Why Hong Kong's property firms are leaning on weekend sales volume

It's now the key metric for developers.

In Barclays' recent meetings with Hong Kong-based investors, the most popular question was whether the strong primary sales volume and take-up rate can be sustained until the end of the year.

According to a research note from Barclays, it appears that weekend sales volume is now seen as the key metric for the Hong Kong developers’ performance.

The report noted that this is very similar to how contract sales data tends to drive the Chinese property companies’ performance.

Here's more from Barclays:

Over the past two quarters, the prospect of low rates and the fine-tuning of the Double Stamp Duty have benefitted not only the physical market but also developers’ share prices.

But with the recent rally having closed much of the physical-stock price gap, we believe there is now more risk to the downside especially if housing sales volume were to pull back, whether due to interest rates or other factors.

At the individual company level, we also find that the past two quarters’ rally has returned many of the property stocks’ discount to NAV close to their historical averages.

With the expectation and valuation gaps now largely closed, we find the Hong Kong property stocks’ risk-reward profile unfavourable.

We continue to recommend investors reduce their weighting on Hong Kong property stocks and await a better entry point.