Citibank: Trump's ban on institutional home purchases triggered a decline, and these two US stocks were excessively sold off

The Zhitong Finance App learned that Citi Research believes that the sell-off of Invitation Homes (INVH.US) and American Homes 4 Rent (AMH.US) seemed excessive after US President Trump made remarks about banning institutional investors from buying homes on Wednesday. Following Trump's remarks, shares of single-family residential rental real estate investment trusts (REITs) such as INVH and AMH jumped lower, then closed down about 6% and 4%, respectively, on Wednesday. Affected by this news, private equity stocks also fell sharply.

Analyst Nick Joseph wrote in a report: “If INVH and AMH are forced to liquidate or decide to liquidate because they are unable to expand the size of their portfolios, we think this will actually be a positive catalyst for stock prices to rise, as both companies' shares are currently far below their net worth.”

He also added that the Trump administration is unlikely to stop AMH from moving forward with its development projects, nor is it likely to prevent INVH from signing development agreements with homebuilders because both activities can increase the supply of housing.

The report stated, “The concept of banning institutional home purchases has been discussed for many years. Although it seems more likely now, many investors have carefully considered what impact this ban will have once it becomes law.”