<div id="readability-page-1"><div>Citi issued a report stating that the recent weakness in Hong Kong property stocks has been driven more by fund flows and negative headlines rather than a deterioration in fundamentals. The bank consolidated recent investor feedback and several “double-constraint” arguments raised by the market, and shared its views on each.Some investors are concerned that a faster-than-expected recovery in home prices could prompt the government to reintroduce demand-side cooling measures. Citi believes that, at current price levels, such risks are premature. Looking at previous tightening cycles: (1) October 2009: after home prices rebounded 30% from the trough in November 2008, the loan-to-value ratio was lowered; (2) November 2010: after prices rose 55% from the trough and reached a ten-year high, an additional stamp duty was introduced; (3) October 2012: after two consecutive years of record highs, the Special Stamp Duty (SSD) was tightened and the Buyer’s Stamp Duty (BSD) was launched. Historically, policy responses targeted multi-year surges that significantly exceeded previous peaks. Currently, home prices are 17% above the trough recorded between March and May 2025, and 18% below the previous peak, which Citi believes is still short of the threshold for policy intervention. The bank estimates that prices may need to rise by a further 10% or more before policy risks become realistic.Some investors also worry that after the year-to-date rise in home prices, growth momentum may slow, signalling weakening recovery dynamics. Citi argues that a gradual recovery is in fact healthier and more sustainable, and more constructive for fundamentals than a sharp rebound. Under this “slow bull” scenario, several reinforcing benefits could emerge: facilitating inventory destocking while maintaining transaction volumes without front-loading future demand; allowing prices to better reflect population inflows and demographic upgrades; and keeping rental yields at attractive levels. In addition, a temporary supply shortfall from 2026 to 2028 due to lower completions provides structural support for the upward price cycle.Regarding concerns over potential tightening of China’s outbound investment rules, Citi notes that this is difficult to verify or refute and that relevant data would likely be lagged. The bank previously pointed out that only 5.5% of residential transactions conducted by non-Hong Kong ID holders are directly affected by capital controls, before considering potential offsetting factors such as reallocating equity investment gains into physical assets. Citi expects this concern to gradually fade amid sustained transaction activity and healthy sell-through rates for new projects.The report also mentions investor concerns over valuation frameworks amid interest rate volatility. Citi acknowledges that cyclical inflection points often represent the most attractive entry timing to capture upside, but this does not necessarily imply selling after confirmation of an upcycle, especially when the recovery remains at an early stage. Historically, over the past 15 years, developers’ net asset value (NAV) discounts have shown a 71% correlation with YoY changes in home prices. For example, SHK PPT (00016.HK) -2.600 (-2.151%) Short selling $116.28M; Ratio 28.071% ’s share price has been correlated with the CCL index, although movements in both directions often overshoot. Citi believes NAV discounts remain relevant, supported by rising home prices and stabilizing office and retail rents. Dividend yield is also a reference indicator. Recent mean reversion was observed after the ten-year US Treasury yield rebounded by 31 bps year to date in 2026 to 4.5%, but this could be offset by lower yields in Mainland China, which have declined by 25 bps year to date to 1.8%.Citi expects near-term volatility in the sector as the market digests these concerns and amid recent rotation into growth sectors. After share prices had priced in bull market expectations, investor positioning has turned more cautious over the past month. The bank advises patience in June, and believes strong 1H26 results, likely to be delivered by developers following robust property sales and margin recovery, could serve as the next catalyst in late July to August.Citi’s top sector picks are SHK PPT (00016.HK) -2.600 (-2.151%) Short selling $116.28M; Ratio 28.071% , CK ASSET (01113.HK) -0.160 (-0.346%) Short selling $19.19M; Ratio 25.447% , SWIREPROPERTIES (01972.HK) -0.020 (-0.093%) Short selling $4.31M; Ratio 11.590% and LINK REIT (00823.HK) -0.320 (-0.838%) Short selling $42.29M; Ratio 13.991% .Shares | Investment Rating | TP (HKD) SHK PPT (00016.HK) -2.600 (-2.151%) Short selling $116.28M; Ratio 28.071% | Buy | HKD168CK ASSET (01113.HK) -0.160 (-0.346%) Short selling $19.19M; Ratio 25.447% | Buy | HKD54.8SWIREPROPERTIES (01972.HK) -0.020 (-0.093%) Short selling $4.31M; Ratio 11.590% | Buy | HKD28.8LINK REIT (00823.HK) -0.320 (-0.838%) Short selling $42.29M; Ratio 13.991% | Buy | HKD44.8(da/u)(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2026-06-08 12:25.)</div></div>

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Citi argues that concerns over HK government cooling measures are premature, as current price levels remain below historical thresholds for intervention. The bank favors a 'slow bull' market for sustainable recovery and recommends buying SHK PPT, CK Asset, Swire Properties, and Link REIT, citing strong fundamentals and attractive valuations despite near-term volatility.

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Citi: Concerns Over HK Govt Cooling Measures Premature; "Slow Bull" More Constructive; Recommends SHK PPT , CK ASSET , SWIREPROPERTIES  and LINK REIT