UBS: Unexpected reduction of mortgage rates in Hong Kong is a "Mid-Autumn Festival gift", optimistic about developers like Henderson Land (00012) benefiting.

UBS released a research report stating that the United States has officially entered a rate-cutting cycle. Following this, Hong Kong banks announced a decrease in the Hong Kong dollar's most favorable interest rate by 25 basis points, unexpectedly becoming a "Mid-Autumn Festival gift" for the Hong Kong property market, bringing positive news. The new mortgage rate for first-hand residential properties will be reduced from 4.125% to 3.88%, narrowing the negative interest gap between mortgage rates and rental yield. Based on market forecasts for rate cuts in the United States in the next two years, UBS currently expects that the new mortgage rate in Hong Kong could decrease to 2.9% by the end of next year, a further 97 basis points drop from the current rate of 3.88%. Assuming that the most favorable interest rate for the Hong Kong dollar can further decrease by 25 basis points this year, and the rental yield remains at 3.5%, the bank predicts that Hong Kong residential properties should be at a neutral level by the end of this year, providing support for the property market. UBS mentioned that they are optimistic about developers such as HENDERSON LAND (00012), KERRY PPT (00683), and SHK PPT (00016) benefiting from this unexpected rate cut. The bank also pointed out that the rate cut in the United States can lower developers' interest expenses, but factors such as increased office market supply, outbound tourism reducing domestic consumption power, and weak recovery of mainland Chinese consumer spending will still pose challenges for Hong Kong property stocks, leading them to lean towards developers rather than property investment stocks.