Hong Kong’s biggest developers surged in the biggest stock market rally in more than a week, on growing speculation the city will roll back market-cooling measures during a policy address later this month to support the industry. Shares of Sun Hung Kai Properties, the biggest by market capitalisation, jumped as much as 6.5 per cent, before closing 0.7 per cent higher at HK$91.25 on Friday. Henderson Land Development rose 0.7 per cent to HK$21.90. The Hang Seng Properties sub-index rose 0.7 per cent, paring about half of its earlier advance. Prices rose in tandem with broadly bullish trading as the city’s benchmark Hang Seng Index climbed 1.2 per cent to snap a six-day losing run. The gauge has slumped by almost 29 per cent this year to the lowest level in 11 years, contributing to a US$1.6 trillion market-wide erosion in equity wealth. Friday’s rebound was preceded by a call earlier this week by the Real Estate Developers Association (Reda), the industry’s powerful lobby, for measures to help shore up prices and prevent so-called “negative equity” cases, or home values sliding below mortgages. Hong Kong’s Chief Executive John Lee Ka-chiu is due to deliver his Policy Address on October 19. Home prices in Hong Kong fell 2.3 per cent in August to their lowest level in 3.5 years, after taking successive blows from the social unrest in 2019, the impacts of Covid-19 pandemic curbs and a surge in interest rates this year at home and abroad. Goldman Sachs forecast home prices to fall by 15 per cent in 2022 and a further 15 per cent in 2023. Hong Kong developers lobby government to end cooling measures, protect homeowners from negative equity amid price slump “If the cooling measures remain amid the backdrop of the global economic downturn and political turmoil, we will see a sharper price correction and rising cases of owners in negative equity,” said Joseph Tsang, chairman of JLL Hong Kong, a property consultancy. “It is high time to consider removing the stamp duties.” Reda this week urged the city to remove punitive taxes, a holdover from previous administrations to douse speculative purchases and keep homes affordable. Lee could adopt measures including removing the 15 per cent stamp duty that non-resident buyers must pay on their purchases, Bloomberg reported on Thursday, citing people it did not identify. Scrapping that levy could support home prices, according to CGS-CIMB Securities. “The move would not be a surprise to us,” said Raymond Cheng, property analyst in Hong Kong at CGS-CIMB. “It is a way to attract more talent, especially from mainland China.” The action may be needed because of a “faster-than-expected rise in Hibor, and hence mortgage rates,” the brokerage said in a report, referring to the Hong Kong interbank offered rates. Higher borrowing costs will continue to erode affordability, [and] keep investors away “unless macro or policy becomes more supportive,” it added.