{I-bank focus}Morgan prefers office over retail/residential

   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.