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2026-08-07 14:58:00 Hong Kong property stocks sank 3.3% on August 6, suppressed by concerns that Mainland Chinese residents holding Hong Kong properties could face offshore asset income tax, JPMorgan said in a report. Although there is currently no clear policy targeting the property market, the negative sentiment may continue to weigh on investor confidence. Together with rising expectations for interest rate hikes, this is likely to remain a short-term pressure on Hong Kong developers. Although real estate has not been explicitly mentioned so far, following crackdowns on stock brokers such as Futu and potentially tighter tax scrutiny on Hong Kong insurance products paying dividends, the possibility that real estate could become the next target cannot be completely ruled out. However, implementation may be difficult because real estate is currently not included under the Common Reporting Standard (CRS), making tracking challenging, although technically not impossible. Under the broker's base case, Mainland Chinese tax residents with offshore real estate income may indeed become subject to taxation, though this may mainly be implemented through tax requirements on offshore trusts. The taxation may primarily target ultra-high-net-worth individuals. If applied to all individuals, however, the impact could be broader. Among Hong Kong property sales, 32% were purchased by buyers with Mandarin surnames. In fact, the property market has shown more signs of slowing over the past few weeks, in line with the broker's view that momentum could weaken by June 2026. Although the broker did not expect a sharp correction in home prices and maintained its forecast for a 10-15% increase for the full year, it believed the property market may pause in the short term, with home prices expected to fluctuate within a range in 2H26. The broker preferred landlords over developers and believed investors will become more selective. Owing to lower earnings visibility, it downgraded SINO LAND (00083.HK) to Neutral. Its top picks were SWIREPROPERTIES (01972.HK), LINK REIT (00823.HK), WHARF REIC (01997.HK) and Hongkong Land. ~ AASTOCKS Financial News Website: www.aastocks.com | |