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The stock market and property market go its own way

Damon Ho

Early October, the stock market has undergone earth-shaking changes, the central government has rescued the stock market by injecting abundant funds, Hang Seng Index has risen two thousand eight hundred points within five days during September 26 to October 3. The stock market has bottomed out and regained its upward momentum. Will the property market also be able to rebound in the near future?

The public believes that the stock market normally bottoms out half year in advance of the property market recovers from the economic downturn. In this business scenario, it is estimated that the property market will bottom out early of next year.

Until now, the sales transactions of the first-hand properties are a curate’s egg. Last Saturday, there were one hundred  thirteen units of the new residential project Yaho Hub Phase two to be opened for sale. As a result, ninety-three units were sold, and it was equivalent to ninety three percent of the total units. On October 2, one hundred fifty units of The Pavilia Forest Phase two in Kai Tak were opened for sale. Consequently, elven units were sold, and it was equivalent seven percent of the total one hundred and fifty units.

As for the second-hand properties market, it recorded only seven transactions in the top ten housing estates during last Saturday and Sunday. Furthermore, second-hand properties selling at a loss are still prevalent.

The first-hand properties market is not stable. However, the second-hand properties market is still semi-frozen. Indeed, it is evident that the interest rate cut, and the surge of stock market have not contributed to the recovery of the property market. If the stock market continues to rise for months, can the property market be triggered to rebound at last?

With this limited two trillion CNY (Renminbi) providing by the central government, it is extremely difficult to support the long-term rise of the A shares with a market value of 10 trillion CNY, but there is no doubt that it can boost shares prices to rise violently within two to three months.

The A shares prices have been rising rapidly in disregard of the deteriorated basic factors. Short-term trading and speculation have been governed everything. The Hang Seng Index rose almost three thousand points within five days. In the near future, the Hang Seng Index may rise several thousand points more. If it is true, it will likely end within three months. Finally, the shares price will fall from the record high again.

The stock market has risen greatly, giving the indebted shareholders a chance to cash in. If they sell in time, the loss of their holding assets can be greatly reduced. Those general investors may take the opportunity to speculate in this critical moment, or they may have unexpected returns.

A few months later, if the stock market falls back from its peak, it will be difficult to prevent the property market to fall again in the face of the negative spillover effects from the stock market. The current property market is different from the stock market, and it will not be able to rise quickly after hitting the rock bottom. If so, it is still too early to enter the property market now.

 
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1. HKhome prices hit an eight year low 2024-10-05 21:04:05

Hong Kong home prices hit an eight-year low in July, falling 1.9% month-on-month (MoM) and 4.7% year-to-date (YTD).

Data from Knight Franck showed that transactions fell in tandem with prices, with August figures clocking in at 3,652, down from a peak of 8,500 in April.

Rents, on the other hand, continued its upward trajectory, increasing by 1.1% MoM in July, marking the highest levels since August 2019.

2. HKMC profit dropped half 2024-10-08 12:33:37

The Hong Kong Mortgage Corporation Limited (HKMC) reported an unaudited profit after tax of $9m for the first half of 2024, down from $1,175m in 1H 2023.

The drop is primarily due to a decrease in property prices affecting the reverse mortgage business, in contrast to last year’s property price rebound.

When excluding the results of its subsidiary, HKMC Annuity Limited (HKMCA), and adjusting for property price impacts, the adjusted profit after tax for 1H 2024 would be $468m, with an annualised return on equity of 6.2% and a cost-to-income ratio of 22.4%. In 1H 2023, these figures were $365m, 5.2%, and 26.6%, respectively.

3. Hk economy is at its best 2024-10-12 15:33:33
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Speaking on a radio programme, Lam said many factors had helped the city's economy in recent months, including the start of the US Federal Reserve interest rate easing cycle.

But he noted that the SAR should not only rely on external factors, as he urged the authorities to further roll out favourable policies to stimulate the economy when the Chief Executive delivers his Policy Address next Wednesday.