China’s property sector received a significant boost from May Day holiday sales, with secondary market transactions jumping 31 percent year-over-year, prompting JPMorgan to upgrade its outlook on leading developers.
"The Chinese property sector advanced another 5% on May 6, sustaining its strength since early April, underpinned by solid data from the May Day Golden Week holiday," JPMorgan analysts wrote in a research report.
The robust holiday performance, based on Iceberg index data, followed an already strong April that saw a 29 percent year-over-year rise in secondary market deals. The momentum, however, was concentrated in the secondary market. In the primary market, most state-owned enterprise developers guided for flat year-over-year growth, indicating a continued divergence in the housing market's recovery.
The strong data provides a fresh sign of stabilization for the beleaguered sector, which has been a major drag on the world’s second-largest economy. For investors, the divergence between a recovering secondary market and a stagnant primary one suggests that while homeowner demand is returning, developer-led new construction remains weak, a dynamic that could shape policy and investment strategy for the remainder of the year.
In response to the encouraging sales figures, JPMorgan raised its target prices for several key Chinese property developers, signaling renewed confidence. The bank’s top picks include China Overseas Land & Investment Ltd. (00688.HK), China Resources Land Ltd. (01109.HK), and China Jinmao Holdings Group Ltd. (00817.HK).
The price target for China Overseas was lifted to HK$19.50 from HK$16.50, while China Resources Land saw its target increased to HK$44 from HK$37. The target for China Jinmao was raised to HK$2.05 from HK$1.75. JPMorgan also upgraded its target for the A-share listed Poly Developments and Holdings Group Co. (600048.SH) to RMB9.5 from RMB8.2. All four developers maintain an "Overweight" rating from the bank.
This article is for informational purposes only and does not constitute investment advice.
