JPMorgan released a research report stating it maintains an "Overweight" rating on CK ASSET (01113). Although the impact on Hong Kong's residential market has been minimal since the outbreak of war, the bank is adopting a more defensive stance in stock selection, partly due to the company's imminent transition to a net cash position. The target price has been raised from HK$48.5 to HK$52.
While the earnings of Hong Kong property stocks have generally exceeded expectations, looking ahead to the second quarter, JPMorgan believes the sector will still struggle to fully avoid the macroeconomic uncertainties stemming from recent Middle East conflicts. A primary concern is the potential for interest rate hikes; however, the bank's base case scenario still assumes that interest rates will remain unchanged until the first quarter of 2027.
Concurrently, the bank has downgraded its rating on interest rate-sensitive Henderson Land (00012) and Wharf REIC (01997), whose earnings per share and dividends are considered uncertain, to "Neutral." The target price for the former was reduced from HK$35 to HK$30, and for the latter from HK$29 to HK$23.
The bank's top picks within the sector include developers such as Sino Land (00083), Sun Hung Kai Properties (00016), and CK ASSET. Among REITs, the bank favors Swire Properties (01972) and Hongkong Land.
The bank is also positive on the conglomerate CK Hutchison Holdings (00001), as it stands to benefit from rising oil prices.
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