Solid Recovery but Too Early for Housewarming: AnalystsWhile a series of propitious events starting in mid-June led to a solid recovery in primary physical market in Hong Kong, but it is "too early for a housewarming," analysts said Saturday."The recent series of local events helped to firm up Hong Kong's primary residential market, but we believe it is really the softer economic numbers coming out of the U.S. that have fueled the rally in property stocks," said Otto Wong, a Salomon Smith Barney (SSB)'s senior analyst for Asia Pacific region. According to a recent quarterly report on global real estate released by SSB, during the second quarter of 2000, the Real Estate Investment Trusts outperformed all major indices in the United States, with a positive total return of 10.4 percent. However, the SSB analyst said the Real Estate Investment Trusts' strong showing had more to due with market sentiment than the healthy underlying fundamentals. In Hong Kong, the most recent lower-than-expected non-farm payroll number is apparently convincing an ever greater number of investors that signs of inflation are benign enough to obviate any further US rate hikes for this year, Wong said. "Developers have not yet been able to flex any pricing muscle, through we have seen very strong market responses to recent market launches in term of volume," he said. In order for price increases to be implemented and sustained, the analyst believed that three conditions must be in place, namely, a decrease in interest rates, a reappearance of speculative and investment interest, and an increase in wages. |
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