Carrie Lam

[AhMeng]

JPMorgan Says Hong Kong House Prices Could Slide 30% in Worst-Case Scenario
www.bloomberg.com

Photographer: Paul Yeung/Bloomberg
Photographer: Paul Yeung/Bloomberg

JPMorgan Chase & Co. has landed on six property stocks that can best weather the Hong Kong turmoil after applying a worst-case scenario that envisages home prices plunging 30%, retail sales falling by a similar amount and prime office rents sinking 40%.

While a worst-case scenario may seem a rather grim starting point, analysts at the New York-based investment bank said in a report earlier this week that’s what most investors are starting to factor in considering the uncertainties in the former British colony.

They include a re-escalation of the U.S.-China trade war and the social unrest in Hong Kong, both of which will impact upon the city’s status as an international financial center, JPMorgan said.

For more on Hong Kong’s unrest:

• More Than 1,000 Arrested So Far in Hong Kong’s Protests
• Why Hong Kong’s Still Protesting and Where It May Go: QuickTake
• Hong Kong Officials Urge Calm While Warning of ‘Signs of Terror’
• Hong Kong Property, Casino Stocks Slump After Violent Protests

Against that backdrop, just six companies make JPMorgan’s overweight list -- CK Asset Holdings Ltd., Henderson Land Development Co., New World Development Co., Wharf Holdings Ltd., Hang Lung Properties Ltd. and Link REIT.

Read more: Protests, Calls to Privatize Fail to Shake Hong Kong’s Link REIT
“The primary objective of our worst-case analysis is to identify stocks that are still good for investment even under this sort of scenario,” analysts led by Cusson Leung wrote, adding such assumptions weren’t their base case.

JPMorgan said CK Asset has been diversifying away from property in Hong Kong and China. Henderson Land, meanwhile, has done a good job ramping up asset disposals and “strong dividend growth will support strong share price performance.”

Wharf and Hang Lung have promising shopping malls after some tenant reshuffling, while New World, the only developer of the six with a residential angle, should see the most substantial increase in rents.

“We believe the only type of residential projects which are still selling well is the mass market product, of which New World will have a 3,000-unit to be launched in Tai Wai early 2020,” the Sept. 2 report said.

On the flip side, four stocks were downgraded to underweight, and two to neutral.

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[AhMeng]

Recent Stresses Could Push Hong Kong Home Prices, Retail Sales Down Up to 30%: JPMorgan
By Liu Yanfei, Wen Simin and Yang Ge

Ships sail past commercial and residential buildings in Victoria Harbor on Aug. 30 in Hong Kong. Photo: VCG

Hong Kong home prices and retail sales could drop by up to 30% and office rents could tumble even more, under a worst-case scenario described by investment bank JPMorgan taking into account recent unrest and fallout from the U.S.-China trade war in the former British colony.

Hong Kong has now experienced social unrest for the last three months from people unhappy with local governance. Their actions, some involving violent confrontations with police, have led to disruption at — and even the closure of — Hong Kong’s main airport, as well as disruptions of public transport. At the same time, the city whose economy depends heavily on trade between China and the rest of the world is taking a hit from declining U.S.-China imports and exports as those two countries fight a trade war.

Property stocks have already declined about 19% on average from peaks in April, JPMorgan wrote in the note dated on Monday, as investors fret about pressures on the local economy. The investment bank noted that the home price-to-income ratio now stands at about 14, or well above the longer term average of 10, following years of steady growth in Hong Kong property prices.

Government data show local home prices have risen 50% or more over the last five years alone, as strong interest from investors on the Chinese mainland helped to send up prices.

JPMorgan said it used the decline to 10 from the current 14 in home price-to-income ratio to determine its worst case scenario for a 30% drop in home prices. It envisioned a drop of up to 70% in tourism and a 10% decline in domestic consumption to calculate an equally dire 30% worst-scenario decline in overall retail sales. It also noted that a potential flight of multinationals amid a confidence crisis could cause office rents to decline 40% from current levels.

Read more
In Depth: Hong Kong Property Market Shaken Amid Social Unrest

“The stress test assumptions — declines of 30% in residential prices, 30% in retail rents and 40% in office rents — are not our base case, but we believe looking through this lens helps to identify the stocks that still present considerable value despite the short-term depressed sentiment,” the note said.

Hong Kong’s official residential property index fell for the second consecutive month in July, and is now down 0.73% from an all-time high in May. An index for Class-A office space was down 0.65% in July from its recent peak, while rents for retail space on Hong Kong Island and the Kowloon area were down slightly in July from their peak. But a lag factor means the situation could be worse. Recent transactions in the residential market are now seeing discounts of 5% to 10%, and reductions of 10% to 40% are occurring in rental rates for retail space.

Continuation of the economic stress could also push up the local unemployment rate, which stood at 2.9% during the latest reading, to above the 3% level, the investment bank said, noting that trade-related jobs account for about 13% of the city’s total.

Contact reporter Yang Ge ([email protected]; twitter: @youngchinabiz)

 

[mojito]

No leh. I sold my HK property liao now waiting for price to collapse before making next move. Lol

U r very ballsy to buy HK property last 10 years. I salute u.

 

[AhMeng]

Song song to see HK slowly crumble. Can't wait for state of emergency and Tiong troops into Hongkanese land.

 

[AhMeng]

U r very ballsy to buy HK property last 10 years. I salute u.

Nothing ballsy. Just follow some Hongkanese friends' advice and went for it. Got rid of it in May when I was there. Super good timing

 

[tanwahtiu]

So is the murderer is going to be arrested send to Taiwan?

Or set free.... whichever way she gets kelong....

She got boobs of steel if she do nothing...

Embattled Hong Kong leader Carrie Lam Cheng Yuet-ngor is set to formally withdraw on Wednesday afternoon the much-despised extradition bill that sparked the nearly three-month long protest crisis now roiling the city, sources have told the Post.

A source also revealed that she will set up an investigative committee to look into the fundamental causes of the social unrest and suggest solutions for the way forward, stopping short of turning it into a full-fledged commission of inquiry, as demanded by protesters. Whether the committee will be independent is yet to be determined.


The decision to withdraw the bill will mean that the government is finally acceding to at least one of the five demands of the protesters, who have taken to the streets over the past 13 weeks to voice not just their opposition to the legislation, but the overall governance of the city in demonstrations that have become increasingly violent.

More at https://tinyurI.com/y6xlajmn

 

[whoami]

I like the way Hongkie citizens fuck mainland Chinese in the MTR and buses. Sinkies only take videos.

Sinkies only come here kpkb lah

 

[AhMeng]

Sinkies only come here kpkb lah

This kind of protest will never happen in Sinkieland at least for the next 50 years.

Firstly, Sinkies are relatively obedient sheep. Secondly, I am sure SPF will not tolerate the slightest form of dissent and will use force at the earliest opportunity, unlike the kind Hongkangese police force who stood by for 3 months before resorting to using more force. Last but not least, the students in Singapore have been "brainwashed" very well since Primary One to University. Coupled with all these, whatever you want to complain about rising HDB BTO or resale prices, it is still relatively affordable for young people. If you are willing to work hard and live by your means, you can afford a 99 y.o HDB flat, unlike in HK where you probably wouldn't be able to afford any in your lifetime. There is nothing to lose for these Hongkanese young people. Crashing the property market via their ever increasing violent protests will chase away more mainlander buyers and they probably see more hope than the status quo. Lol

 

[meepokboy]

This perhaps comes as too little to late. The anger pent up in the protesters won't be negated by a simple withdrawal now.

 

[winnipegjets]

This kind of protest will never happen in Sinkieland at least for the next 50 years.

Firstly, Sinkies are relatively obedient sheep. Secondly, I am sure SPF will not tolerate the slightest form of dissent and will use force at the earliest opportunity, unlike the kind Hongkangese police force who stood by for 3 months before resorting to using more force. Last but not least, the students in Singapore have been "brainwashed" very well since Primary One to University. Coupled with all these, whatever you want to complain about rising HDB BTO or resale prices, it is still relatively affordable for young people. If you are willing to work hard and live by your means, you can afford a 99 y.o HDB flat, unlike in HK where you probably wouldn't be able to afford any in your lifetime. There is nothing to lose for these Hongkanese young people. Crashing the property market via their ever increasing violent protests will chase away more mainlander buyers and they probably see more hope than the status quo. Lol

Carrie Lam thought that the protests would fizzle out. That's why she did not withdrew the bill after the first million people protest. Instead, as the protests grew, she ordered the HK Police to be harsher in their management of the demonstrations.

Our SPF is always ready to do the dirty work for the PAP; a strong complaint letter to a minister leads to SPF launching an investigation and midnite visit to the homes of potential suspects.

HDB price is affordable only because people pay through their CPF; their retirement savings is being used for housing. Since, it is not from the pocket, stupid sinkees doesn't realized how much they have been scammed.

Crashing the property market would be a good thing for hongkees; then affordability returns. Hongkees resent that the developers are catering to mainland investors at the expense of locals.

 

[tanwahtiu]

Protest likeky to continue until blackout of suburbs and cities are applied...

Then mass exodus of HK to Shenzhen begin separating parents from children, the protesters...

Thes exodus will not return to HK after settling well and taken care by CCP...

Leaving behind protestors to deal with is easy with nore disruption with blackout until investors and businnes leave or relocate to Shanghai or others...

With mass population of Honkies down to 30% its the end of HK as financial centres and tourism and wipe out BE image completely..

Make sure there wont be repeats of this on every 4 June... Period...

 

[JohnTan]

It's a sad day for democracy. What a shame to see the HK government give in to oppies. Carrie should have manned up and sent in the tanks and machine guns. The people who killed lots of chinks at tiananmen square decades ago went on to be national heroes.

 

[winnipegjets]

https://liveandletsfly.boardingarea.com/2019/09/03/hong-kong-airport-dunkirk/

 

[tanwahtiu]

More 王八羔子 will be born 9 months later from this day..... tired and fatigues takes tolls and fall dead asleep girls are easy target to be raped by the boys.... without even know how many times they are fucked, and by how many boys.... full loaded cunts with protien sperms..

Good for HK ecomony, baby boom of at least 2,000,000 王八羔子 babies can be born soon.. 患乱出小英雄 儿子...

continue this for 6 months even protestor MILF, mothers and aunties orso get raped by fathers or uncles... add another 1,000,000 babies to it, nieces and cousins are inclusive, then all too confusing 王八羔子 in HK.... 患乱出 baby booms...

Expect more pregant girls in high schools and unis and some wonder who is the father of her 小儿子... hehehe....

Except the unexpected phenomenon baby boom generation nickname Extradition Bill generation.... wah haha...

Take this with a pinch of salt...

https://liveandletsfly.boardingarea.com/2019/09/03/hong-kong-airport-dunkirk/

 

[Hypocrite-The]

No leh. I sold my HK property liao now waiting for price to collapse before making next move. Lol

And Singkieland huat ah...HK turbulence Singkieland benefits n might even push up the price for older HDB flats. 60 year lease remaining is good deal to hongkies

 

[Hypocrite-The]

Explainer: How important is Hong Kong to the rest of China?
FILE PHOTO - Students stage a rally to call for political reforms outside City Hall in Hong Kong
FILE PHOTO - Students attend a rally to call for political reforms outside City Hall in Hong Kong, China, August 22, 2019. REUTERS/Kai Pfaffenbach
05 Sep 2019 09:05AM
(Updated: 05 Sep 2019 10:02AM)
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HONG KONG: Concerns over Hong Kong's political and economic future are growing as protests drag on and turn increasingly violent, and China makes clear that forceful intervention is possible.

An intervention by Chinese troops could seriously damage Hong Kong's standing as a stable international financial centre and a gateway for global capital flowing into the world's second-largest economy.

No other Chinese city, not even Shanghai, could step into that role in the foreseeable future.

WHY DOES CHINA NEED HONG KONG AS IT IS?

While China still has extensive capital controls and often intervenes in its financial markets and banking system, Hong Kong is one of the most open economies in the world and one of the biggest markets for equity and debt financing.

The size of Hong Kong's economy may only be equivalent to 2.7 per cent of mainland China's now, down from 18.4 per cent in 1997 when it reverted to Chinese rule, but the territory punches above its weight due to its world-class financial and legal systems.

READ: Not resigning 'my own choice': Hong Kong leader Carrie Lam clarifies comments on quitting
All that is possible due to its unique system of governance.

Under the "one country, two systems" formula agreed as part of Britain's handover of the territory to China, Hong Kong is guaranteed liberties which are unavailable on the mainland such as freedom of expression and an independent judiciary.

These freedoms give Hong Kong a special status internationally, allowing it to negotiate trade and investment agreements independently from Beijing - for instance, it does not have to pay the tariffs that the United States is imposing on Chinese imports.

They also mean foreign investors have more faith in Hong Kong's legal and governance systems. China's legal system is accountable to the Communist Party.

WHAT IS AT STAKE?

China uses Hong Kong's currency, equity and debt markets to attract foreign funds, while international companies use Hong Kong as a launchpad to expand into mainland China. The bulk of foreign direct investment (FDI) in China continues to be channelled through the city.

Most of China's biggest firms, from state-owned Industrial and Commercial Bank of China, to private firms like Tencent Holdings, have listed in Hong Kong, often as a springboard to global expansion.

Last year, Chinese companies raised US$64.2 billion globally - almost a third of the worldwide total - via initial public offerings (IPOs), but just US$19.7 billion of that came from listings in Shanghai or Shenzhen, according to data from Refinitiv, compared with US$35 billion in Hong Kong.

Commentary: Why Hong Kong protesters have tolerated the use of radical tactics
"Connect" schemes linking the Hong Kong bourse with those in Shanghai and Shenzhen also provide the main gateway for foreigners to buy mainland stocks.

Chinese businesses also tapped Hong Kong's debt market for 33 per cent of their US$165.9 billion in offshore US dollar funding last year, Refinitiv data shows.

Chinese banks hold more assets in Hong Kong - US$1.1 trillion in 2018 - than lenders from any other region, according to Hong Kong Monetary Authority's data compiled by Natixis. That figure equates to roughly 9 per cent of China's GDP.

Losing such a massive financing channel risks destabilising the already slowing Chinese economy, hurting confidence that the Communist Party can continue to deliver prosperity after a strong, decades-long track record.

Among other deep linkages, Hong Kong's port continues to handle a hefty share of China's exports and imports, and the city was also China's largest trade partner in services in 2018 with its market share of over 20 per cent topping the US' 17 per cent, China's Commerce Ministry says.

Hong Kong also has been pivotal to China's longer-term ambition to turn the yuan into a widely-used international currency, competing with the US dollar. While still a long way out, achieving that goal would increase the world's stake in China's success, as well as Beijing's influence.

HOW COULD IT ALL UNRAVEL?

Beijing has said it would not sit idly by if the unrest in Hong Kong threatened Chinese security and sovereignty. Chinese officials have said the events in Hong Kong were an internal matter and denounced foreign interference.

READ: Hong Kong protests: Key dates as peaceful rallies against extradition Bill turn to violent clashes
But many world leaders have urged restraint.

Some US senators have threatened to amend the 1992 Hong Kong Policy Act and stop treating it as a separate customs area from the mainland. That hinges on their assessment that Hong Kong is sufficiently independent from Beijing. Any action by mainland troops is likely to be a decisive factor in making that call.

Even if Beijing doesn't resort to the so-called "nuclear option" of using troops, signs of more open and direct interference in Hong Kong's affairs and continued street clashes could prompt global investors to seek other low-tax financial centres with highly-respected legal systems.

 

[myfoot123]

This type of citizens we should import into Singapore. Power sia !

They didn't want to even if you offer them citizenship. Simple reason, Singaporeans are rather hopelessly useless when come to voting, let alone doing a protest.

 

[Hypocrite-The]

This kind of protest will never happen in Sinkieland at least for the next 50 years.

Firstly, Sinkies are relatively obedient sheep. Secondly, I am sure SPF will not tolerate the slightest form of dissent and will use force at the earliest opportunity, unlike the kind Hongkangese police force who stood by for 3 months before resorting to using more force. Last but not least, the students in Singapore have been "brainwashed" very well since Primary One to University. Coupled with all these, whatever you want to complain about rising HDB BTO or resale prices, it is still relatively affordable for young people. If you are willing to work hard and live by your means, you can afford a 99 y.o HDB flat, unlike in HK where you probably wouldn't be able to afford any in your lifetime. There is nothing to lose for these Hongkanese young people. Crashing the property market via their ever increasing violent protests will chase away more mainlander buyers and they probably see more hope than the status quo. Lol

The unity of the protesters, the organisation, logistics on having the protest n dealing with the authorities is amazing. No wonder the chicoms blames others n saying it's foreigner supported etc. The chicoms are trying hard to enforce their rule. If HK can create problems and other places start it misbehave...the chicoms will b in trouble. If not why censor the news etc in ah tiong land

 

[congo9]

2047 is so so near compared to 1997. Why these China commies can't wait ?

 

[laksaboy]

2047 is so so near compared to 1997. Why these China commies can't wait ?

Because Chairman-President for Life Xi Jinping wants to be an emperor, and he'll probably not live till 2047.

There are also reports that mainland China's CCP wants to loot Hong Kong (financial hub), because money is running out in China.

Lastly, Carrie Lam is a crafty bitch, do not trust her completely.