JP Morgan: Market overly worried about impact of rate hikes on Hong Kong property stocks, expected interest rates to remain unchanged in the next four quarters.

JPMorgan Chase released a research report stating that recent market concerns, inflation, or geopolitical tensions leading to interest rate hikes may cause a revaluation of the Hong Kong real estate sector. The report assumes that interest rates will remain unchanged in the next four quarters, and property buyers currently enjoy a slight positive interest rate spread, expecting the sector to withstand an environment of unchanged interest rates. Furthermore, the report believes that while expectations of interest rate hikes may trigger temporary profit-taking, historical data shows that interest rate hikes do not necessarily lead to falling stock prices or property prices. Before becoming overly concerned about interest rate hikes, the market may have overlooked the recent trend of the Hong Kong Interbank Offered Rate (HIBOR) continuously falling, which is at least a positive factor for borrowing costs and mortgage rates in the short term. Among the stocks covered by the report, NEW WORLD DEV (00017) and HENDERSON LAND (00012) are most sensitive to changes in interest rates. Apart from interest rate factors, the fundamentals of the sector remain solid, and the report maintains a positive view. Among developers, SHK PPT (00016) and SINO LAND (00083) are preferred, while among rental stocks, SWIRE PROPERTIES (01972), Hongkong Land, and HANG LUNG PPT (00101) are preferred.