"Big Banks" JP Morgan: Mortgage subsidies alone are insufficient to reverse the situation of the domestic property market; the market has not overreacted

JP Morgan's research report indicates that the mainland property sector recently rose, mainly due to market rumors that the central government is considering providing mortgage subsidies. These rumors are not new, but the latest version mentions a potential scale of up to RMB 400 billion. Overall, the bank believes this policy direction is possible, but if the authorities fail to instill confidence in buyers regarding the stabilization of property prices, relying solely on these measures or any other policies to improve buyer affordability will not be sufficient to turn the situation around.

Objectively speaking, RMB 400 billion is only equivalent to about 5% of annual primary residential sales. Historically, the accuracy rate of market rumors is only about 40%. Following the emergence of related rumors, Vanke (02202.HK) saw its stock price surge by over 10%, while large state-owned enterprises such as CHINA RES LAND (01109.HK) and China Overseas Development (00688.HK) only rose by a maximum of 1%, reflecting that the stock price increase was mainly driven by short covering, especially since Vanke has been a particularly popular target for short selling, suggesting that investors are not overly excited about this policy.

The bank maintains its preferred stocks as CHINA RES LAND, CHINA RES MIXC (01209.HK), and CHINA JINMAO (00817.HK); if a policy-driven upward trend occurs, the bank believes LONGFOR GROUP (00960.HK) can provide the best risk-return profile