US Federal Reserve rate cut could boost Hong Kong-listed bank shares, weigh on weaker property developers, experts say
- Local banks not likely to cut, making the top ones’ shares more attractive, experts say
- Hang Seng has been trading range-bound for more than a month, but may need bigger-than-expected cut to really rally
Investors have been waiting for this week.
Finally, after weeks of hints by officials and endless market speculation, investors will learn whether the US Federal Reserve will cut its benchmark rate by a quarter of a percentage point, as expected.
If it does that, Hong Kong-listed bank stocks could get a temporary lift, while weaker property stocks, especially those ones whose focus isn’t residential, could be weighed down, experts say.
Those sectors with big debt, like airlines, could see their shares rise. Gold-linked stocks could go up, as investors see the yellow metal as a more attractive asset in a lower-rate environment.
Meanwhile, Hong Kong’s Hang Seng Index could get a sugar rush – it’d be the first rate cut in the US since 2008 – especially if the Fed surprises with a bigger cut. That could break the benchmark’s tight range-bound trading for more than a month on thin turnover, partly due to investors waiting on the sidelines for the Fed to act.
Such a bigger-than-expected surprise rate cut could push the Hang Seng benchmark up to 29,000, where it has not been since May, when trade talks broke down and sent benchmarks around the globe tumbling, said Alvin Cheung, associate director at Prudential Brokerage.