JP Morgan Chase & Co (NYSE: JPM) and UBS AG (NYSE: UBS) analysts have taken a more optimistic tone about Chinese real-estate stocks, citing that concerns over tightening credit have been overblown and that depressed share-prices make them value-buys.
UBS Shanghai-based analyst, Haiyun Zhang, “Concerns over policy tightening have impacted sector performance recently, while the sector’s valuation has largely been ignored.” In the note, UBS upgraded its view on the Chinese real-estate industry to “positive,” up from “neutral.”
Share prices of developerve has declined as fears that China’s government will initiate measures to reign in property prices. China Premier Wen Jiabao re-iterated a pledge to lower home purchases for speculative purchases after home prices climbed the most in the last 21 monst during the month of January.
Real estate stocks on Shanghai’s Composite index have declined by about 3.5% during the last six months, compared to a 14% gain in the benchmark gain. The industry currently trades at about 27 times earnings, much lower than half of last year’s high of trading 43 times earnings.
Separately, JP Morgan Chase analyst lead by Lucia Wong commented that the “shock of policy measures largely priced in while more positive news emerged.”
