Core Viewpoint - The real estate sector in China is experiencing a downturn, with major companies like Sunac China and R&F Properties seeing significant stock declines, while analysts express cautious optimism for recovery in core cities [1] Industry Summary - The current real estate cycle is in a "deep water zone," indicating a prolonged period of low performance, particularly affecting companies in the sector [1] - Analysts from Huatai Securities are optimistic about the recovery pace in core cities, especially first-tier cities, as the risks in the real estate chain may have been sufficiently digested [1] - Shenwan Hongyuan predicts continued pressure on real estate companies' performance in Q3, primarily due to declining sales since 2021 leading to lower settlements and profit margins [1] Company Summary - Sunac China (01918) shares fell by 3.85% to HKD 1.5, while R&F Properties (03301) dropped 3.31% to HKD 0.175, indicating a broader trend of declining stock prices among major real estate firms [1] - New City Development (01030) and Greentown China (03900) also experienced declines of 2.19% and 2.05%, respectively, reflecting the overall negative sentiment in the market [1] - Analysts expect a weak recovery in the sector's performance between 2025 and 2026, with increasing differentiation in performance among companies as profit margins stabilize and impairments are cleared [1]

Group 1 - The core viewpoint of the article indicates that the real estate sector in China is experiencing a downturn, with significant declines in stock prices for major property companies [1] - Major property stocks such as Sunac China, Ronshine China, New City Development, and Greentown China have seen declines of 3.85%, 3.31%, 2.19%, and 2.05% respectively [1] - Huatai Securities suggests that the current real estate cycle is in a "deep water zone," but there is optimism for a recovery in core cities, particularly first-tier cities [1] Group 2 - Shenwan Hongyuan predicts that the performance of property companies will continue to be under pressure in Q3, primarily due to a decline in sales since 2021 leading to lower settlements [1] - The article notes that previous price cuts and promotions have negatively impacted profit margins, but there is an expectation for a weak recovery in the sector's performance from 2025 to 2026 [1] - The report highlights that the performance divergence among companies is expected to intensify as the industry stabilizes and profit margins reach a bottom [1]

Market Overview - The market experienced a pullback after a brief rally, with the three major indices briefly turning negative during the session. The total trading volume in the Shanghai and Shenzhen markets was 1.93 trillion, a decrease of 141.7 billion from the previous trading day, falling below 2 trillion again since September 10. The Shanghai Composite Index rose by 0.1%, while the Shenzhen Component Index fell by 0.25%, and the ChiNext Index increased by 0.38% [1]. Solar Industry Insights - CITIC Securities highlighted that the core contradiction in the solar industry is currently "anti-involution," which is driving capacity elimination. The industry is still in a state of supply-demand imbalance, with significant progress made in addressing below-cost sales, leading to gradual price increases for silicon materials, wafers, and cells. However, module prices have limited short-term increases, and future pricing trends need close attention. The tightening of energy consumption standards for polysilicon is expected to be a key method for capacity elimination. The focus should be on capacity integration and industry-wide production control efforts, with a positive outlook on leading material companies and new technology directions such as BC, TOPCon3.0, and slurry [2]. Real Estate Market Analysis - Huatai Securities noted that the real estate cycle is currently in a "deep water zone," with a more favorable outlook for core cities represented by first-tier cities. Since mid-2021, the Chinese real estate market has undergone significant adjustments, with a rapid clearing of supply. The year-on-year decline in transaction volume for commercial housing has gradually narrowed since mid-2025, indicating that the real estate cycle has entered a bottoming phase. Although housing prices are still in a bottoming process, the decline has narrowed since September, and with ongoing destocking efforts, a comprehensive recovery in the real estate market is expected to approach in the future [3]. Consumption Trends at Airports - CICC indicated that with the continuous optimization of inbound policies in recent years, "China shopping" is gradually emerging, providing new growth momentum for the domestic consumption market. Airport consumption may benefit slightly from "China shopping," particularly favoring large international airport hubs. However, some bottlenecks still need to be addressed. It is anticipated that both taxable and duty-free sales at airports will benefit from the growth trend in inbound consumption, although the current impact on performance is limited. In taxable commercial areas, airport businesses do not lack popular foreign goods, but shopping time, store layout, and tax refund qualifications may still pose certain restrictions. In the duty-free sector, while Chinese airport duty-free shops are dominated by cosmetics, the price advantage does not effectively drive foreign consumer spending, possibly related to their consumption habits [4].

Core Viewpoint - The current real estate cycle in China is entering a "deep water zone," with a more optimistic outlook for the recovery pace in core cities represented by first-tier cities [1] Group 1: Market Adjustment - Since mid-2021, the Chinese real estate market has undergone a significant adjustment, completing a certain volume of correction [1] - The supply side has experienced a rapid clearing process, indicating that the real estate cycle has entered a bottoming phase [1] Group 2: Sales and Price Trends - From mid-2025, the year-on-year growth rate of commodity housing transaction volume has gradually narrowed, with monthly annualized sales area remaining at a low level [1] - The sales area growth rate and land market have shown bottoming characteristics since Q2, suggesting that the transaction volume in the current adjustment phase may have already reached its "bottom" [1] - Although housing prices are still in the process of bottoming out, the decline in prices has narrowed since September, indicating a potential for gradual recovery in the real estate market [1] Group 3: Future Outlook - The comprehensive recovery of the real estate market is not yet here, but there is a relative optimism for the recovery pace in core cities represented by first-tier cities [1]