Citi Sees Hong Kong Property Stocks to Continue Volatile in July

According to Citi, Hong Kong property developers' stock prices have been adjusting in recent weeks amid expectations for continued volatility in July. The bank attributes the adjustment to anticipated U.S. interest rate hikes, concerns over China's direct investment regulations, and a shift in valuation framework from net asset value per share (NAV) discounts to dividend yield models amid macro uncertainty.

Citi expects the market may take one to two months to fully digest these concerns. However, strong first-half earnings and a 11% increase in property prices year-to-date should provide support, as developers' profit margins recover and cash generation strengthens with declining debt levels.