Morgan Stanley released a research report stating that Sun Hung Kai Properties (00016.HK) saw its share price drop 5% yesterday (6th), while the Hang Seng Index fell 1.6% during the same period, following media reports that mainland authorities have begun taxing income from offshore insurance policies. The bank remains optimistic about the Hong Kong property market and expects the impact of cross-border fund controls, which led to a decline in July transaction volumes, to be temporary.

Earlier this month, Morgan Stanley downgraded its rating on Sun Hung Kai Properties to "Market Perform," primarily due to signs that the year-on-year growth rate of the Centaline City Leading Index (CCL) has peaked, which could continue to pressure developers. The bank noted that Sun Hung Kai Properties' share price is highly correlated with the year-on-year change in the CCL, and while it expects the index to continue rising, the pace of growth is likely to slow. Morgan Stanley has set a target price of HK$121 for Sun Hung Kai Properties.

Among developers, the bank prefers Henderson Land (00012.HK). Among property landlords, it favors Swire Properties (01972.HK) and Link Real Estate Investment Trust (00823.HK).