JPMorgan issued a research report stating that although Hong Kong property stocks generally outperformed expectations, looking ahead to the second quarter, JPMorgan believes this sector will struggle to fully avoid macro uncertainties brought about by recent Middle Eastern conflicts. The primary concern is potential interest rate hikes; however, the bank’s base case scenario still assumes no rate changes until the first quarter of 2027.

Although the impact on Hong Kong’s residential market since the outbreak of conflict has been minimal, the bank is adopting a more defensive stance in stock selection. Consequently, it upgraded CK Asset Holdings (01113.HK) to “Overweight” due to its impending transition to a net cash position, raising its target price from HKD 48.5 to HKD 52.

At the same time, the bank downgraded Henderson Land Development (00012.HK), which is more sensitive to interest rates, and Wharf Real Estate Investment Company (01997.HK), whose earnings per share and dividend prospects are uncertain, to “Neutral.” The target price for the former was reduced from HKD 35 to HKD 30, and for the latter from HKD 29 to HKD 23.

The bank’s top picks in the sector include developers Sino Land Company (00083.HK), Sun Hung Kai Properties (00016.HK), and CK Asset Holdings; as well as Swire Properties (01972.HK) and Hongkong Land among real estate investment trusts. The bank also favors diversified conglomerate CK Hutchison Holdings (00001.HK), which benefits from rising oil prices. (ss/u)

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