Listed Real Estate Asia, KT Capital Group

Jacob Cheng

Listed Real Estate Asia

KT Capital Group

Principal investments and advisory firm that focuses on connecting the CIS countries with East Asia.

Principal investments and advisory firm

Equity Bottom-Up

<ul>
<li>The Fed announced a 25bps rate cut, which is largely anticipated by the market.  The SEP median estimate indicates 2 more cuts in 2025</li>
<li>Regarding HK policy address, there are no meaningful positive surprise related to the property market.  It highlights the importance of Northern Metropolis development, and improving home ownership, and talent admission</li>
<li>Investors should see-through these and focus on big picture: macro developments, monetary policy, and sector fundamentals.  Pick company with attractive valuation and catalysts: NWD, Link REIT, CICT, COLI, VNET, GDS</li>
</ul>


The Fed announced a 25bps rate cut, which is largely anticipated by the market.  The SEP median estimate indicates 2 more cuts in 2025
Regarding HK policy address, there are no meaningful positive surprise related to the property market.  It highlights the importance of Northern Metropolis development, and improving home ownership, and talent admission
Investors should see-through these and focus on big picture: macro developments, monetary policy, and sector fundamentals.  Pick company with attractive valuation and catalysts: NWD, Link REIT, CICT, COLI, VNET, GDS


RE Stock Implications from Fed's Rate Cut and HK PA: Focus on Big Picture, Macro and Sector Drivers

Thematic (Sector/Industry)

<ul>
<li>According to latest, market is pricing in an 89% probability of 1 rate cut (25bps) and 11% probability of 2 rate cuts (50bps) in upcoming September FOMC meeting</li>
<li>We think the easing trade is still happening. Under this macro backdrop, Asia listed developers and REITs will benefit from linked interest rate movements</li>
<li>In particular, developers with high gearing will benefit the most.  Buy NWD, COLI, SHKP, Link REIT on the back of attractive valuation</li>
</ul>


According to latest, market is pricing in an 89% probability of 1 rate cut (25bps) and 11% probability of 2 rate cuts (50bps) in upcoming September FOMC meeting
We think the easing trade is still happening. Under this macro backdrop, Asia listed developers and REITs will benefit from linked interest rate movements
In particular, developers with high gearing will benefit the most.  Buy NWD, COLI, SHKP, Link REIT on the back of attractive valuation


Quick Note: The US Easing Trade: Buy Asia Leveraged Developers and REITs, NWD, COLI, SHKP, Link REIT

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<ul>
<li>We remain near-term bullish since our 4/22/25 Compass, and our intermediate-term outlook remains bullish as well (as of our 5/14/25 Compass), with Int’l Compass reports all echoing this sentiment.</li>
<li>We will maintain our bullish intermediate-term view as long as market dynamics remain healthy and the SPX and ACWI-US are above 6028-6059 (up from 5700-5785) and $119-$121.</li>
<li>$128, $125-$126, and $123-$123.50 are short-term supports to watch on ACWI-US; we will maintain our near-term bullish outlook as long as $123 support holds.</li>
</ul>


We remain near-term bullish since our 4/22/25 Compass, and our intermediate-term outlook remains bullish as well (as of our 5/14/25 Compass), with Int’l Compass reports all echoing this sentiment.
We will maintain our bullish intermediate-term view as long as market dynamics remain healthy and the SPX and ACWI-US are above 6028-6059 (up from 5700-5785) and $119-$121.
$128, $125-$126, and $123-$123.50 are short-term supports to watch on ACWI-US; we will maintain our near-term bullish outlook as long as $123 support holds.


Continue Adding Exposure to China; Short-Term Supports to for This ACWI-US Pullback

HK/China Equity Long-Short

Osbert Tang, CFA

<ul>
<li>Although lower interest rates will benefit the technology sector more, many investors will still opt for high-yield stocks to protect their income stream.</li>
<li>
<a href="https://www.smartkarma.com/entities/cnooc-ltd" target="_blank" data-smartkarma-citation="entities:175:1" rel="noopener">CNOOC Ltd (883 HK)</a>, <a href="https://www.smartkarma.com/entities/hang-lung-properties-ltd" target="_blank" data-smartkarma-citation="entities:49:1" rel="noopener">Hang Lung Prop (101 HK)</a>, <a href="https://www.smartkarma.com/entities/china-hongqiao-group-ltd" target="_blank" data-smartkarma-citation="entities:1909:1" rel="noopener">China Hongqiao (1378 HK)</a>, <a href="https://www.smartkarma.com/entities/hengan-international-group-co-ltd" target="_blank" data-smartkarma-citation="entities:29:1" rel="noopener">Hengan Intl Group (1044 HK)</a>, and <a href="https://www.smartkarma.com/entities/henderson-land-development-co" target="_blank" data-smartkarma-citation="entities:376:1" rel="noopener">Henderson Land (12 HK)</a> are the top 5 high-yield HSI constituents.</li>
<li>Mainland China banks no longer made the list, but <a href="https://www.smartkarma.com/entities/industrial-and-commercial-bank-of-china-limited" target="_blank" data-smartkarma-citation="entities:1119:1" rel="noopener">ICBC (H) (1398 HK)</a> and <a href="https://www.smartkarma.com/entities/bank-of-china-ltd-h" target="_blank" data-smartkarma-citation="entities:656:1" rel="noopener">Bank Of China Ltd (H) (3988 HK)</a> remain attractive at 5.7% and 5.6%, respectively.</li>
</ul>


Although lower interest rates will benefit the technology sector more, many investors will still opt for high-yield stocks to protect their income stream.

CNOOC Ltd (883 HK), Hang Lung Prop (101 HK), China Hongqiao (1378 HK), Hengan Intl Group (1044 HK), and Henderson Land (12 HK) are the top 5 high-yield HSI constituents.
Mainland China banks no longer made the list, but ICBC (H) (1398 HK) and Bank Of China Ltd (H) (3988 HK) remain attractive at 5.7% and 5.6%, respectively.


HK Strategy: Time to Revisit the Yield Story

<ul>
<li>China/HK real estate developers used to operate on “asset heavy” business model, where they build, own and operate the assets on balance sheet</li>
<li>We think a new “asset light” model is emerging: the new model is charactered by minimized asset ownership, reduced financial risk and improved ROE</li>
<li>In particular, we like CLI, Link REIT and China Resources Land.  We think they are on a transformational path and will provide further upside to shareholders</li>
</ul>


China/HK real estate developers used to operate on “asset heavy” business model, where they build, own and operate the assets on balance sheet
We think a new “asset light” model is emerging: the new model is charactered by minimized asset ownership, reduced financial risk and improved ROE
In particular, we like CLI, Link REIT and China Resources Land.  We think they are on a transformational path and will provide further upside to shareholders


Transforming from Asset Heavy to Asset Light: The New Business Model of Real Estate in Asia

Hong Kong

Link REIT is a real estate investment trust in Hong Kong. The Trust owns and operates shopping centers, parking space facilities and real estate retail space.

Price Gauge
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Link REIT (823 HK)

RE Stock Implications from Fed's Rate Cut and HK PA: Focus on Big Picture, Macro and Sector Drivers

Investors should see through Fed's 25bps rate cut and HK's Policy Address, and focus on macro development, geopolitical risks, as well as sector...

Jacob Cheng

Quick Note: The US Easing Trade: Buy Asia Leveraged Developers and REITs, NWD, COLI, SHKP, Link REIT

Powell has opened the door for rate cuts and market is expecting at least 25bps rate cut in September. We suggest to buy Asia high gearing name...

Jacob Cheng

Continue Adding Exposure to China; Short-Term Supports to for This ACWI-US Pullback

Continue Adding Exposure to China; $ACWI Short-Term Supports for this pullback: $128, $125-$126, and $123-$123.50. Pullbacks = buy opportunities,...

Vermilion Research

HK Strategy: Time to Revisit the Yield Story

High-yield stocks like CNOOC, Hang Lung Prop and Henderson can protect income stream despite lower interest rates favouring the tech sector. ICBC...

Osbert Tang, CFA

Transforming from Asset Heavy to Asset Light: The New Business Model of Real Estate in Asia

We think real estate companies in Asia are transforming from asset-heavy to asset-light, highlighted by minimized asset ownership, reduced...

Jacob Cheng

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

RE Stock Implications from Fed's Rate Cut and HK PA: Focus on Big Picture, Macro and Sector Drivers

Investors should see through Fed's 25bps rate cut and HK's Policy Address, and focus on macro development, geopolitical risks, as well as sector...

Jacob Cheng

Quick Note: The US Easing Trade: Buy Asia Leveraged Developers and REITs, NWD, COLI, SHKP, Link REIT

Powell has opened the door for rate cuts and market is expecting at least 25bps rate cut in September. We suggest to buy Asia high gearing name...

Jacob Cheng

Continue Adding Exposure to China; Short-Term Supports to for This ACWI-US Pullback

Continue Adding Exposure to China; $ACWI Short-Term Supports for this pullback: $128, $125-$126, and $123-$123.50. Pullbacks = buy opportunities,...

Vermilion Research

HK Strategy: Time to Revisit the Yield Story

​High-yield stocks like CNOOC, Hang Lung Prop and Henderson can protect income stream despite lower interest rates favouring the tech sector. ICBC...

Osbert Tang, CFA

Transforming from Asset Heavy to Asset Light: The New Business Model of Real Estate in Asia

We think real estate companies in Asia are transforming from asset-heavy to asset-light, highlighted by minimized asset ownership, reduced...

Jacob Cheng

High-yield stocks like CNOOC, Hang Lung Prop and Henderson can protect income stream despite lower interest rates favouring the tech sector. ICBC...