Whence Asian property stocks?

Are Asian property stocks expected to rise or fall? We examine the arguments.

Source: Today, 15/5/9, p.B7
Headline: Amid the signs of recovery ... Is now the time to invest in Asian property stocks?
Writer: By Frederick Lim

Quote1
The 20- to 30-percent rally in Asian property stocks in the past few months is not sustainable, say experts. ...

Comment1
An assertion is made that there has been a rally in Asian property stocks. This is a statement of fact. We take this as true. But experts say this rally is not sustainable. We want to know why.

Quote2
"In the physical property market, values are clearly falling in most, if not all, markets," said Mr Patrick Sumner, head of Property Securities at Henderson Global Investors. ...

Comment2
This is a comment on the values in the physical property market, rather than the values in property stocks. No explicit link between physical property value and property stock value is provided. We shall not speculate as to any such link.

Quote3
According to Henderson, the recent rally in property securities has been driven by positive sentiment in the equity markets. ...

Comment3
This explains the rally in property stocks, but does not address the question of sustainability.

Quote4
Yanlord, a high-end property developer based in China, said certain segments of the Chinese real estate market are showing signs of recovery. "We have seen our transaction volumes increase from about 200 million yuan in November and December last year to 1 billion yuan ($215 million) in March this year," said Ms Michelle Sze, head of Investor Relations at Yanlord. ...

Comment4
The intended argument here is inductive:

Reason: Transaction volumes have risen
Conclusion: Hence, transaction volumes will continue to rise [suppressed]

Again, this relates to the physical property market, not property stocks. Again, we will not speculate as to any link.

Quote5
Mr Justin Chiu, executive director of Hong Kong developer Cheung Kong Holdings, said ... "As real estate fluctuates in tandem with economic cycles, the current downtrend in Asia has opened up opportunities for favourable entry." ...

Comment5
Here's the argument:

Premiss1: If (economy down), then (real estate down)
Premiss2: (economy down)
Conclusion: Hence, (real estate down)

The argument form is the valid Modus Ponens. Premiss2 is a well-known fact. Is Premiss1 true? In any case, it is not clear whether physical property or property stocks are referred to.

Quote6
"Singapore aims to become a global city focusing on wealth management, high-end talent and lifestyle. Does this strategy have legs? I, for one, am very confident," said Mr Olivier Lim, group chief financial officer at CapitaLand.

Comment6
Again, it is not clear whether physical property or property stocks are referred to.

Summary & Conclusion
No clear argument has been offered to support the claim that the rally in Asian property stocks is not sustainable. Even assuming a positive correlation between physical property value and property stock value, Comments 2 and 5 are pessismistic, while Comments 4 and 6 are optimistic. The experts do not agree.

END