HSBC raises price targets for China real estate stocks by Investing.com

Investing.com — HSBC raised its price targets on several China property stocks in a note on Wednesday, reflecting growing optimism around the sector’s potential recovery driven by supportive government policies.

The increase in target prices, with an average increase of 36% in the sector, underlines HSBC’s confidence in ongoing stabilization efforts and a possible sooner-than-expected recovery in China’s housing market.

Analysts at HSBC pointed to several key factors contributing to this upward revision. A major factor is the Chinese government’s unprecedented commitment to stabilizing the property market, which has reshaped the outlook for developers and investors alike.

Initially, the market had anticipated a recovery to materialize around 2026, but recent political interventions have changed expectations, suggesting a turnaround could occur as early as 2025. This has fueled fears of missing out among investors, more chosen in the context of policy tailwinds strengthening sentiment and increasing risk appetite in the sector.

Another major factor for HSBC’s optimistic outlook is increased developer activity, particularly in landbanking, as well as steady project launches.

Analysts cited positive developments in key cities such as Guangzhou, Shenzhen and Chengdu, where land auctions posted premiums, alongside continued strong sales in Shanghai’s luxury property market.

These activities indicate that developers are moving quickly to capitalize on the political environment, especially ahead of important market checkpoints such as Golden Week.

HSBC’s upward revisions include a wide range of developers, including Agile, which was upgraded from a Reduce rating to Hold.

Meanwhile, stocks with high exposure to top cities such as Yuexiu (HK: ), Greentown (HK: ) and China Overseas Land & Investment (OTC: ) were all rated ‘buy’, reflecting HSBC’s belief that these companies will benefit the most from the political environment.

The revaluation also extends to companies such as CR Mixc and KE Holdings (NYSE: ) (HK: ), which are expected to post gains from increased consumer and market-leading activity.

While the outlook improved, HSBC analysts warned that risks remained. Chief among these is the potential failure to stabilize housing prices, which could delay the anticipated recovery.

However, increased price targets and positive sentiment highlight a broader market turnaround, indicating that the worst of the recession may be behind the sector.