Property stocks to come under short-term selling pressure

CIMB Equities Research expects property stocks to come under short-term selling pressure as share prices rallied after the 13th general election, giving investors an excuse to take profits.

It said on Tuesday any slowdown in property sales will likely be temporary, perhaps similar to the previous cases of two to three months as house buyers hold out for lower prices.

“But given the strong fundamentals of the residential sector with affordability near its best-ever level, transaction volume and property prices should remain firm. We remain bullish on the sector and would advise investors to buy property stocks on any selloff,” ot said.

CIMB Research said media reports stated Bank Negara Malaysia may impose curbs on the developer interest-bearing scheme (DIBS).

“If true, this would be negative for developers in the short term, though not entirely unexpected as speculation on such moves had already surfaced in May,” it said.

The research house said although such a policy would have a negative impact on speculative demand, it believed the impact on earnings would be muted, while creating a healthier property market led more by fundamentals.

“We remain Overweight on the property sector with Mah Sing as our top pick and robust sales and earnings growth as sector catalysts. Any weakness in property stocks is an opportunity to accumulate, in our view,” said CIMB Research. - By The Star

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