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2026-07-03 11:25:33 Hong Kong's retail sales value in May grew 7.9% YoY, at the upper end of Citi's previous forecast range of 5-8%, Citi published a research report saying. The growth was mainly stemmed from a 26% YoY growth in jewelry, watches and luxury gifts sales, as well as an 8% YoY rise in Golden Week visitor arrivals to Hong Kong and the weakening of the HKD against the RMB. The broker forecast that although weaker capital markets in June may temporarily dampen consumer sentiment, full-year retail sales in 2026 were still expected to recover to HKD400 billion. Citi noted that retail sales typically leads spot rents by 12-18 months, while spot rents lead rental reversion changes by another 12-18 months. Therefore, after retail sales value recorded growth for 13 consecutive months, retail spot rents were foreseen to begin recovering from 2H26, supporting rental reversions returning to neutral-to-positive territory in 2027. Within the local property sector, the broker's top picks were SWIREPROPERTIES (01972.HK), SHK PPT (00016.HK), CK ASSET (01113.HK) and LINK REIT (00823.HK). Among retail landlords, Citi was most bullish on SWIREPROPERTIES, as both its Hong Kong and mainland China retail rental reversions charted positive growth, while spot office rents at Pacific Place have stabilized. Its commitment to maintaining mid-single-digit annual DPS growth remains intact, with the current dividend yield reaching 6.2%. Meanwhile, the broker also favored LINK REIT (00823.HK) for shifting toward a model focused on asset disposals and share buybacks. In addition, merchant sales performance at Harbor City under WHARF REIC (01997.HK) outperformed the overall market, which was expected to support its rental reversions returning to neutral in 2027. HANG LUNG PPT (00101.HK)'s current dividend yield of as high as 7.5% has also started attracting investor attention. ~ AASTOCKS Financial News Website: www.aastocks.com | |