[ET Net News Agency, 28 September 2018] On 27 September, major banks in HK, including
HSBC (00005), Hang Seng Bank (00011), BOCHK (02388) and Standard Chartered (02888)
announced a prime rate increase of 0.125%, following the US rate hike announcement on 26
September.
Nomura expects another round of prime rate hike by mid-2019, assuming a similar
situation regarding the cost of capital and aggregate banks' HKD balance.
The research house has been cautious over prime rate hikes and been cherry picking the
property stocks on (1) attractive dividend yield, (2) the willingness and capability to
further increase dividend, and (3) business (office versus retail versus residential) with
less association with Prime rate hikes.
Sector-rise, Nomuar maintained its preference for Central office sectors over retail and
residential sectors. Stock-wise, it likes Swire Properties (01972) and HK Land as key
Central office landlords; and CK Asset (01113) and New World Development (00017) with
their company-specific drivers to make themselves defensive amid the rate hike
environment. (KL)