JP Morgan expects that domestic real estate will outperform in the short term, with a preference for CHINA RES LAND and CHINA RES MIXC

JP Morgan's research report indicates that mainland property stocks rebounded 4% yesterday (14th), outperforming the Hang Seng Index's 1% increase during the same period. This is believed to be driven by the Iceberg Index showing a 36% year-on-year growth in real-time second-hand transactions in major cities in April; coupled with official signing data indicating good trading momentum in major cities (especially Shanghai), as well as market speculation about potential policy support before the Politburo meeting at the end of April.

However, the bank pointed out that other leading indicators such as prices and developers' sales remain weak, and it believes that a few weeks of strong second-hand transaction growth is insufficient to prove that the industry has bottomed out. Nonetheless, it is not overly pessimistic. If key indicators such as transaction volume, prices, and inventory can sustainably improve over several months without policy support, the market may see a turning point. JP Morgan currently expects the market to stabilize by 2027.

After several weeks of sluggish performance, JP Morgan believes that China's real estate sector may outperform the broader market in the short term, mainly due to strong growth in second-hand market transaction volumes and the strategic timing of the Central Committee's Politburo meeting at the end of April.

The bank's preferred stocks are CHINA RES LAND (01109.HK) and CHINA RES MIXC (01209.HK), but it expects higher beta values for China Overseas Land & Investment (00688.HK) and China Jinmao (00817.HK) among state-owned developers, as well as Longfor Group (00960.HK) among private developers. Additionally, the bank anticipates that strong second-hand transactions (if sustainable) will directly benefit Beike (02423.HK)