2020

Hong Kong's retail market is expected to rebound in the first half of next year, Morgan Stanley said, as high and low-end retail shop shares will outperform those in between.

Morgan Stanley also predicted office rents will bottom out during the second half of next year.

It raised the rating of Fortune Reit (0778), Hysan (0014) and the Link Reit (0823), with the Reit's target price rising 11 percent to HK$78.

The bank took a positive view on Harbour City and Times Square operator Wharf Real Estate Investment Company (1997), as it may benefit from a pickup in luxury retail sales.

The target price of the company's shares increased 50 percent to HK$42.

The number of Chinese tourists is expected to rebound during the second and third quarters of 2021, and the Hong Kong retail market will usher in a two-year recovery period, said the bank.

In other news, Hong Kong's PMI index rebounded to 50.1 last month, the highest since March 2018, IHS Markit said.

It stabilized from 49.8 in October and reached a new high since March 2018, marking a return to the boundary line of dryness and prosperity, said the market research company.

IHS Markit chief economist Bernard Aw pointed out that with the tightening of epidemic prevention measures, which may hinder economic recovery, the new round of epidemic has affected business confidence.

Meanwhile, JP Morgan Asset Management estimated that Hong Kong economy's will grow 4.8 percent next year after a fall of 5.7 percent in gross domestic product this year.

Even if the economy grows by 4 to 5 percent next year, it will still be difficult for the economy to return to pre-pandemic levels, said the bank.

And Secretary for Commerce and Economic Development Edward Yau Tang-wah said that the local economy has been steady this quarter, but the annual economy would inevitably shrink.

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