GO
| HSI1 | 25,042.71 | +291.93 | 202.73B |
| HSCEI1 | 8,339.63 | +114.23 | 56.78B |
| Back Zoom + Zoom - Block Traded | |
|
Bank of Singapore: HKSAR Govt Support for RMB Internationalization Entails Structural Benefits to HK Banks; Rate Hikes Weigh on Property Stocks and Highly Leveraged Firms
2026-09-21 11:32:43 The HKSAR Government released its latest Policy Address and first Five-Year Plan last week. Louisa Fok, Senior Equity Strategist at Bank of Singapore under OCBC Group, said the key measures propounded in the Policy Address and Five-Year Plan are expected to help raise Hong Kong's long-term growth potential and competitiveness, including: (i) fortifying Hong Kong's position as an international financial, shipping, trade, aviation and innovation technology hub through the "four centers and one hub" strategy; (ii) deepening integration with the Guangdong-Hong Kong-Macao Greater Bay Area; and (iii) accelerating development of the Northern Metropolis. The bank said the policies focus on consolidating Hong Kong's status as a global offshore RMB hub and supporting RMB internationalization, which is anticipated to entail structural benefits to Hong Kong's banking sector. Banks with strong RMB business foundations and wealth management platforms are foreseen to be the key beneficiaries, while exchanges and brokers may also benefit from the related measures. On the other hand, interest rate-sensitive sectors such as real estate, as well as highly leveraged companies, are broadly expected to be negatively affected by expectations of rate hikes. Yield plays with narrow spreads between dividend yields and market interest rates may also face negative impacts. Regarding the real estate sector, the support measures provided in the new policy address are relatively limited. From the supply side, long-term targets remain unchanged, including: (i) accelerating development of the Northern Metropolis; and (ii) reiterating long-term housing supply targets. The bank believed property developers with larger business exposure or substantial farmland reserves in the Northern Metropolis are projected to benefit. Federal Reserve rate hikes often have a negative impact on the Hong Kong stock market. However, based on market performance during the past two rate hike cycles (2015-2018 and 2022-2023), economic growth prospects, policy measures and geopolitical factors are still expected to remain the key drivers affecting Hong Kong equities. As quality yield plays typically have lower beta and more resilient performance, the bank preferred them as hedging tools in investment portfolios, although yield plays with narrow spreads are more likely to face adverse impacts. Therefore, the bank tended to avoid yield plays with narrow spreads and lacking growth prospects or growth momentum. ~ AASTOCKS Financial News Website: www.aastocks.com | |