Currently Hong Kong is in a place where it could establish an economic recovery from its beaten-down shares in property firms and real estate funds. However, it is really working well. On the other hand, after China’s border opened-Global Investors are trying to look out for the profit earning ways.
Investors are dog watching every event taking place in China and Hong Kong. For an instance, China’s dropping of its stringent zero-COVID policy late in 2022 has lifted travel and tourism stocks across Asia. Global Investors are saying Hong Kong will benefit from the property sector and local economies will improve. Tourists will return to the city, and during this time of the year, US interest rates peak.
Investors don’t worry whether the property is in the mainland or in the city, they are just keeping an eye on it and waiting to grab the opportunity.
“We certainly view the current improving backdrop of Hong Kong’s reopening as a catalyst for continued re-rating,” said Jadgeep Ghuman, managing director on the public real assets team at real estate investment manager Nuveen.
Guangdong Investment is up more than 10 per cent since the end of 2022, while Henderson Land Development has gained 7.2 per cent. The Hang Seng Property index is up about 3.1 per cent.
Fund managers are also keen on Hong Kong real estate investment trusts (REITs) as their stock prices are cheaper than the value of properties they fully or partly own. REITs tend to have heavy borrowers, so they can benefit when the interest rate falls.
Hong Kong home prices sank 15.6 per cent in 2022, ending a 13-year rising trend after three years of COVID-19 dried up flows of property buyers from China and tourists.
“Hong Kong has a lot more to get us excited than China property companies where their financial data remains weak,” said Tim Gibson, co-head of Global Property Equities at Janus Henderson Investors.
Gibson likes Link REIT due to its heavy exposure to shopping centers that focus on non-discretionary retail spending.
Link REIT’s share price dropped 54 per cent from a peak in July 2019 to a trough of HK$46.3 (US$5.90) by the end of October 2022. On Friday, it was still down 37 per cent from the peak.
Fortune REIT is trading at 54 percent discount to its net asset value. Guangdong Investment offers a dividend yield of more than 6.9 percent, higher than the industry median of 4 per cent.
“We remain positive on Hong Kong and many of its listed real asset companies, across infrastructure, utilities and property,” said Fitzgerald. “We see no reason why they could not get back to where they traded, given the re-opening of the economy.”
- Published By Team Hongkong Journalist