HK Stock Market Move | Hong Kong property stocks continue to rise, Morgan Stanley pointed out that the rate cut by the US Federal Reserve is good news for most Hong Kong property developers, and it is expected that Hong Kong property prices will rebound next year.

Hong Kong property stocks continue to rise. As of the time of writing, NEW WORLD DEV (00017) rose by 2.77% to HK$7.42; LINK REIT (00823) rose by 1.67% to HK$39.5; SHK PPT (00016) rose by 1.18% to HK$81.55; WHARF REIC (01997) rose by 1.08% to HK$23.3. On the news front, on September 19, the Hong Kong Monetary Authority announced a 50 basis point cut in the benchmark interest rate to 5.25%, down from the previous 5.75%. Overnight, the Federal Reserve announced a 50 basis point rate cut. Under the linked exchange rate system implemented in Hong Kong, the HKMA responded to the U.S. rate cut by lowering the benchmark interest rate to 5.25%. Morgan Stanley released a research report pointing out that Hong Kong has unique advantages benefiting from the decline in U.S. interest rates and the accelerated economic growth in mainland China. The Fed's rate cut is expected to boost valuations to historically low levels and provide sustained and high dividends for Hong Kong property stocks. The bank predicts a 6% rebound in Hong Kong property prices next year after a 8% decline this year. Even though residential prices are expected to drop by 30% in 2021, the affordability ratio of Hong Kong homes currently remains at a historically high level of 50%. However, assuming mortgage rates fall to 3.2% next year, the ratio is expected to improve to 45%, and rental returns after deducting supply will also turn positive.