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This Oct 18, 2024, photo shows a general view of the Central business district of Hong Kong. (SHAMIM ASHRAF \/ CHINA DAILY)<\/p>\nThis Oct 18, 2024, photo shows a general view of the Central business district of Hong Kong. (SHAMIM ASHRAF \/ CHINA DAILY)<\/p>\n
Hong Kong lenders may not fully align their prime rate cuts with the Federal Reserve<\/strong><\/a>\u2019s anticipated easing, but the United States (US)\u2019 central bank\u2019s likely move is expected to have a positive impact on the city\u2019s equity and property markets, according to analysts.<\/p>\n After holding its benchmark interest rate steady for nine months, the Fed is widely expected to announce a rate cut by at least 25 basis points on Wednesday local time to support the weakening US labor market.<\/p>\n Hong Kong is likely to follow the US movement and banks may lower their prime lending rates, possibly aiding some borrowers. However, the scope for downward adjustment in local prime rates is limited, given the already low interest rate environment, according to Roen Yeung Ming-yee, senior associate director at Centaline Property Agency’s research department.<\/p>\n READ MORE<\/strong>: HKMA keeps base rate unchanged, tracking US Fed move<\/strong><\/a><\/p>\n Meanwhile, the potential US rate cut could support home prices and stimulate transactions in Hong Kong\u2019s housing market, Yeung said. \u201cHome prices are expected to gradually edge higher after stabilizing, as the local market is widely anticipating a US rate-cutting cycle. Transaction volumes are also likely to pick up,\u201d she explained.<\/p>\n But the rental yields may have reached a peak, as the pace of rent increase is set to slow or even reverse following the summer high season, Yeung added.<\/p>\n Ning Bo, market strategist at China Merchants Securities International, believes the Fed\u2019s expected move will benefit Hong Kong\u2019s equity market by drawing international capital and increasing liquidity.<\/p>\n Ning said growth stocks may take the lead in a liquidity-friendly environment, while the technology sectors \u2014 particularly artificial intelligence<\/strong><\/a> (AI) and internet-related names \u2014 will continue to benefit from international fund inflows.<\/p>\n \u201cThe non-ferrous metal sector also has some tailwinds due to the Fed rate cut,\u201d the strategist said. \u201cAbundant liquidity boosts inflation expectations and reduces global economic recession risks, which may support the demand of non-ferrous metals.\u201d<\/p>\n Lower interest rates and a weakened US dollar following the rate cut are usually favorable for non-ferrous metal prices, which may further boost the sector, Ning added.<\/p>\n Echoing the sentiment, Alvin Ngan, an equity strategist at Zhongtai Financial International, said sectors such as biotechnology, real estate, robotics, AI, and non-ferrous metals are likely to see a boost.<\/p>\n