Morgan Stanley published a report on LINK REIT (00823.HK)  -0.350 (-0.824%)    Short selling $3.95M; Ratio 3.209%   , which was expected to primarily benefit from the stabilization of Hong Kong retail sales and its potential inclusion in the Shanghai-Hong Kong/Shenzhen-Hong Kong Stock Connects.

Hong Kong's retail sales in May grew 2.4% YoY, with consumer staples continuing to outperform luxury items. The broker noted that LINK REIT’s 3.0 strategy is brewing, which may entail new fee income sources and the potential issuance of a Singapore Real Estate Investment Trust (S-REIT).

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Morgan Stanley considered LINK REIT’s valuation appealing, forecasting a dividend yield of 6.2%, 180 bps above the U.S. 10-year Treasury yield. It reiterated an Overweight rating on LINK REIT, maintaining a target price of HKD48, and decided to include it as a top pick.

Morgan Stanley anticipated that LINK REIT might be included in the Shanghai-Hong Kong/Shenzhen-Hong Kong Stock Connects due to: 1) being the most liquid and largest company among Hong Kong REITs; 2) a dividend yield of 6.2%, higher than the average yield of approximately 5% for commercial REITs; 3) the 10-year Chinese government bond yield consistently below 2% (1.64% as of July 7), coupled with the expected rate cut by the U.S. Federal Reserve; 4) a strong balance sheet with lower leverage favorable for new investments, which are attractive to mainland investors and could be realized as early as the end of this year, serving as a potential positive catalyst.
(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2025-07-16 12:25.)