Sale of direct stake in Swire Properties may bring relief for investors

John Swire & Sons' decision to offload its remaining direct stake in one of Hong Kong's biggest commercial landlords could spell relief for investors and brighten the property firm's short-term outlook, analysts say.

The share price of Hong Kong-listed Swire Properties closed nearly 3 per cent lower at HK$23.25 yesterday after John Swire & Sons, Swire Properties' founding shareholder, said it would to sell 3.71 per cent of Swire Properties at HK$22.51 a share, according to a stock exchange filing yesterday.

Despite the price fall, some investors believe the Swire stock is still too high relative to its peers.

The stock is trading at a discount of about 20 per cent to its net asset value, compared with 25 per cent for Wharf and 30 per cent for Hysan Development, two of Swire's major competitors.

But, some analysts say that at least for the short term, the sale of its founding shareholder's direct stake could have a positive effect on the company's stock price because the sale would eliminate one of the stock's biggest near-term uncertainties and downside risks.