Property, banking gain as likely pause in Fed rises seen boosting home sales
Hong Kong shares surged to their highest level in almost three months yesterday as growing investor hopes that global interest rates may be near their peak spurred rallies in property and banking stocks.
The Hang Seng Index extended its gains for a fourth day, soaring 299.53 points, or 1.8 per cent, to close at 16,916.77, its highest close since May 11. So far this year, Hong Kong is the sixth best performing market in Asia-Pacific, with the Hang Seng Index up 13.72 per cent.
'Interest rates are certainly near the peak,' South China Securities vice-chairman Howard Gorges said. '[But] having had a good run, the market may need to consolidate a bit before it goes much further up [from] here.'
The latest bout of optimism over the likely course of interest rates was sparked by the US Federal Reserve's 'Beige Book' report on current economic conditions, which found evidence that the pace of growth is slowing.
The Federal Open Market Committee holds its next meeting on August 8 and investors are increasingly betting it may stand pat.