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
