Citi expects any rebound in domestic property stocks this month to be short-lived, with China Jinmao and C&D International Group as top picks

Citi's research report pointed out that although the Central Political Bureau meeting in December did not mention the real estate industry, the Central Economic Work Conference revealed some real estate-related details, including actively and steadily resolving risks in key areas; focusing on stabilizing the real estate market, implementing city-specific policies to control increments, reduce inventory, optimize supply, and encouraging the acquisition of existing homes for affordable housing.

Regarding the real estate sector, Citi believes that the policy intentions in December this year are stronger than in April and July, but slightly less decisive compared to the Central Economic Work Conference in December last year. They believe that new demand-side local stimulus measures (including home purchase subsidies or mortgage interest subsidies) in the fourth quarter may be helpful, but given the ample and continuously increasing supply of second-hand housing, it is unlikely to change price expectations. They will pay attention to targeted monetary easing policies or support leverage policies, but currently believe the likelihood is low.

Citi expects that any policy-driven stock price rebound in December may be short-lived, as sales in the fourth quarter may continue to be weak, and household confidence is limited before price expectations change. After weak performance in the third quarter this year, Citi anticipates a round of earnings forecast downgrades in December and January next year, including some favored stocks; they also believe that late December may be a better entry point or a time to reassess the sector after stock price corrections. Retail sales in luxury goods malls may maintain a positive atmosphere in the fourth quarter after exceeding expectations in the third quarter.

Citi's preferred stocks are CHINA JINMAO (00817.HK), C&D INTL GROUP (01908.HK), and CHINA RES LAND (01109.HK). For Citi's ratings and target prices on domestic property stocks, please refer to another table