HONG KONG investors should be braced for more shocks triggered by US interest rate rises, warned John Greenwood, chairman of GT Management Capital yesterday.
Back in the territory on a visit from his new base in California, Mr Greenwood, a veteran watcher of Hong Kong's economy, expects the US Federal Reserve Board to further increase the discount rate this year, which will provide some Asian stock markets, including Hong Kong, with further negative shocks.
Mr Greenwood, who is also GT's chief economist, said the investment firm believed the discount rate could climb to between four and five per cent from 3.5 per cent now.
The Fed's decision to raise the discount rate from three per cent to 3.25 per cent on February 4 sent stocks and bonds tumbling around the world. The rate was further raised to 3.5 per cent on March 22.
Since hitting record highs in January, the Hang Seng Index has lost 28 per cent while the Dow Jones industrial average is down nine per cent. US Treasury bonds, meanwhile, have moved up seven per cent.
Many analysts view the Fed's recent moves as an attempt to curb inflation and stock market speculation before it got out of control.