Equity Research in HK and Mainland China

Li Tang

Highly experienced sell-side analyst with more than ten years of experience in the field of China’s in-depth policy-driven macro research in China (Beijing) .
Covering in equity research in HK and Mainland market mainly real estate, construction,steel sector.
The Ideas generation based on an analysis of China’s future direction and policy decisions fundamental analysis on sector impact, market drivers, timing and scale, combined with quantitative analysis.

Thematic (Sector/Industry)

China Real estate management and development / Thematic (Sector/Industry)

Since the end of June, the A-share and H-Share real estate sectors have surged after a prolonged period of stability. In line with our expectation, property construction and sales activity are coming back, especially in upper-tier cities in leading city clusters as the industry is benefiting from plentiful liquidity and relaxation of residency permits fed a demand surge in June.
<ul class="" type="disc">
<li>The China Index Academy data from 100 cities showed that house prices in June rose at the fastest pace since Sep 2017.</li>
<li>Sales of China's leading property developers saw robust growth.</li>
<li>30 cities monthly sales surged to 2019 peak level.</li>
</ul>
The 2020 Government Work Report has more positive wording towards the property market this year. It called for city-level policy adjustments to promote “steady and healthy development of the real estate market”, under the principle of “houses are for living in, not speculation”. On the other hand central government still refrains from using the real estate sector as a short-term stimulus. We believe the government will continue to take a restrained approach to short-term economic stimulus both compared with other major economies and with China's 2009 stimulus. In other words, the policy goal is for the property sector to support the economy, while avoiding excessive home price rises and debt risk. As market conditions differ city to city, local governments are tasked with setting local property policy accordingly.

Since the end of June, the A-share and H-Share real estate sectors have surged after a prolonged period of stability. In line with our expectation, property construction and sales activity are coming back, especially in upper-tier cities in leading city clusters as the industry is benefiting from plentiful liquidity and relaxation of residency permits fed a demand surge in June.

The China Index Academy data from 100 cities showed that house prices in June rose at the fastest pace since Sep 2017.
Sales of China's leading property developers saw robust growth.
30 cities monthly sales surged to 2019 peak level.

The 2020 Government Work Report has more positive wording towards the property market this year. It called for city-level policy adjustments to promote “steady and healthy development of the real estate market”, under the principle of “houses are for living in, not speculation”. On the other hand central government still refrains from using the real estate sector as a short-term stimulus. We believe the government will continue to take a restrained approach to short-term economic stimulus both compared with other major economies and with China's 2009 stimulus. In other words, the policy goal is for the property sector to support the economy, while avoiding excessive home price rises and debt risk. As market conditions differ city to city, local governments are tasked with setting local property policy accordingly.

China New Home Sales Turn Positive As Major Property Developers See Rising Sales in June