Property sector update – An overdone hammering (CIMB)

Sector leaders SP Setia and Mah Sing have been heavily sold down since last week on the back of The Edge’s report on the possibility of a change in housing loan calculations from gross to net pay. Although we did expect the news to rattle investors, we are taken aback by the speed and severity of the selloff. The selldown is excessive as the jitters even spilled over yesterday to construction companies with property development exposure. The report is yet to be confirmed and even if the measure is implemented, we believe it could be mild as the intention is to curb speculation, not hammer overall sentiment. Investors should continue accumulating property stocks on weakness. We maintain our OVERWEIGHT sector rating and an Outperform on all developers. Mah Sing remains our top pick and SP Setia our core holding.