It is difficult to reverse the property price with the increase in P material
The exchange of weak funds in Hong Kong, and the decline in the balance of the banking system, Hong Kong’s expectation of a warming cycle following the US’s interest rate hike cycle, CICC’s report stated that Hong Kong’s economy is expected to achieve steady growth this year and the prime rate (P) will enter the interest rate hike cycle. It is expected that the P-rate will be raised by 75 to 100 basis points.
Up to 1 % increase in up cycle
CICC also believes that the increase in the prime rate may have a certain degree of repressive effect on property price increases in Hong Kong, but it may not necessarily reverse the upward trend in property prices.
CICC stated that the interest rate hike will have a greater impact on local shares in Hong Kong. As far as Chinese stocks are mainly affected by China’s policies, even if there is a major market or short-term disruption, the general direction will not change, because the market is mainly affected by the valuation and is expected to Steady earnings support fundamentals.
Motorsports have no choice but to rush
Morgan Stanley believes that the interest rate increase cycle is different from the previous 2004 to 2006. After the sixth US interest rate hike, local banks raised the prime rate, but now Hong Kong banks hold large amounts of cash. Due to the high percentage of savings deposits, there is no need to rush to raise the best lending rate; most mortgage loans will be capped at the best lending rate (P 5%) by 2.85 percent, which is the effective interest rate of 2.15 percent. This is the short-term property market and stock market in Hong Kong. Little risk.
Damao also said that in the coming months it will depend on changes in the deposits of Hong Kong Bank to see if there is a possibility of raising the prime rate. At present, the share price of real estate development stocks has already represented a discount of approximately 40% to the net asset value per share. It is estimated that there will not be much room for downside in the short term.