The Fed made it clear in November that the rate hike cycle was about to peak, and it was only because market expectations were too optimistic that the Fed's decision** reaffirmed its hawkish stance. It was not until the December interest rate meeting that the Fed finally stated that the rate hike cycle was over, and also hinted that there would be three opportunities to cut interest rates next year.
Financial markets also expect that there may be at least six interest rate cuts next year, and the rate cut will be more than 1%, which is more optimistic than the Fed's hints.
The United States is doing well, but in comparison, we have not yet felt this optimism from the Hong Kong property market and **. More than a year ago, everyone refused to believe that the Federal Reserve would raise interest rates sharply, and they were shocked togetherNow that the Federal Reserve has hinted at cutting interest rates next year, Hong Kong businessmen are generally like frightened birds, and they cannot believe that the Fed has turned from a hawk to a dove.
Of course, there are still a few KOLs in the market who believe that the United States will cut interest rates eight times next year, which is more exaggerated than the US investment market expected. However, looking through the records, this person still insisted that the United States would not raise interest rates until the end of last year, and also threw away his schoolbag and said that "interest rate hikes cannot reduce supply-side inflation". His theoretical basis and practice are problematic, and few people now dare to believe his views on interest.
Has the Fed turned from a hawk to a dove?In fact, Hong Kong KOLs completely ignore the Fed's statement when discussing the trend of U.S. interest rates.
More than two years ago, the Federal Reserve hinted at the need to raise interest rates, and at the beginning of the interest rate hike cycle, it stated that it must raise interest rates sharply to curb inflation, but Hong Kong people refused to believe it, and threw out a lot of wrong economic and financial theories to mislead themselves and others.
One layer deeper, will the Federal Reserve be unscrupulous?Looking back over the years, will the Fed explicitly raise interest rates, but suddenly cut them in reverse?How can the Fed engage in gibberish and damage its own prestige?For many years, the Fed has done what it says, and although it has occasionally mistimed its interest rate adjustments, it has not been able to increase but subtract, or not to subtract but to increase. On the same day, the Federal Reserve restarted raising interest rates and said that it would raise interest rates sharply
Why did the people of Hong Kong refuse to believe that the Fed would raise interest rates in the first place?The reason is that Hong Kong's economy and real estate market simply cannot withstand the pressure of sharp interest rate hikesComparing hearts to hearts, everyone thinks that the US economy cannot tolerate interest rate hikes either.
Why are some Hong Kong KOLs even mistaken about such simple fundamentals and situations?For Hong Kong people, they only adore a few of Hong Kong's major developers, as if the whole world will revolve around them. All news that is unfavorable to the Hong Kong real estate market will be despised by the Hong Kong people. In the eyes of Hong Kong people, even the authority of the Federal Reserve can be completely ignored.
Today, Hong Kong people have gone from one extreme to another. Now that the Fed has signaled the end of its interest rate hike cycle since November, it has also hinted at three rate cuts next year. As a matter of common sense, we don't need to believe the overly optimistic views in the financial markets, but according to the past record, it will take about six months for the market to digest between the Fed's discussion of interest rate cuts and the actual implementation. We can at least conservatively expect the Fed to cut interest rates about two or three times next year.
Unless U.S. core inflation is unexpectedly stubborn in the coming months with no signs of coming back, or the 10-year U.S. Treasury yield returns to the upward trajectory, or U.S. Treasury sales are too sluggish, in the short term, the Fed should make good on its promise to start cutting interest rates next year.
As far as the Hong Kong economy is concerned, although the Fed will enter a cycle of interest rate cuts, it is expected that it will only be reduced by about 80 basis points next year, and it will only be reduced by about 1% the year after that, and the situation of ultra-low interest rates should not happen again. In addition, the vacancy rate of industrial and commercial buildings in Hong Kong is on the high side, with a total vacancy area of at least 7 million square feet, and the situation of street shops has also deteriorated sharply after the reopening of the border between the two places. The outlook for industrial and commercial properties is by no means rosy.
The situation in Hong Kong's residential market should be better than that of industrial and commercial properties, but with at least 100,000 residential units for sale this year, developers in general still have great financing pressure. We do not see any signs of a turnaround in the residential property market for the time being.
Text: Han Bai