Hong Kong property market is more affected by the mainland M2
The Hang Seng Index fell 240 points last Friday, closing at 28,366 points, with a turnover of 84.7 billion yuan. After the four-day rise of Hong Kong stocks, it was repelled by the news of the collapse of the Turkish lira last Friday. However, the city’s mainland banks lowered the Shanghai’s first mortgage rate, which was changed from 95% to 10%. The news stimulated the rise of Chinese property stocks. After the Agricultural Bank of China (1288) and ICBC (1398) Shanghai Branch denied. On this side, local banks raised their mortgage rates, local property stocks were slightly under pressure, and the bank stocks that have been strong have also retreated significantly on Friday. Some analysts believe that Hong Kong will officially enter the interest rate hike cycle, and the property market will continue to be under pressure. However, the historical interest rate increase of 1.5% or more will have a greater impact on the property market. Since the SARS in 2003, Hong Kong’s economy has been mainly affected by China. The stock of M2 is more correlated with the trend of the Central Plains Property Price Index (CCL).
American pastor Andrew Brunson was accused by the Turkish authorities of inciting a coup, triggering a sharp turn in relations between Turkey and the United States. The United States announced on August 1 that it would ban foreign companies from having any trade or capital with the foreign ministers and ministers of the country. In addition, and on August 3, overweight, announced the re-examination of the country’s import tax exemption measures, which will affect Turkey’s $1.7 billion worth of merchandise exports.
The Turkish issue is difficult to affect the Chinese and Hong Kong stock markets
Last Friday, the tariff on steel and aluminum levied on Turkey will be doubled, and it is suggested that there will be one after another. The Turkish lira fell in a row and fell below 6.75 against the dollar last Friday. This downtrend will put significant pressure on the financial system. Goldman Sachs pointed out that if the dollar fell to 7.1 against the dollar, the capital adequacy of the Turkish bank would be in jeopardy.
This year, emerging markets have been repeatedly pressured, and there are chain reactions to some fragile emerging markets, such as Brazil, Argentina, Indonesia, the Philippines, South Africa, etc. Last Friday, the South American stock market also fell sharply, but it has not seen any in Europe, America and Northeast Asia. Too much impact. However, due to the large amount of loans from Spain, France and Italy in Turkey, which reached US$83.3 billion, US$38.4 billion and US$17 billion respectively, the news dragged down European banking stocks by 5%, which was the main index in Europe. But in any case, the amount is always limited, and the European Central Bank is behind the support. The Turkish issue is unlikely to evolve into a large-scale financial crisis. The Chinese and Hong Kong stock markets are only noise, and the impact is mainly psychological.
HSBC, BOC Hong Kong (2388) and Standard Chartered (2888) announced last week that they would upgrade their new H to a cap rate of 0.2%, and H and P at the latest interest rates of 2.35 per cent and 2.25 per cent respectively. Before the interest rate hike, the interest rate was only 2.15%, and the interest rate of the previous one month has also risen to 2%. For small and medium-sized banks with weak deposit bases, the mortgage business has become very tasteless. Sales, perhaps still not worth the loss, so Citigroup took the lead in raising interest rates, disguised to suspend the development of mortgage business. Unexpectedly, all small and medium-sized banks have followed.
For the big bank, the deposit base is large, the capital cost is low, and there is no big interest rate hike. However, since the peers raise interest rates, they are happy to enjoy more generous spreads. This also seems to explain the author’s doubts at the beginning of last week. Local banks led by Hang Seng (0011) rarely show a divergence with local property stocks headed by Xindi (0016).
The logic of the market is that interest rate hikes are not good for the real estate market, and property prices are underperforming. However, the increase of 0.2%, the new monthly payment of 60 million yuan of 80% mortgage property will increase by 490 yuan, will the property price turn? The possibilities are limited. Historically, to adjust the price of property, the rate of interest rate increase should be at least 1.5%. In 2005-06, the best interest rate (P) was added by a full 3%, and the property market in Hong Kong refused to fall. First, the absolute value of interest rates is still low. Second, Hong Kong is more affected by the Chinese economy than the United States, and is more affected by the Chinese currency M2 stock (see chart); M2 stocks are almost in sync with CCL trends, China’s floods are flooding, flowing Sexuality will naturally flow to commodity assets that are in short supply and have potential for appreciation.
The market begins to estimate whether the US will stop raising interest rates.
In addition, although the US economy is very strong and the unemployment rate has been as low as 4% or less, it has already been full employment. The Fed has repeatedly reiterated that it will gradually increase interest rates, but inflation will not rise. The inflation index PCE has been rampant at 2%. . Inflation has moderated and continued to raise interest rates. The US 10-year inflation-preserving bond interest rate has risen to a new high after the financial tsunami, and real interest rates have also turned positive. The market began to estimate whether the Fed would stop raising interest rates in 2019. Assuming that the rate hike will be raised twice later this year, and inflation is still not blazing, the rate hike will be very limited next year. The rate hike cycle in Hong Kong will be repeated once or twice.