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Hong Kong Property Developers - shares thread

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Looks like HK12 Henderson land has broken through long held resistance at around the $56 range. I don't have time to post any more ATM but wonder if this is the final charge now beginning for HK Property and we are about to see a quickening in the pace of property price growth prior to heading into a final top in the next year or so?

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Looks like HK12 Henderson land has broken through long held resistance at around the $56 range. I don't have time to post any more ATM but wonder if this is the final charge now beginning for HK Property and we are about to see a quickening in the pace of property price growth prior to heading into a final top in the next year or so?

 

Yes. That seems very logical to me.

The 2-year "winner's curse" period began about one year ago, I suppose.

It need not last the full two years, and could stretch a bit longer too

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Yes looks to me like the market start to take off from mid 2014 after having moved sideways for the previous 18 months - so mid 2016 would be a full two years of the winner's curse. Will be watching the builder stocks closely now to see how far they break out - probably a correction and retest of the trend line next from above before taking off to new highs - unless of course the government intervenes again in the market which must be a reasonable bet to slow down the pace of price rises.

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HSI ... is still Hanging up there.

HSI : 27,674

SHC : 5,011

And may be making a sideways correction before pushing higher

 

Hang Seng: Breakout ! :

27,575.67 : +5.10%

Change:

arrow_up_sm.gif+1,338.81

Open: 26,913.28

High: 27,922.67

Low: 26,844.53 / ... update: 2-years : 10-days

Percent Change:

HSI-2yrs_zpshagonjzf.gif

 

Why the big gain?

It's the "Thru-Train" ! Or as The Standard put it:

"Money train arrives with a bang", pg.2

 

Here's HSI versus the Shanghai Composite ... update : 3-years

 

HSI-etc-10d_zpslc7xzf7d.gif

 

HSI-Shcomp_zpsyq2gtyv0.gif

 

HSI - Long term chart ... update

HSI-LT_zpskwbibrob.gif

 

Meantime, in the real world:

Data setbacks in both China and US leave equity bulls undaunted - FT, pg.19

 

Beijing sees slowest quarter of growth since 2009 while weak factory data from US add to pile of bad news

The ability of the market to brush off bad news "speaks volumes about the state of investor sentiment."

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Hong Kong's Dollar Peg is under serious pressure

 

USD in HKD ... update

HKD_zpsq7zggxnk.gif

 

Today's headline story is:

HKMA says U.S. Rate rise key to Peg battle

 

"No let-up for now as hot money inflows force actions in the past week to weaken local currency by

injecting HK$30bn to buy greenbacks."

"This will only end with the US raises rates..."

(Or maybe when the HKMA modifies the peg... They are now like Switzerland a few months ago.)

 

 

HK-US dollar peg has outlived its usefulness - William Pesek, in the SCMP, pg.B8

 

The HK Monetary authority "treated the 32-year-old link as the linchpin to the economy's international credibility.

But with Chinese money now swamping the city, the opposite may be true."

"...the flow of money shows no sign of slowing."

Mainland tycoons are "increasing turning to HK's stock and property markets"

Gavekal: "It looks very much like HK is going to get more money and less mainlanders."

"... this is likely to increase tensions."

The GINI ratio has reached the highest levels since record-keeping began in 1971, and

"Puts HK well above the 0.4 level analysts associate with civil unrest."

"... It is no coincidence that record protests flared up at the same time as residential home prices

surged by 13 per cent."

 

ccli_zpswx3vjtng.png

 

"If Hong Kong authorities want to cool down their overheating economy, they should start by addressing

its undervalued currency"

 

This is a key reason why HK's inflation is growing by 4.6%, compared with 1.4% on the mainland, and

0.4% in South Korea.

Meantime the HKMA is defending the peg by selling off massive amounts of HKD.

Mainlanders have been taking advantage of the cheap HKD, and pouring more money into the city.

 

With the peg staying place, the HKD has become a "transmission device for China's imbalances".

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Very interesting Dr B what next do you think for the peg? Will HK be able to defend the peg, have to follow the SNB path and allow the market to value or repeg to a basket of currencies/RMB. I have no strong view but the market does seem to be forcing the issue ATM via Hang Seng valuation.

 

As for US interest rates I have am increasingly convinced the following scenario will play. We will have one rate rise of circa 0.25% which will set off a major stock market correction which will in turn then make the fed cautious about raising rates after that. I suppose the question for the peg is what will come first a US IR increase or decisive pressure that forces HK authorities to act?

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When the PEG goes, it will be Sudden, and catch most of the market by surprise (as the Swiss did it.)

 

And I think they will do it for the same reason as the Swiss. They will not want to load up on assets (USD T-Bonds?),

which they think will lose value in the future.

 

This shock could come any time... or be delayed into 2016, or beyond.

 

The ant-peg talk is now about as strong as I have ever heard. And if the HKMA keeps pour money in buying USD,

this could force their hands.

 

Maybe they will move to a 50/50 peg, with the other 50% being RMB.

John Greenwood has spoken of that possibility before

 

fe4f9d674c7091e75482253700e27082.jpg?ito

(an old story):

Hong Kong peg 'could last another 20 years', says its designer John Greenwood ...
South China Morning Post-Oct 13, 2013

The Hong Kong dollar's peg to the US dollar could easily be in place for the next 20 years with a potential switch to the yuan an unlikely prospect, according to John Greenwood, the economist who designed the currency board system that marks its 30th anniversary this week.

"A number of people take the view that the [yuan] could become fully convertible and a competitor international reserve currency with the US dollar and in that case, it might make sense to peg to the [yuan], but, in my view, that is many, many years away," Greenwood told the South China Morning Post.

Asked if he thought the peg could feasibly mark 50 years of operation, he said: "Given current conditions in China, I think that is true.

"It will take China a very, very long time to achieve that sort of status for its currency and so I don't envisage any near-term factors that would render the linked exchange rate system past its sell-by date."

The Hong Kong dollar's peg was created on October 17, 1983, after a slide in the value of the currency on growing investor concern at the time over talks between Beijing and London on the return of the city to mainland rule.

.

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Thanks Dr I guess it has to be sudden to avoid speculation but unpegging will have unintended consequences. Presumably under a 50/50 model they would reduce the level at which the dollar peg happens. I have heard 6HK$ to the US$ mentioned in the past - and perhaps such a revaluation of HK$ denominated assets will mark the top in the property market? Interesting times ahead...

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I think that the biggest shift would be about 20%, to take the HKD to parity with CNY

---------

 

HK Property stocks could be in a "Topping" area

 

HK-12/ Henderson Land ... update : $59.10 / a key bellwether

 

HK12_zpsyagodqqv.gif

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New highs today Dr B at 60.50 for HK12. Perhaps it will run up to nearly $65 before a turn. I think this implies Hk property market is not likely to turn down yet.

 

The most likely scenario for HK property market short turn now is a rotation away from small properties towards larger properties in line with the recent property cooling measures. Given transactions are likely to stay at lower levels for larger properties I suspect this means Centaline will disproportionately frame the impact of falls at the lower end just as it has shown rises generated by the smaller flats over the last 18 months or so.

 

What will happen when the momentum comes out of the stock market i think is the key question - will it rotate into property or will it mark a more important turning point?

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Yeah. You could be right.

I am looking for HK-12 to peak out somewhere around $60-65.

But there should be no need to get to expectant of falls until some sort of peak is in place.

And like Barratt, Henderson may keep rising and defy my expectations.

 

So maybe "wait and see" is now the best policy for most folks.

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Henderson Land, and important bellwether for HK property, may be coming off a major high

 

HK-12 / Henderson Land ... update

 

HK12-10yrs_zpsgzm6shkr.gif

 

Since year-end:

 

Week : CCLI : CMMI : RobinPl: Tregun : Dynast : Clovell/ IslHarb: ParkAv: Waterf : Sorrent : ThArch : C'ribC : TaikSh.
Numb.: ( #1) ( #2,4): (---- #6) : (--- #7) : (--- #8) : (-- #9) / (--- #7) (--- #8): (- #12) : (-- #13): (-#14) (--#-3) : (---#21)
==== . .
06/07: 143.31 144.54: 15,493 : 20,014 : 25,251 : 22,894 /12,820: 12,965 : 16,454 : 17,515 : 22,361 : 6,500 : 14,315 :
>2014
12/28: 132.45 133.50: 15,491 : 19,434 : 24,750 : 22,230 /11,083: 12,582 : 13,947 : 15,883 : 21,760 : 6,141 : 13,301 :

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What would you be looking for as confirmation of a downtrend Dr B a cross of the 76 and 252 MA's?

 

Yes, That would be good.

But there can be false signals

So breaking the lower channel line might prove a better confirmation

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AX : A discussion from AsiaXpat

==

 

OFFTHEPEAK (2 DAYS AGO)

"So where does that lead us?
10% reduction in HK property over the next few months once the panic from the last few days has died down a bit?"


Once the HK property market rolls over, we will get more than that.IMO.
I have said some time ago, that I expected a Long Cycle market peak in 2015-2017. And ideally, it would be 2016, probably the Spring (April?). After that peak, I expect a slide of 3-5 years, maybe into 2020. And over that time frame, I would expect prices to lose at least 30%, and perhaps more. That's what my cycle work suggests...

The usual pattern would have stocks peak 6-12 months before property prices. And I now see a likely stock peak in April. If that was the high, then August is only four months after that, so it would be a bit "early" for the cycle high, based on the patterns I have seen in the past. But we cannot rule it out.

It was might strong intention not to miss this cycle high, so I was willing to sell early. Thus, my property sale completes next month, in September
DURACELLL (1 DAY AGO)
When do you expect the share prices to bottom? I am not going to sell my flat, but I am in the process of (selectively) buying some stocks, with the dips.

Where else to put your money, if shares and house prices drop?
OFFTHEPEAK (1 DAY AGO)
I will wait until mid-September, at the earliest.

And then I may buy a stock like Hang Lung properties, which is cash rich, and has strong cash flow. I would hope to get a dividend yield above the Net Yield I would have had from renting out my property - which I have sold.
DURACELLL (2 HRS AGO)
Thanks OTP. I just checked, and Hang Lung has been down since 2010, almost in a linear fashion. Over the last 5 years it has lost 50% of its value. Why not go with something like 0016? The yield is a little bit lower (3.42%), but it seems to be managed better, if one looks at the share price? Or why not Link Reit??

It would be good to have a thread discussing individual shares.
OFFTHEPEAK (JUST NOW)
Hang Lung's balance sheet is stronger than those others, I believe.

And it's core assets are shopping centers in China, which explains the long slide perhaps.
But they have enough cash, and enough savvy to take some advantage of a slowdown in HK
==

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Dr B

 

I don't think this slide in Chinese stocks and the Hang Seng is done yet, despite the sizable bounce today.

 

Having said that the property stocks have not fallen faster than the market which is interesting given the leveraged nature of property investment. I wonder whether this reflects the likelihood that all the time IR's remain low property remains a relatively attractive investment. Has the commodities crash and deflationary impact extended the 18 years house price cycle a bit further for HK and other key Asian markets I wonder by delaying IR rises in the US?

 

And how will HK property market react should the Chinese let their currency slide?

 

Lev

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"Has the commodities crash and deflationary impact extended the 18 years house price cycle a bit further for HK?"

 

Peak : 1997 + 18 = 2015

Low - : 2003 + 14 = 2017

 

I still think a 2015-2017 window for the peak makes sense

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My original post said: see AX

"My best guess is we will see a drop of at least 30-40% over the next 3-5 years."
Are these guys copying me, after all these weeks?
(This must be why they pay me the big bucks... not !
But I used to be paid more than 99% of the folks reading this thread, probably.
For analytical and other efforts. Ah. those were the days!
And you get if for free. Why? Maybe someone can give me a good reason to continue.)

Hong Kong home prices could tumble 30 per cent through 2017 on deteriorating economy: UBS

UBS reported that downside risks exist in Hong Kong property market, mainly driven by several macro-factors, including liquidity, job market conditions, inflation, the HKD's relative strength, and interest rate hikes. Different from past down cycles that were triggered by global economic shocks, this round of price reversals should be caused by a deteriorating local economy. Therefore, the price drops may come more gradually and over multiple years. Although the market's focus is on mortgage rate hikes, the broker believed other factors are more important to property prices.

UBS pointed out that Hong Kong property prices have surged by 340% since 2003. They may recede 25% to 30% frown now to the end of 2017.

UBS predicted that prime retail rents for local shopping malls could fall by up to 25% between now and the end of 2017 while the rapid growth in Chinese visitor spending in Hong Kong may no longer exist. The broker cut developers' target prices by 6% to 16% as there could be further downside pressure on share prices given property prices have just begun to fall.

The broker downgraded WHARF HOLDINGS (00004.HK) -1.100 (-2.506%) icon.png Short selling $70.90M; Ratio 41.729% icon.png and KERRY PPT (00683.HK) -0.700 (-3.196%) icon.png Short selling $317.55K; Ratio 1.529% icon.png from Neutral to Sell as the former focused on high-end retail properties while the latter has relatively higher Hong Kong residential exposure among its peers. HENDERSON LAND (00012.HK) -1.500 (-3.175%) icon.png Short selling $38.51M; Ratio 38.902% icon.png was downgraded from Neutral to Sell as its share price was held up in the past year as the chairman expanded its stakes for several times. However, the broker believed it is reaching the limit. NEW WORLD DEV (00017.HK) -0.380 (-4.853%) icon.png Short selling $16.14M; Ratio 12.608% icon.png was downgraded from Buy to Neutral.
(Quote is delayed for at least 15 mins.Short Selling Data as at 2015-09-29 12:25.)

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Started buying today

 

Dr B

 

I don't think this slide in Chinese stocks and the Hang Seng is done yet, despite the sizable bounce today.

. . .
Lev

Yes.

And many are now back testing lows:

 

Both stocks hit my targets today: 10d-both

 

HKG / HK: 10 : lo- 25.80 / hi - 26.70 : Last : $26.25 - 0.75 - 2.78%
HLP / HK:101 : lo- 17.00 / hi - 17.34 : Last : $17.06 - 0.50 - 2.85%

===
Ratio hlg/hlp : r- 65.9% / ------------ : r- 65.0 %
.

And I did some buying.

I Will get 25-50% of my initial target amount of shares today

 

CALCULATION : Relative Value (Updated: 9/29- on Low prices ):

Symbol---------- : HK-10 : HK101 :
Last Price----- : $25.80 : $17.00 :
Dividend, est.-- : $ 0.81 : $ 0.76 : - see post #14
Yield- %, est. -- : 3.14 % : 4.47 % :
Book Value/sh.: $55.90 : $29.50 :
Discount Book: -53.8% : -42.4% :
Shares O/S---- : 1.36bn : 4.49bn*:
Market Cap----: $35.09b: $76.33b:
HLG, 52.9%--- : $40.38b
Discount-------- : $5.29 bn
Debt difference: $4.77 bn
Net difference +$0.52 bn
/ 2.2mn sf----- :-$0,236 psf - Prime Shanghai location
!!! LESS THAN FREE !!!
===

 

*Shares O/S : 4.497 mn at Sept. 7, 2015 (after exer. of sh. options)

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Topped up some HLG/ HK-10 today at $25.35-25.40

 

HLG broke $26, to new low at $25.25 while HLP held $18 (above its $17 Low)

 

HLG /hk10 - long term : all data / HLP-all

HK10-Log_zps7nwoadst.gif

 

HLG /hk10 - daily chart : 3yr / HLP-3yr

HLG_zpsbkni2btc.gif

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As China falls.... HK's Property share index (HPI) tests support

 

ShComp : 3,125.00 -236.84 : - 7.04% > L of Yr: 2,850.7
HK - HSI : 20,363.8 -617.00 : - 2.94% > L of Yr: 20,324
HK - HPI : 28,237.3 -479.00 : - 1.67% >
===

CN : ShComp ... 10-years : 3-Yrs : xx

ShComp_zpsqe5ffwcp.gif

 

HK's HPI ... update : 28,219

HKhpi-15yr_zpswn4gbmax.gif

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Homes slump 'bottoms out'
Dominique Nguy Jul 21, 2016

Morgan Stanley and Citibank believe the Hong Kong property market has bottomed out, forecasting that home prices will rise by 5-8 percent in the second half of this year due to low interest rates and the release of "suppressed demand."

A report by Morgan Stanley said as the worry of an interest rate hike lessens and the unemployment rate remains at a relatively low level, it is predicted that the "suppressed demand" for flats may help lift the home price.

The bank forecasts home prices going up by 5 percent in the second half.

. . .

 

Buggle Lau Ka-fai, chief analyst at Midland Realty, said the limited supply of local super-luxury flats will spur an increase in prices.

Meanwhile in the primary market, Sino Land (0083) offloaded 22 flats of its new project in Sai Kung, Park Mediterranean, in the first hour of sales yesterday.

Hang Seng Bank (0011) head of retail banking and wealth management Margaret Kwan Wing-han said there were only an average of 2,000 new mortgages per month in the first quarter, but there had been an average of around 6,000 per month in the second quarter.
====
MORE : http://www.thestandard.com.hk/section-news.php?id=171818

Sure. Why not.
Property stocks bottomed some time ago, and are well off their lows.

I bought HK-10 too soon last year at $26, and then saw a 25% drop all the way down to $19.46. But HK-10 is now back above $26, and my position is in profit, with $50,000+ in dividends collected. But I am lightening up now, since I do not expect this (temporary?) rally to last, and expect lower lows in the months and years to come - given the supply that is coming.

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Sold down at $26.35, to 20% of my original position in HL/ HK10, because of this:

 

The Rally in HK stocks may be ending

 

HK:HSI / Hang Seng Index near 23,000 ... update - at 22,932, back to 610d MA

HSI_zpszewtplbx.gif

 

China too?

 

CN:ShComp / Shanghai Composite Index ... update

ShComp_zpsvvpbgidd.gif

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