Wharf Real Estate Under Pressure

Wharf Real Estate (1997.HK): Under Pressure Below HK$31.90

The Hong Kong local property stock is one of the weakest sectors in the Hang Seng Index as Hong Kong is suffering the third wave of coronavirus. Wharf Real Estate (1997.HK) was trading around the 52-week low, but the Hang Seng Index rebound around 15% from March low.

Hong Kong's retail sales dropped 24.8% on year in June (vs -24.0% expected, -32.9% in May), according to the government. The gloomy retail sales outlook could affect the leasing income and the valuation of the property for the company.

Recently, Wharf Real Estate, a Hong Kong based REIT, posted 1H net income down 26% on year to 3.84 billion Hong Kong dollars. The company declared an interim dividend of 0.78 Hong Kong dollars per share, down from 1.10 Hong Kong dollars in the prior-year period.

From a technical point of view, the stock retreated from HK$39.05 and returned the level around the 52-week low.

Besides, the death cross between 20-day and 50-day moving averages has been identified, suggesting a bearish signal.

The RSI is below its oversold level at 30, but has not displayed any reversal signal.

Bearish readers could place the nearest resistance level at HK$31.90 (38.2% retracement), while the support levels would be located at HK$27.90 and HK$22.80 (138.2% expansion).

Source: GAIN Capital, TradingView.

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