23/4/2018-5

Interest rate hike will hit the floor defense line

All along, the local low-interest tone has not changed and it constitutes a key line of defense for the Hong Kong property market. With the Fed raising interest rates and shrinking the pace of advancement, a number of local commercial banks in Hong Kong have started to move. At present, many leading Hong Kong commercial banks, including HSBC and BOCHK, have begun to temporarily suspend fixed-rate mortgage products. Market participants generally believe that this is where banks will pave the way for raising mortgage interest rates in the future.

Some analysts believe that the impact of the HKMA’s efforts to defend the Hong Kong dollar may be a “double-edged sword”: policy changes will force Hibor to go higher and eliminate additional liquidity; but at any time it may expose a large number of potential risks and threaten the high property market in Hong Kong.

For the Hong Kong dollar, if there is currently a signal of tightening liquidity, it will inevitably stifle industries including the property market. Industry insiders suggest that individual investors should be cautious when investing in the Hong Kong property market even if they follow professional investment institutions. First, Hong Kong housing prices are already high and investment costs are high. Second, the property market in Hong Kong is greatly affected by the international environment, and it is prone to fluctuations.

In addition to the property market warning, speculators should also pay attention to risk. Banking sources revealed that recent speculators have followed the example of Soros, the international crocodile, in the “bilateral operation" tactics in 1997. While Hong Kong dollar was carrying out the carry out of the carry trade, Hang Seng Index Futures also hedged against the sharp rise in Hong Kong dollar interest rates.

The Hong Kong dollar is thick at home

During the financial turmoil from 1997 to 1998, Soros took advantage of the short-selling of Hong Kong dollar and Hong Kong stock futures. In that year, international speculators headed by Soros slammed the Hong Kong dollar to a large extent. The Hong Kong Government’s high interest rates hit back, and the overnight interest rate hovered to nearly 300 per cent. Hong Kong stocks continued to tumble, forcing the government to use foreign exchange reserves to enter the market to buy Hong Kong stocks to repel speculators.

However, experts also analyzed that it is not easy to make large-scale short-selling of the Hong Kong dollar profit because the back home of the Hong Kong dollar is very thick. According to the data of the Hong Kong Monetary Authority, Hong Kong’s foreign exchange reserves currently exceed US$440 billion, much higher than the US$70 billion to US$90 billion in 1998; moreover, the Hong Kong dollar currency basis is approximately HK$1.69 trillion, which is also higher than the HK$190 billion in 1998. Several times.

Wang Liangxian, managing director of the financial department of DBS Bank (Hong Kong), said that the market has once again experienced “bilateral operations”, which is quite different from the Asian financial crisis. The weakness of the Hong Kong dollar was purely due to technical factors related to carry trade and was not affected by Other regional currency effects.