Friday 12 December 2008

Property Stock Rally Will be Brief, Say Analysts

Shares of Hong Kong developers gained yesterday for a third day yesterday as investor confidence was boosted by encouraging sales of new projects and expectations of interest rate cuts soon.

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Guanyu said...

Property Stock Rally Will be Brief, Say Analysts

Peggy Sito
12 December 2008

Shares of Hong Kong developers gained yesterday for a third day yesterday as investor confidence was boosted by encouraging sales of new projects and expectations of interest rate cuts soon.

However, analysts said the rally would be short-lived as the economy and the overall property market were unlikely to stabilise in the near future.

International property consultant Jones Lang LaSalle yesterday said capital values and rents would fall until the first half of 2010 before a rebound might occur.

Sun Hung Kai Properties rose 5.47 per cent to HK$66.70, bringing the three-day gain to 12.62 per cent. Cheung Kong (Holdings) rose 3.72 per cent to HK$83.70, taking the rise since Tuesday to 14.74 per cent. Henderson Land Development rose 6.59 per cent to HK$31.55, lifting its gains to 12.68 per cent, while New World Development gained 25.29 per cent after adding 9.4 per cent to HK$7.68.

“There have not been much bad news in the market in the past two weeks, which helped draw some investors to the market,” said Li Kwok-suen, a fund manager at Phillip Capital Management. “Investors are seeking cheaper stocks like developers after buying into the banking sector.”

Adrian Ngan Wai-hung, an executive director at CCB International Securities, said investor confidence was boosted by positive sales at a number of new projects in the past two weeks. These included SHKP’s La Grove in Yuen Long, Peak One in Sha Tin and Henderson’s City 18 in Jordan.

But Mr. Li and Mr. Ngan said the rally was unlikely to be sustainable because of lingering uncertainties in the property and stock markets.

Marcos Chan Kam-ping, the head of the research department at Jones Lang LaSalle, said: “As the global economic meltdown drags on moving forward to 2009, we expect the market to continue to be volatile in the short to medium term.”

Since demand was expected to be thin, it was inevitable that capital values and rents across all market segments would trend down between now and 2010, Mr. Chan said.

“With the central government’s efforts in maintaining economic growth on the mainland and Hong Kong as an international financial centre having strong economic fundamentals, we expect the overall property market will see a rebound in the latter half of 2010,” he said.