[ET Net News Agency, 13 August 2019] Morgan Stanley said investors are looking for
bargains among battered HK property stocks with a dividend yield at all-time highs (4.5%).
The research house sees more risks to residential prices and retail sales in 2H and will
avoid most of these stocks near term.
Morgan previously highlighted its preference for residential over office over retail,
which is fundamentally true even now. However, its new preference is for office over
retail over residential. This is mainly due to current expectation/sentiment is already
quite low for retail, while CCL (Centa-City Leading) index is at an all-time high.
The research house said office vacancy is low, and it has yet to see a mass exodus of
corporates from HK. Morgan prefers Hang Lung Properties (00101), Swire Properties (01972)
and Sun Hung Kai Properties (00016) over Wharf REIC (01997), Hysan Development (00004) and
Henderson Land (00012).
It expects 3Q retail sales trend to deteriorate from June's -6.7%. While 4Q retail sales
momentum may improve sequentially on a lower base, visibility is low due to macro
uncertainties.
Morgan thinks Rmb depreciation, global trade tensions, and local uncertainties should
drag local consumption sentiment and tourist spending. (KL)