Home » What is the reason behind Hong Kong stocks becoming the “hardest hit area” in the event of Black Monday? -Viewpoint Real Estate Network

What is the reason behind Hong Kong stocks becoming the “hardest hit area” in the event of Black Monday? -Viewpoint Real Estate Network

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Viewpoint Real Estate Network On September 20, when everyone was preparing to welcome the Mid-Autumn Festival with anticipation, the Hong Kong stock market ushered in Black Monday.

Before the close of trading on Monday afternoon, Hong Kong stocks had fallen below 24,000 points, the first time since October last year. By the end of the day, the Hang Seng Index fell 3.3%, or about 1,000 points, to close at 24,099 points.

Among them, real estate stocks fell by 6.69%, becoming the “hardest hit area.” For example, Hong Kong’s local real estate stocks fell sharply, Henderson Land Development fell 13.34%, New World Development fell 11.54%, Cheung Kong Group and Sun Hung Kai Properties also fell more than 9%; as for mainland property stocks, China Evergrande fell 17% in the morning and closed down. Narrow to 10.24%. In addition, Logan Group, LVGEM China Land, R&F Properties fell more than 8%, and Agile fell more than 7%.

The biggest hit was Sony Holdings, because its stock price plummeted, it issued a temporary suspension announcement at 3:38 pm, and the reason has yet to be announced. Before the suspension, Sony’s stock price was only 0.5 Hong Kong dollars per share, a decrease of 87.01%. The lowest position had seen 0.37 Hong Kong dollars, and the market value was only 1.785 billion Hong Kong dollars.

Regarding the reasons for the collapse of Hong Kong stocks and the heavy losses of real estate stocks, market opinions are divided. Some analysts have summarized them into three reasons. Others in the industry are more inclined to believe that the collapse of real estate stocks reflects the development model of real estate companies. Conversion.

For the three major reasons mentioned above, market analysis pointed out that one of them is the risk of U.S. debt, because on September 19, the day before Hong Kong stocks plummeted, U.S. Treasury Secretary Janet Yellen (Janet Yellen) acted as the ” The principal” once again sent the “SOS” signal to the US Congress, bluntly saying that the US federal debt default will trigger a historic financial crisis-this event was interpreted as the collapse of most Asia-Pacific stock markets on September 20 The main reason was that Hong Kong, India, New Zealand, Australia, Malaysia, Singapore, and Thailand fell across the board.

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The second reason is that Hong Kong stocks have been maliciously shorted. The evidence is that Ping An, the third-largest heavyweight stock, does not have Evergrande’s risk exposure. China Fortune happiness has also been clarified, but the south channel was closed last Friday. Opportunities smashed, intended to short the Hang Seng Index. Analysts believe that September 20 was a repeat of the old trick.

And the third reason is the most widely affected in the Hong Kong market. Brokers reported that the regulators have proposed new tasks to Hong Kong developers, asking them to help solve the housing shortage that may undermine social stability. The major public utilities in Hong Kong are mostly in the hands of real estate developers. This may explain the decline in not only real estate, banking, and insurance, but also soft and hard utility stocks.

In the eyes of most investors, the third reason not only reflects the change in the direction of the policy, but also perhaps heralds a change in the development model of the industry. It will also be a long-term development problem that developers need to face directly.

In response to the Hong Kong stock market diving today (September 20), Hong Hao, managing director and head of research at BOCOM International, quoted a Reuters report as saying: Hong Kong real estate giants are required to solve Hong Kong real estate problems. If so, vacancy tax, New Territories development, large-scale Development models that were previously difficult to use, such as reclamation, may be opened. Hong Kong is the most expensive real estate market in the world. This is a mode conversion.

He just pointed out in his keynote speech at the Boao Real Estate Forum 2021 on the morning of September 17 that real estate is a long-term industry, but stock price fluctuations are reflected in a short-term form, which contains a huge emotional component.

Only three days later, the long-term worries about the future development of real estate developers were thus conveyed through the plunge in stock prices.

In fact, compared with changes in the share prices of Henderson Land and Cheung Kong, which mainly develop residential properties, rental stocks such as Swire Properties, Wharf Real Estate and Hang Lung Properties have fallen, but the decline is about 4 to 5%, which is significantly smaller than that of residential developers.

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Morgan Stanley’s analysis of this Black Monday is that, on the fundamentals of developers, commercial real estate stocks are more ideal, but the regulatory risks are obviously higher. Therefore, they prefer SHKP, Kerry Properties and Sino Land to Henderson Land and Cheung Kong. And the new world.

From this point of view, the prediction of “model shift” is not just the words of Hong Hao’s family, but also the opinions of most investors, and it is not only directed at Hong Kong developers.

Also at the Boao Real Estate Forum 2021, Chen Qizong, chairman of Hang Lung Real Estate, who has always been known as a “sober”, pointed out that the opportunity for real estate developers to make big money has basically passed: “To be honest, more than a decade or even 20 years ago. Earlier, we should know that the commercial model of housing and real estate is unsustainable. Of course, I also understand that people are in the rivers and lakes and cannot help themselves.”

Therefore, he made three suggestions to housing developers:

First, stay in the bank, because the industry will not disappear anyway, but the profit will become very low and very thin, similar to the builders, but your risk is greater than them, because you are going to buy land.

Second, switch to commercial real estate, but this is also something to be very careful, because commercial real estate and residential real estate are like the difference between playing table tennis and tennis. They are quite similar, but also quite different.

Third, withdraw from real estate. Not that there is no such market. But it is not necessarily a market previously imagined. So the possibility of exiting housing real estate is also an option.

Although Chen Qizong’s advice is to mainland developers, it may also be applicable to Hong Kong housing developers. After all, the business models are similar. However, in addition to the development model and profitability problems of domestic real estate stocks, they may also reflect their financial difficulties.

After all, on September 20, in addition to the nearly 90% plunge in the share price of Sony Holdings, another financially troubled company, R&F Properties, released two pieces of good news about financing after the market closed on the Hong Kong Stock Exchange:

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According to an announcement by Country Garden Services on September 20, its subsidiary Country Garden Property Hong Kong and R & F Properties signed an equity transfer agreement to acquire Furian Global at a consideration of no more than 10 billion yuan, and indirectly acquire 100% of the equity of each target company held by Furian Global.

In addition to the sale of property assets, R&F Properties also issued an announcement that evening, executive director Li Silian and major shareholder Zhang Li, will provide approximately HK$8 billion in shareholder funds, which is expected to be completed in the next one to two months. The company expects to receive it tomorrow, September 21 About 2.4 billion Hong Kong dollars.

R & F Properties said that after the financial support provided by major shareholders, coupled with the existing available cash, the group still expects to have sufficient funds to meet the debts that are due in the short term. It also stated that after receiving shareholder funds, reserved interest and other financial expenses, it will consider repurchasing long-term bills, mainly because it is in the company’s economic interests based on current market prices, saved interest and maturity.

Therefore, in the context of Black Monday, concerns about the financial plight of residential developers continue to sizzle everyone’s hearts. Some developers in the real estate industry believe that real estate companies that have taken a lot of land in the past two years will definitely have a hard time in the future. Unless it is a state-owned enterprise or a central enterprise, he predicts that the “thunderstorm” of real estate enterprises may also be a good opportunity for development. The 15-17 trillion (real estate) market is still there.

Yes, Black Monday may continue to appear in the future, and the funding concerns about real estate companies continue, but whether it is the above-mentioned industry insiders, Chen Qizong and Hong Hao, they are still optimistic about the Chinese real estate market. Chen Qizong predicted: “The demand will always exist, and the market will always exist. It will not disappear because of the difficulties our industry faces today. So from this perspective, that is good news.”

However, the transformation of the development model of real estate enterprises is now on the agenda.

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