US rates to drop as much as 1.5 percentage points by next year, Citibank says
Trend will further weaken the US dollar, boost Hong Kong and China stocks and drive the price of gold even higher, analysts say
The lower interest rate, alongside government policies in Hong Kong and mainland China, would also stabilise property markets in the coming years, they said during an online briefing on Tuesday.
“The US economic data and unemployment figures are weak, which is set to lead the Federal Reserve to continue to cut the interest rate until next year,” said Calvin Ha, senior investment strategist for Asia-Pacific at Citi Global Wealth.
“The rate cuts will weaken the US dollar and lead investors to shift their investments into the Hong Kong and China stock markets in the coming year,” Ha said. “Gold will also be a safe haven for investors. Although the gold price has risen substantially this year, we still believe there is room for further growth.”
Gold, which has risen 44 per cent over the past year, could reach US$3,800 per ounce in the near term, the bank said. It was priced at a record of US$3,752 on Tuesday.
Citibank analysts said the Hang Seng Index would reach 26,800 at the end of this year, notching a 34 per cent gain for the year, and would continue rising to 27,500 by the middle of next year, said Ka Liu, head of advisory support at Citibank Hong Kong.