[ET Net News Agency, 24 September 2018] Deutsche Bank said its analysis suggests
whenever the Hang Seng Index (HSI) declines >20%, the HK property market will
correspondingly dip into a bear market. On average, the duration of HK property's bear
market is 33 months, with an average decline of 41%.
The recent sell-off has pushed valuations to seemingly attractive levels, but DB
cautioned this may be a value trap as estimates are susceptible to downward revisions
during bear market periods.
DB drew two key conclusions from previous market cycles: (1) HK property prices do not
necessarily follow the uptrend in the stock market; and (2) property prices mostly decline
whenever there is a sizeable decline in the stock market.
The HSI has fallen 21% from the peak reached in January 2018, and the research house
noted more signs of a bear market approaching the HK property market. By referencing to
previous bear markets, DB believes residential volume/prices will markedly decline
It said primary volume will be more resilient (-18%) than the secondary market (-42%),
and DB expects prices to sharply decline 28% on average in the first 8 months of a likely
bear market.
DB revised its target prices for the developers it covers as follows:
Name Rating Target Price
-----------------------------------------------------
SHKP (00016) Hold HK$135.1 to HK$109.4
MTRC (00066) Hold HK$43.2
CK Asset (01113) Buy HK$80.80 to HK$70.20
Henderson Land (00012) Hold HK$47.20 to HK$41.80
Wharf REIC (01997) Hold HK$60.10 to HK$54.80
New World Dev (00017) Hold HK$11.60 to HK$9.70
Hang Lung (00101) Hold HK$17.50 to HK$15.70
Wharf (00004) Hold HK$34.90 to HK$34.20
Hysan Dev (00014) Sell HK$27.50 to HK$24.50
Kerry Props (00683) Hold HK$38.10 to HK$30.20
(KL)