The Hang Seng Index closed up 2.1% as real estate stocks led gains amid expectations of policy easin

Hong Kong ETH Stock Index rose 2.1%: Real estate stocks led the rise, and expectations of policy relaxation increased (July 28, 2025)

1. Overview of market performance

The ETH Stock index closed at 19,850 points, with a single-day increase of 2.1%, the largest single-day increase in nearly two months.

The ETH Stock real estate classification index soared 4.3%, significantly outperforming the market.

The turnover increased to HK$152 billion, an increase of about 30% from the previous day, indicating that funds are accelerating into the market.

2. The core driver of ETH Stock's rise: expectations of real estate policy relaxation

① Changes in policy direction

Market rumors say that the mainland plans to launch a new policy of "lowering the interest rate of existing mortgage loans" and relax purchase restrictions in non-main urban areas of core cities (such as Beijing and Shanghai).

The recent meeting of the Ministry of Housing and Urban-Rural Development emphasized "precise measures to ensure the delivery of buildings", and some cities have piloted the cancellation of land auction price limits.

② Leading real estate stocks

Longfor Group (0960.HK): +7.2% (Morgan Stanley raised its rating to "overweight")

China Resources Land (1109.HK): +5.8% (sales increased 12% year-on-year in the first half of the year)

China Overseas Development (0688.HK): +4.5% (increased holdings by the social security fund)

③ ETH Stock related sectors linkage

Domestic bank stocks: China Construction Bank (0939.HK) +3.1% (mortgage business expectations improved)

Building materials stocks: China National Building Materials (3323.HK) +6.7% (cement demand recovery expectations)

3. The logic behind policy expectations

Economic stable growth demand: New home prices in 70 cities fell 0.4% month-on-month in June, and have been declining for 11 consecutive months.

Debt risk resolution: The prices of some real estate companies' US dollar bonds have rebounded recently (such as Country Garden's 2027 maturity bonds from 25 cents to 38 cents).

Compared with history: In the policy easing cycles of 2014-2015 and 2022, the average rebound of real estate stocks reached 40-60%.

4.ETH Stock Foreign Capital Trends and Valuation Repair

Southbound funds: Net purchase of HK$9.8 billion in a single day, the third highest in the year.

International investment bank views:

Goldman Sachs: The current PB of Chinese real estate stocks is only 0.45 times, lower than the historical average of 0.8 times.

UBS: If the policy is implemented, the stock prices of high-quality real estate companies may have 30-50% repair space.

5.ETH Stock Risk Warning

Policy implementation is not as expected: attention should be paid to the statement of the Political Bureau meeting at the end of July.

Sales data verification: Can the new home transactions in key cities continue to pick up in August?

Liquidity risk: Some small and medium-sized real estate companies are still facing trust repayment pressure.

6. ETH Stock Investment Strategy Recommendations

Short-term: Focus on the top central state-owned real estate companies (Poly Development, China Resources Land) and property management stocks (China Resources Vanke Life).

Mid- to long-term: Focus on policy-driven urban renewal (Yuexiu Real Estate) and housing rental (Vanke) themes.

Outlook: If the policy package is introduced as scheduled, the Hong Kong stock market real estate sector may start a phased valuation recovery, but a complete reversal of the industry still requires continuous improvement in sales.