Shares of Hong Kong property developers are experiencing a broad sell-off. At the time of writing, HENDERSON LAND (00012) fell 3.2% to HK$24.82. SHK PPT (00016) dropped 2.99% to HK$110.20. SINO LAND (00083) declined 2.45% to HK$10.35. CK ASSET (01113) was down 1.83% to HK$43.90.

Catalyst for the Market Movement

The downturn follows a research report from BofA Securities, which attributed the recent adjustment in Hong Kong property stocks to renewed concerns over potential interest rate hikes in the United States. The report noted that while the market has already priced in one to two rate hikes, which likely would not cause a decline in local property prices, a more aggressive rate hike path would pose a risk.

Outlook on Property Prices and Sales

BofA Securities anticipates that the momentum for primary residential sales will slow in the second half of this year. It expects property prices to show only modest growth for the remainder of the year, compared to the 10% cumulative increase seen year-to-date. The firm has also slightly revised its forecast for Hong Kong property price growth in 2027, adjusting it from a previous estimate of 5% growth to a range of flat to 5% growth.

Additional Analyst Perspective

In a separate note, J.P. Morgan pointed out that Hong Kong's secondary residential property price index has rebounded by 10.4% year-to-date, reaching the lower end of its full-year 2026 forecast of 10% to 15% growth. This suggests that price growth in the second half of the year could slow to below 5%. The bank maintained its full-year forecast, expecting the upward trend in prices to continue, albeit at a slower pace. It identified the prolonged weakness of the Hang Seng Index as the most significant downside risk, given its historically strong correlation with Hong Kong property prices, typically with a lag of three to six months.

Impact on Stock Valuations

To account for the heightened uncertainty, J.P. Morgan has lowered its target prices for Hong Kong property stocks by an average of 10%.