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 The blistering pace of price gains in the Chinese and Hong Kong property markets has “peaked,” according to a report by JPMorgan Chase & Co. The analysts cut China and Hong Kong stocks to “underweight” from “neutral” on concerns over property prices and another round of tightening by monetary officials. 

“China, Hong Kong and Singapore property markets have peaked; the debate is the pace and magnitude of price declines,” the firm’s analysts wrote in a note to clients. 

“Property prices [in China] are falling. The official data hides the use of incentives such as free internal fittings, cash rebates, and tax rebates.” 

JPMorgan also believes the government’s monetary tightening program is not over, as inflation remains above the target range and is “eroding living standards.”

“The problem for the market is that investors are positioned for an end of the tightening cycle,” the analysts write. 

JPMorgan is advising clients to dump Chinese bank stocks, as the firm believes monetary officials will raise the bank reserve ratio requirement by another 50 basis points.


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