Are you a true Hong Kong believer? Do you see interest rates staying low and property prices going up? If so, do developer stocks look a screaming buy? Having under-performed all year, most continue to idle. The reason, of course, is Government plans to increase flat supply on a large scale.
Yet, investors worry was less about new supply than threats to a regulatory environment that lets the big firms earn profit margins unimaginable elsewhere. With a clearer picture of Government intentions beginning to emerge, radical initiatives do not appear to be on the agenda. Chief Executive Tung Chee-hwa, it seems, is not about to desert his old developer pals.
The business model that lets firms time the payment of land conversion premiums to the Government is not under threat, reckons the formerly bearish Nava Securities. Essentially the taxation of land remains unchanged, to the developers' huge advantage.
Now the Government has committed itself to building 40,000 new flats per year, which must come through re-development and lease conversions. Where are they going to come from? Clearly the big three developers - Henderson Land, Cheung Kong and Sun Hung Kai Properties - will build most of them. With the threat of radical reform seemingly passed, what kind of price will they extract for co-operation? Lower premiums for lease conversion and higher plot ratios, reckons Nava Securities. Sounds good for business.