New | Hong Kong property stocks under pressure as the shine comes off real estate
Higher interbank lending rates are seen as a negative for property developers
Hong Kong property stocks fell sharply Wednesday, as investors abandoned the sector amid concerns over the interest rate outlook and darkening prospects for the local property market.
The Hang Seng property subindex fell 4.91 per cent from Tuesday’s closing level, outpacing a 3.8 per cent drop in the Hang Seng Index, which settled at 18,886.30.
The interbank lending rate, or Hibor, jumped to 0.5547 per cent on Wednesday, its highest closing level in 5 ½ years.
KGI Asia executive director Ben Kwong saidinvestors worried about further weakness in the Hong Kong dollar and the impact of higher local interest rates.
“We already feel the impact of the rising Hibor rate so with the further weakening, maybe close to the 7.85 level, we’ll see the upward pressure on interest rates will be even higher,” he said.
“So when the interest rates go up, which sector are you going to short?” Kwong said, implying that property developers would face a difficult period ahead.