News Alert: Limited signs of pickup during the National Day holiday
- Sales performance during the week National Day holiday showed limited signs of improvement despite policy supports introduced in end-Sept
- Sales office traffic reportedly improved as developers have introduced more price promotions, but overall sentiment remained subdued
- We expect sentiment to remain at the current level, with a mild pickup in the physical market activities in 4Q alongside potential increase in project launches
- Share price volatility to remain in the near term; stay with quality names that are less impacted by RMB depreciation and can benefit from the potential release of further policy support
- Top picks: COLI (688 HK), CR Land (1109 HK), Yuexiu (123 HK), KE Holding (BEKE US/2423 HK)
What’s new
Sales data recorded during the week of National Day holiday (Oct 1 – Oct 7) saw limited signs of recovery despite a round of policy support in end-Sept. Developer data per our channel check revealed a similar trend.
Our view
Limited signs of sentiment recovery. Despite the introduction of several supportive measures in end-Sept, sales performance in 21 cities during the week of national holiday saw limited pickup with residential GFA sold fell 38% y-o-y according to the CREIS database. Sales office traffic has reportedly improved along with developers’ introduction of more price promotions, but overall homebuyer sentiments appears to remain subdued. Our channel checks with several developers also revealed largely similar trends. We believe this is largely in-line with our expectations, as we have previously noted that recently introduced measures may be insufficient to revive physical market sentiment (see PBOC and CBRIC in action to manage physical market’s downside risks and More policy support to revive the physical market for details). Alongside our anticipation that further policy support will remain controlled and gradual, homebuyer sentiment should remain largely at the current level, with a mild pickup in the physical market activities to be seen in 4Q upon a potential increase in developers’ project launches.
Stay with quality names. Investor sentiment continues to be fragile, with the suspected non-payment incident of CIFI (884 HK) triggered another round of sector sell-off soon after a quick rebound from the introduction of policy support in end-Sept. We believe the sector’s share price will continue to exhibit volatility before RMB stabilizes, physical market recovers and refinancing channels reopen. We recommend investors to stay with quality names that are less impacted by RMB depreciation and able to benefit from the potential release of more policy supports – COLI (688 HK), CR Land (1109 HK) and Yuexiu (123 HK). We also like KE Holdings (BEKE US/2423 HK) which would benefit from the ongoing demand shift to the secondary market.
Developers’ subscription sales performance during the National Day holiday (1-7 Oct)
Source: Companies, DBS HK
Average daily GFA Presales in 21 cities during the National Day holiday (1-7 Oct)
Source: CREIS, DBS HK
