Will regulator dial up policy support?
- While large scale stimulus seems unlikely in the near-term, we believe regulators will intervene if systemic risks arise; policy shift possible in 2H24
- A further c.20% drop in secondary ASP could cause underwater mortgages, potentially impacting Chinese banks’ CET1 ratio if fully provisioned
- Physical market may contract further due to low homebuyer confidence; liquidity risk may persist and investor sentiment to be weak until policy shift occurs
- KE Holdings poised to benefit from developers’ rising reliance on external customer acquisition channels and surging secondary market transactions; trading opportunities may arise on quality names