Citibank sounds the bullish bugle: Time to bottom fish in Chinese real estate stocks!

Citigroup's strategist calls on investors to build positions in Chinese real estate stocks, as policy support and better management practices are expected to improve the profitability of the industry. Citigroup analysts Griffin Chan and Cindy Li stated in their report on Wednesday, "We expect the next two years to be a good time to position in the Chinese real estate sector, with the potential for continued improvement in stock return on equity as asset turnover and pricing improve." Before Citigroup made the above call, the bank had improved its sentiment towards the real estate sector in February, citing policy expectations and signs of stabilization in sales. Analysts expect a "positive support" from the political bureau meeting scheduled for the end of April. The latest data shows that the decline in housing prices in China narrowed again in March, before the escalation of trade tensions. Citigroup stated that although April is a slow season for new home sales, the outlook for June is optimistic due to previous proactive housing inventory replenishment. Citigroup analysts also noted that recent changes in senior management at companies such as GREENTOWN CHINA (03900) reflect the company's desire to "strengthen control by optimizing management efficiency and structure, thereby increasing shareholder value." HSBC HOLDINGS analysts also have become more optimistic about the industry, believing that the return on equity of major developers will rise, leading to profit growth. HSBC bank analysts including Michelle Kwok stated, "Low interest rates, tight supply, and credit normalization interact to create favorable conditions for the structural recovery of the real estate market."