HSBC Research: The decline of HIBOR is beneficial for the local real estate industry, with a preference for New World Development and KERRY PPT

HSBC Research published a report indicating that the local real estate and integrated enterprises are expected to continue outperforming the market since April this year. The bank noted that recent major changes are related to the significant decline in the Hong Kong Interbank Offered Rate (HIBOR), with the one-month HIBOR dropping sharply from about 4% at the end of April to approximately 2.1% as of yesterday (May 8) (compared to about 4.6% at the end of last year). If HIBOR remains low, it should reduce financing costs for the real estate sector and improve dividend payout ratios.

The bank stated that due to the significant decline in HIBOR, actual mortgage rates are expected to trend downward in the coming months. This will provide some support for property prices. The bank believes that although there are still uncertainties in the global macro environment, some users may switch from renting to buying. Among them, the sales performance of Sierra Sea under New World Development (00016.HK) has been ideal, with the standard units of Phase 1A sold out.

The bank pointed out that among local developers, New World Development (00016.HK) is one of the few companies with good earnings visibility and stable dividends, while KERRY PPT (00683.HK) may benefit from the sales performance of high-end residential projects in Hong Kong and Shanghai