Hong Kong real estate stocks, why did they skyrocket today?

China's real estate policy combination has exceeded expectations and finally landed in the Hong Kong stock market!

On Monday, September 4th, Hong Kong's property stocks collectively surged, with many stocks experiencing double-digit gains. Among them, Sunac China soared 34%, Beike, Xinhu Zhongbao both rose 20%, Agile Property rose 18%, and Greentown China, Longfor Group, and Zhongjun Holdings all saw gains.

In addition, Country Garden rose 15%, with its stock price returning above HKD 1; China Evergrande rose 9%, with its stock price at HKD 0.3.

In terms of news, China's heavyweight real estate stimulus policies were announced last week, and the four first-tier cities of Beijing, Shanghai, Guangzhou, and Shenzhen have all implemented new policies, leading to a rapid market recovery.

According to media reports, the policy effects were immediate: except for Guangzhou, both new and second-hand property sales in first-tier cities have rebounded to varying degrees, with Beijing's property market being the most active. Shanghai's second-hand property listings have also shown a significant increase.

Looking back at the gradually introduced new real estate policies in China, the participation of first-tier cities seems to have had the greatest impact on both the real estate market itself and the capital market.

It started with the Politburo meeting at the end of July, which set the tone for "timely adjustment and optimization of real estate policies." However, because the policies were gradually implemented and not fully disclosed all at once, investors' high expectations did not match the policy intensity and speed of implementation, leading to a decline in market sentiment. The Hong Kong stock market experienced a correction for most of August until the end of the month when it began to improve.

However, it is worth noting that the rebound in late August was also uneven.

A simple chronological list is as follows:

On August 25th, the Ministry of Housing and Urban-Rural Development, the People's Bank of China, and the China Banking and Insurance Regulatory Commission jointly announced measures to promote the implementation of the policy of "recognizing houses without recognizing loans" for first-time homebuyers. The Wind Real Estate Index rose 0.6% on the same day;

On August 29th, a screenshot of the notice about the launch meeting for the adjustment of individual housing loan interest rates, which was circulated in the market, was confirmed by 21st Century Business Herald to be true. The meeting was to be held by one of China's six major state-owned banks, Bank of Communications. Property stocks rallied in the afternoon, with many stocks rising more than 10%, and the Wind Real Estate Index rose more than 4%;

On August 30th, Guangzhou officially announced the implementation of the policy of "recognizing houses without recognizing loans," and Shenzhen followed suit after the market closed. According to Securities Daily, including Agricultural Bank of China, China Construction Bank, China CITIC Bank, and China Merchants Bank, several Chinese banks have formulated plans to lower interest rates on existing housing loans, and there may be substantial progress this week. However, property stocks did not close high on the same day, with only a morning surge;

On Thursday, August 31st, property stocks fell during trading hours, but after the market closed, the People's Bank of China and the China Banking and Insurance Regulatory Commission issued two important policies: 1) lowering the down payment ratio for first-time and second-time homebuyers, and 2) reducing interest rates on existing first-time home loans;

On Friday, September 1st, the Hong Kong stock market was closed, while Beijing and Shanghai announced in the evening the implementation of the "Recognize Housing, Not Recognize Loans" policy.

As a result, Hong Kong's real estate stocks experienced a fierce surge after the new policy! As of Monday, September 4th, at noon, the Wind Real Estate Stock Index rose nearly 7%!

Why does the combination of the 831 policy and the "Recognize Housing, Not Recognize Loans" policy in Beijing and Shanghai have such a powerful impact?

The market has seen the determination of the Chinese government to support the real estate market, and expectations are once again optimistic and high!

China Everbright Securities pointed out that this combination of policies has a more obvious effect on reducing the cost of home purchases, which is conducive to unleashing the purchasing power of residents and is expected to boost their confidence in buying homes. It is anticipated that the real estate market will stabilize and rebound during the traditionally strong sales season of September and October.

A research report from CITIC Securities also stated that as policies on the demand side of the real estate market are implemented and various measures gradually come together, it is expected that the fundamentals of the real estate market will stabilize and rebound starting from September.

The lowering of the threshold for home purchases and the reduction of financial burdens are the reasons for the market's entry into the path of recovery. The reversal of expectations from a unilateral decline in housing prices is the reason for the sustained recovery of the market. The policies will unleash a series of long-suppressed genuine housing demands, mainly including the demand for upgrading homes by selling old ones and buying new ones, as well as demands for returning to hometowns for retirement and travel.

However, the policies do not encourage the demand for second homes in the same city, and speculation and hoarding of large quantities of housing are strictly prohibited. In summary, the optimized policies better reflect the spirit of "housing is for living, not for speculation," and the value of housing will further focus on its residential attributes.