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2026-09-18 10:39:37 The US Federal Reserve raised interest rates by 25 bps as expected, JPMorgan said in a report. HSBC had announced yesterday (17th) that it would keep Hong Kong's prime rate unchanged at 5%, meaning mortgage rates in Hong Kong have not yet been adjusted. As the market is digesting the possibility of further rate hikes by the Fed, Hong Kong's prime rates (and mortgage rates) may still rise if there are additional hikes later. Reviewing history, the broker said rate hikes alone do not necessarily lead to declines in stock prices or property prices throughout an entire cycle. For example, during 2004-06 and 2016-18, both stock prices and property prices were in upward cycles. Historical data showed that the property sector tended to trade within a range after expected rate hikes, with the average change over the following 30 days at 0%. Only after unexpected rate hikes did the sector underperform by 5% and 10% over the subsequent 30 and 60 days respectively. For homebuyers, the potential rise in mortgage rates is directionally negative, but this factor alone is unlikely to push property prices into a downcycle because of various mitigating factors such as fixed-rate mortgage plans and banks' cash rebates. The broker emphasized that inventory levels and the stock market are more important drivers of Hong Kong property prices. Although HIBOR remains below 3%, if rates rise to 3-4%, developers' earnings could still be diluted. Every 100 bps increase in floating rates would lead to a 3% decline in earnings, with NEW WORLD DEV (00017.HK) and HENDERSON LAND (00012.HK) being the most interest-rate-sensitive names under its coverage. In the short term, the broker expected Hong Kong developers' share prices to remain weak due to rate hikes and uncertainties related to ODI (Overseas Direct Investment) taxation, while preferring landlords such as SWIREPROPERTIES (01972.HK) and Hongkong Land. Among developers, it preferred CK ASSET (01113.HK), which maintains a net cash position. JPM's ratings and target prices for Hong Kong property developers and landlords are listed below: Stock|Rating|TP SHK PPT (00016.HK)|Overweight|HKD135 CK ASSET (01113.HK)|Overweight|HKD52 HENDERSON LAND (00012.HK)|Neutral|HKD28.5 SINO LAND (00083.HK)|Neutral|HKD10.6 NEW WORLD DEV (00017.HK)|Neutral|HKD6.8 SWIREPROPERTIES (01972.HK)|Overweight|HKD30 Hongkong Land|Overweight|USD10.7 LINK REIT (00823.HK)|Overweight|HKD43 WHARF REIC (01997.HK)|Overweight|HKD35.7 HANG LUNG PPT (00101.HK)|Overweight|HKD10 CKH HOLDINGS (00001.HK)|Overweight|HKD79 Jardine Matheson|Overweight|USD94 MTR CORPORATION (00066.HK)|Overweight|HKD39 ~ AASTOCKS Financial News Website: www.aastocks.com | |