Chinese Real Estate Large Cap Index
Updated
This is an updated version of my previous "Evergrande + others" chart of Chinese real estate. Instead of including some smaller companies with longer price history, this focuses on large market cap companies. I weighted the prices against each other equally by their 42 day average, and then weighted that by the market cap:
1. Sun Hung Kai Properties (0016) HKD 268.5 billion -2.06% Sun Hung Kai Properties Limited develops and invests in properties for sale and rent in Hong Kong, Mainland China, and internationally. It...See Company Profile HKD
2. China Overseas Land & Investment (0688) HKD 252.28 billion 24.86% China Overseas Land & Investment Limited, an investment holding company, engages in the property development and investment, and treasury...See Company Profile HKD
3. China Resources Land (1109) HKD 245.3 billion 4.88% China Resources Land Limited, an investment holding company, invests, develops, manages, and sells properties in the Peoples Republic of China....See Company Profile HKD
4. China Vanke Co. (2202) HKD 235.54 billion -11.14% China Vanke Co., Ltd., a real-estate company, develops and sells properties in the Peoples Republic of China. The company operates through...See Company Profile HKD
5. CK Asset (1113) HKD 202.95 billion 13.53% CK Asset Holdings Limited operates as a property developer in Hong Kong, the Mainland, Singapore, the United Kingdom, continental Europe,...See Company Profile HKD
6. Longfor (0960) HKD 177.07 billion -20.57% Longfor Group Holdings Limited, an investment holding company, engages in property development, investment, and management businesses in China....See Company Profile HKD
7. Sino Land Co. (0083) HKD 91.07 billion 21.52% Sino Land Company Limited, an investment holding company, invests in, develops, manages, and trades in properties. It operates through six...See Company Profile HKD
8. Country Garden Co. (2007) HKD 80.22 billion -49.28% Country Garden Holdings Company Limited, an investment holding company, invests, develops, and constructs real estae properties primarily in...See Company Profile HKD
9. Greentown China (3900) HKD 40.51 billion 28.98% Greentown China Holdings Limited, an investment holding company, engages in the property development and related business in China. It operates...See Company Profile HKD
10. Yuexiu Property Co. (0123) HKD 29.82 billion 40 .17% Yuexiu Property Company Limited, together with its subsidiaries, develops, sells, and manages properties primarily in Mainland China and Hong...See Company Profile HKD
source: fknol.com/hk/stock/real-estate-development.php
(Unfortunately they no longer sort by market cap by default. To view it you'll have to sign up for fknol's terrible website.)
Here was the logic I used:
'a' = 42 day price average.
'b' = adjust b based on the market cap. if the market cap is larger, c gets smaller, market cap smaller, c larger.
Market....a=42D_AVG.....b=a/Market_Cap_Billions
---------------------------------------------------------------------------------------------
0016.......94.14................0.3506
0688.......21.49................0.08518
1109.......35.14................0.1433
2202.......18.51................0.07858
1113.......51.73................0.2549
0960.......37.36................0.211
0083.......0.3542..............0.003889
2007.......5.662................0.07058
3900.......13.34................0.3293
0123.......0.09548............0.003202
(I had to fill in the table with dots so it would show correctly.)
Now, for each row, take each market and divide by 'b':
'market1'/b1 + 'market2'/b2 + ... :
'0016'/0.3506+'0688'/0.08518+'1109'/0.1433+'2202'/0.07858+'1113'/0.2549+'0960'/0.211+'0083'/0.003889+'2007'/0.07058+'3900'/0.3293+'0123'/0.003202
You can also exclude the second column, skip computing 'b', and instead divide the price by 'a' and you would have a 42 day average price weighted index. Dividing a price by an average would normalize it near 1, weighting each price equally.
Does it make sense? Thanks for taking a look!
Misc. Analysis:
Total valuation, going by the info, is roughly 1623.26 billion HKD , which is ~200 billion USD. This is not an unusually large amount, but the importance of these companies is far beyond their numerical market cap. Chinese citizens and companies purchase properties around the world, so I think this price action goes hand in hand with global real estate, possibly with this index as a leading indicator. A large global surplus of buyers in the last few decades has pushed real estate prices everywhere to unreasonable levels and now there is a deficit of buyers. Any serious bailout will distort prices and at some point it's possible that the price action becomes useless. The CCP owns a piece of every company already so I think this would be the more probable route.
Good luck and don't forget to hedge your bets!
1. Sun Hung Kai Properties (0016) HKD 268.5 billion -2.06% Sun Hung Kai Properties Limited develops and invests in properties for sale and rent in Hong Kong, Mainland China, and internationally. It...See Company Profile HKD
2. China Overseas Land & Investment (0688) HKD 252.28 billion 24.86% China Overseas Land & Investment Limited, an investment holding company, engages in the property development and investment, and treasury...See Company Profile HKD
3. China Resources Land (1109) HKD 245.3 billion 4.88% China Resources Land Limited, an investment holding company, invests, develops, manages, and sells properties in the Peoples Republic of China....See Company Profile HKD
4. China Vanke Co. (2202) HKD 235.54 billion -11.14% China Vanke Co., Ltd., a real-estate company, develops and sells properties in the Peoples Republic of China. The company operates through...See Company Profile HKD
5. CK Asset (1113) HKD 202.95 billion 13.53% CK Asset Holdings Limited operates as a property developer in Hong Kong, the Mainland, Singapore, the United Kingdom, continental Europe,...See Company Profile HKD
6. Longfor (0960) HKD 177.07 billion -20.57% Longfor Group Holdings Limited, an investment holding company, engages in property development, investment, and management businesses in China....See Company Profile HKD
7. Sino Land Co. (0083) HKD 91.07 billion 21.52% Sino Land Company Limited, an investment holding company, invests in, develops, manages, and trades in properties. It operates through six...See Company Profile HKD
8. Country Garden Co. (2007) HKD 80.22 billion -49.28% Country Garden Holdings Company Limited, an investment holding company, invests, develops, and constructs real estae properties primarily in...See Company Profile HKD
9. Greentown China (3900) HKD 40.51 billion 28.98% Greentown China Holdings Limited, an investment holding company, engages in the property development and related business in China. It operates...See Company Profile HKD
10. Yuexiu Property Co. (0123) HKD 29.82 billion 40 .17% Yuexiu Property Company Limited, together with its subsidiaries, develops, sells, and manages properties primarily in Mainland China and Hong...See Company Profile HKD
source: fknol.com/hk/stock/real-estate-development.php
(Unfortunately they no longer sort by market cap by default. To view it you'll have to sign up for fknol's terrible website.)
Here was the logic I used:
'a' = 42 day price average.
'b' = adjust b based on the market cap. if the market cap is larger, c gets smaller, market cap smaller, c larger.
Market....a=42D_AVG.....b=a/Market_Cap_Billions
---------------------------------------------------------------------------------------------
0016.......94.14................0.3506
0688.......21.49................0.08518
1109.......35.14................0.1433
2202.......18.51................0.07858
1113.......51.73................0.2549
0960.......37.36................0.211
0083.......0.3542..............0.003889
2007.......5.662................0.07058
3900.......13.34................0.3293
0123.......0.09548............0.003202
(I had to fill in the table with dots so it would show correctly.)
Now, for each row, take each market and divide by 'b':
'market1'/b1 + 'market2'/b2 + ... :
'0016'/0.3506+'0688'/0.08518+'1109'/0.1433+'2202'/0.07858+'1113'/0.2549+'0960'/0.211+'0083'/0.003889+'2007'/0.07058+'3900'/0.3293+'0123'/0.003202
You can also exclude the second column, skip computing 'b', and instead divide the price by 'a' and you would have a 42 day average price weighted index. Dividing a price by an average would normalize it near 1, weighting each price equally.
Does it make sense? Thanks for taking a look!
Misc. Analysis:
Total valuation, going by the info, is roughly 1623.26 billion HKD , which is ~200 billion USD. This is not an unusually large amount, but the importance of these companies is far beyond their numerical market cap. Chinese citizens and companies purchase properties around the world, so I think this price action goes hand in hand with global real estate, possibly with this index as a leading indicator. A large global surplus of buyers in the last few decades has pushed real estate prices everywhere to unreasonable levels and now there is a deficit of buyers. Any serious bailout will distort prices and at some point it's possible that the price action becomes useless. The CCP owns a piece of every company already so I think this would be the more probable route.
Good luck and don't forget to hedge your bets!
Note
Typo correction:'b' = adjust a based on the market cap. if the market cap is larger, b gets smaller, market cap smaller, b larger.
b = a / market_cap_billions
Note
I wanted to take a minute to correct a bug in the chart.Many times, you can use single quotes and 4 digits to refer to HKEX symbols. But in the case of:
'0123'
'0083'
If you put leading zeroes, they refer to Malaysian stock symbols. I hadn't realized this until after posting. They should be corrected as:
'0123' -> '123' or HKEX:123
'0083' -> '83' or HKEX:83
Corrected calculation table:
Market....a=42D_AVG.....b=a/Market_Cap_Billions
---------------------------------------------------------------------------------------------
..16......94.14.........0.3506
.688......21.49.........0.08518
1109......35.14.........0.1433
2202......18.51.........0.07858
1113......51.73.........0.2549
.960......37.36.........0.211
..83......11.58.........0.1272
2007......5.662.........0.07058
3900......13.34.........0.3293
.123......9.529.........0.3196
Final Result:
'16'/0.3506+'688'/0.08518+'1109'/0.1433+'2202'/0.07858+'1113'/0.2549+'960'/0.211+'83'/0.1272+'2007'/0.07058+'3900'/0.3293+'123'/0.3196
The other symbols with leading zeroes are not ambiguous since there aren't any MYA symbols with those digits, but I removed the leading zeroes anyways, incase there are some conflicting symbols in the future.
I can't post a screenshot of the new chart, it seems to be a bug.
Note
Since I couldn't take a screenshot I made a new idea so you can see the fixed version. It's similar but noticeably different:
Cheers and enjoy.
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