At the beginning of this week, the "Zhitong Decision Reference" has suggested that the Hang Seng Index has adjustment pressure. Today, the Hang Seng Index fell 2.12%, the Wind Hong Kong Secondary Industry Index fell across the board, and PetroChina (00857), which was mentioned in the "Weekly Gold Stocks" sector, hit a 10-year high.
(Wind Hong Kong Secondary Industry Index fell across the board)
A-shares also corrected sharply. The Shanghai Composite Index fell 1.65%, the Shenzhen Component Index fell 2.29%, the ChiNext Index fell 1.97%, and small and micro cap stocks fell hardest, the CSI 2000 Index fell more than 7%, and the Wind Micro Cap Index fell more than 10% intraday.
In such a market, a clear contrarian dynamic is worth noting.
After the market opened at noon, A-shares and Hong Kong-listed real estate stocks rose simultaneously, and A-share Binjiang Group rose by more than 6%; Hong Kong stocks CIFI Holdings and Sino-Ocean Group once rose more than 20%; Sunac China and Shimao Group rose by more than 10%, Vanke Enterprise rose by more than 5%, and Xincheng Development rose by more than 3%.
The full-day market is sorted according to the turnover rate, and the transaction situation and final rise and fall of the TOP5 companies are as follows:
(Source: Wind)
From the perspective of real-time transactions, the transactions of real estate stocks are suddenly enlarged compared with the past, and they are synchronously concentrated in the time range of 13:24-14:05. This kind of disk characteristics shows that there are institutional funds entering the market to sweep the goods.
(Vanke H trading tick chart, other real estate stocks are similar.) Image source: Xueqiu)
1. What happened?
1. 10 a.m
The National Bureau of Statistics released the basic situation of the national real estate market from January to March 2024.
From January to March, the national real estate development investment was 2,208.2 billion yuan, a year-on-year decrease of 9.5% (calculated on a comparable basis); Among them, residential investment was 1,658.5 billion yuan, down by 10.5 percent. From January to March, the construction area of real estate development enterprises was 678501 million square meters, a year-on-year decrease of 11.1%. Among them, the residential construction area was 4,745.8 million square meters, down by 11.7%.
(Photo source: National Bureau of Statistics)
The area of new housing construction was 172.83 million square meters, down by 27.8%. Among them, the area of new residential construction was 125.34 million square meters, a decrease of 28.7%. The area of housing completions was 152.59 million square meters, down by 20.7%. Among them, the area of residential completions was 111.48 million square meters, a decrease of 21.9%.
(Photo source: National Bureau of Statistics)
Sheng Laiyun, deputy director of the National Bureau of Statistics, said at a press conference of the State Council Information Office today that the mainland's existing stock of houses, houses below 90 square meters account for the vast majority, with the improvement of people's living standards and the advancement of urbanization, the improvement and rigid demand is still large, and the mainland still has conditions to support the healthy development of real estate.
2. 11 and a half points
According to data released by the Shenzhen Real Estate Agents Association, in the 15th week of 2024 (April 8 to April 14), the transaction volume of second-hand houses (including self-service) in Shenzhen recorded 1,295 units, an increase of 34.3% month-on-month, and the single-week transaction volume hit a new high since 2022.
According to the monitoring of the Shenzhen Real Estate Agents Association, affected by the Qingming holiday in the previous week, part of the accumulated demand was reflected, and the number of second-hand houses recorded a recovery growth, and hit a new weekly high in the past three years.
(Photo source: Shenzhen Real Estate Agency Association)
3. Industry fundamentals
According to the data of the China Index Research Institute, in terms of new housing, in the first quarter, the year-on-year decline in the sales area and sales of newly built commercial housing across the country was narrower than that in January and February, and the policy effect of some core cities appeared, and there was a moderate recovery market in March. The pressure of adjustment in the new home market is still there, and the year-on-year decline in the scale of new home sales is still large under the high base of the same period last year.
In terms of second-hand housing, the activity of the second-hand housing market increased in March, and the pace of market recovery was better than that of new housing. From the Spring Festival to the end of March, the number of second-hand residential units in key cities increased month-on-month for six consecutive weeks, and in March, the second-hand housing transactions in Beijing, Shanghai, and Shenzhen all reached the highest level since April 2023. In the first half of April, the average weekly transaction volume of second-hand houses in key cities was basically the same as that in March, and the market remained active; Last week (4.8-4.14), the transaction volume of second-hand houses in key cities increased by 52.8% month-on-month and decreased by 9.2% year-on-year, and the decline was significantly narrowed, and the demand for housing continued to be released.
On the whole, the second-hand housing market is expected to maintain short-term market activity for a period of time, driven by the exchange of price for volume, but the drive to the new housing market may be limited, and the adjustment trend of the new housing market is expected to continue.
How to understand the current market status quo of "weak first-hand housing, strong second-hand housing, and declining prices"?
CICC said that considering that the characteristics of spatial segmentation, pricing segregation and stable proportion of the primary and second-hand housing markets have changed in recent years, CICC has constructed a real estate market supply and demand analysis framework that includes both primary and second-hand housing. Based on this framework, the current round of housing price decline can be split into two phases:
Phase 1 is from mid-2021 to 2022, driven by the contraction of aggregate demand;
The second stage is from 2023 to the present, and the driving force is mainly the expansion process of total supply (especially second-hand housing listings). In fact, it is digesting the accumulated excess supply and rebalancing ownership.
CICC drew attention to the fact that the framework intuitively reveals that housing prices have a certain degree of self-fulfilling inertia, so in the process of market adjustment, it may be necessary for the policy side to make timely efforts to adjust the inertia and prevent risks.
Since March, the central government and regulatory authorities have continued to release positive signals to stabilize the market, making it clear that they will "further optimize real estate policies"; Beijing, Hangzhou and other places continue to optimize the purchase restriction policy to promote the release of potential housing demand. Recently, many cities have put forward the policy direction of "exchanging the old for the new", which is still in the exploration stage as a whole, and if the follow-up supporting policies continue to improve, it is expected to play a greater role in the linkage of the primary and secondary markets.
Second, those institutions that are copying Vanke: Xiaomo, Ningquan Assets......
According to the equity disclosure of the Hong Kong Stock Exchange, Xiao Mo purchased 11.77 million shares of Vanke in the secondary market at an average price of HK$4.40 on April 8, and the proportion of long positions increased to 5.17%.
(Photo source: HKEX)
In addition to foreign-funded institutions, there are also domestic institutions that continue to increase their holdings in Vanke.
Shanghai Ningquan Asset Management Co., Ltd., a well-known private equity of 10 billion yuan, purchased 773,000 shares of Vanke in the secondary market at an average price of HK$4.79 on April 2, holding a total of more than 170 million shares, accounting for 8.03% of the total share capital of Hong Kong stocks.
Since September last year, Ningquan Assets has been "buying, buying, buying" in the process of Vanke H's decline. The continuous increase in holdings in the past eight months has increased its shareholding in Vanke Hong Kong by 3 percentage points. Those days of increasing holdings that crossed the integer mark include: 981,000 shares were added at an average price of HK$9.20 on September 12; On November 7, it increased its holdings by 6.476 million shares at an average price of HK$8.13; On December 13, it increased its holdings of 3.364 million shares of Vanke at an average price of HK$7.08.
Therefore, Ningquan Assets was nicknamed "the most stubborn long in Vanke Hong Kong stocks". In fact, Ningquan Assets not only increased its bet on Vanke, but in 2024, Ningquan Assets will also increase its holdings in the Hong Kong stock market Datang New Energy (latest shareholding 6.06%), Xinte Energy (latest shareholding 8.16%), COFCO Jiakang (latest shareholding 5.09%), and Guolian Securities (latest shareholding 5.00%).
3. Prudent investment or bet on a more flexible reversal of the dilemma?
Vanke H's firm bulls are betting on a smooth resolution of the debt problem and a reversal of the company's development difficulties. There is a view that mortgage interest rates have been reduced to below 4, down payments have been lowered, various purchase restrictions have been lifted, and the economy is still recovering—with the dual blessing of policy and improving economic fundamentals, real estate sales may pick up in the second quarter, in this case, Vanke may become the vanguard of the reversal of the predicament.
At present, Vanke's leverage ratio is above 70%, and its interest-bearing debt ratio increased by 10 percentage points last year. The real reversal of its predicament requires the decline of internal leverage ratio on the one hand, and the improvement of the sales side due to the recovery of the external industry environment.
So what will happen to mainland housing prices next?
According to CICC, based on international comparisons and supply and demand analysis, considering that land supply is still declining, the stabilization point of housing prices may be premised on the premise that aggregate demand remains stable and the number of second-hand housing listings stops rising and falling, so the time for different cities to reach the stabilization point may vary greatly.
Due to the large population inflow and sufficient demand support policy space in the top cities, it is easier for aggregate demand to remain stable, while the cumulative excess supply is relatively limited, and the income and wealth level of residents are relatively high, so the number of second-hand housing listings may stop rising and decline earlier, so as to reach the point of housing price stabilization faster; Medium and low-energy cities or vice versa.
Since the first quarter of this year, due to the weakening of the margin of new home sales, the annualized total demand has fallen back to the previous low level, and the listing speed of second-hand houses has accelerated after the Spring Festival.
At this point in time, CICC suggests that some well-known leaders with low drawdown risk can be allocated as the bottom position ticket, such as Hong Kong stocks China Resources and C&D International, and take into account the highly flexible targets that may benefit from the policy, such as China Shipping, Yuexiu, Longfor and Greentown. The real estate service targets recommend Greentown Management Holdings, China Resources Vientiane Life, Greentown Services, Poly Property, China Overseas Property, Wanwuyun, and Sunac Services.
With the disclosure of the 2023 performance report of the mainland QDII fund, Zhitong Finance APP has sorted out the holdings of all Hong Kong real estate stocks (including properties), leaving aside the situation that the market value of the position does not exceed 10,000 yuan, and the position as of the end of 2023 is as follows:
(Source: Wind)
It can be found that although there are not many Hong Kong real estate stocks (including property) held by QDII funds, they are basically in a state of overweight.
Judging from the target selection preferences of most fund managers, it basically coincides with the bottom warehouse ticket pool recommended by CICC, which is the pursuit of a safe style - the most popular real estate development stocks are China Resources Land (01109), Greentown China (03900), C&D International (01908), and Yuexiu Real Estate (00123). The most relied on property service stocks are China Overseas Property (02669), Yuexiu Services (06626), Greentown Management (09979), and China Resources Vientiane Life (01209).
Huatai Berry Asian companies with different styles and good historical net worth performance can be seen from their positions that they are betting on more resilient dilemma reversal targets (CIFI Holdings, Country Garden).
For the average retail investor, it still takes a certain amount of courage to bet on a reversal of the dilemma.