[ET Net News Agency, 21 June 2019] Morgan Stanley now believes a Fed rate cut will come
as soon as July and remain at that level for the foreseeable future. Furthermore, the
market is now anticipating over three rate cuts. This should drive down HIBOR.
More important, this relieves pressure on the Prime rate and results in low effective
mortgage rates and affordability, said the research house.
Hence, Hong Kong physical property market sentiment may be reignited by upcoming primary
launches. Morgan has been highlighting that the successful launch of a major primary
project can help to "activate" pent-up demand and push prices higher.
It expects HK developers to launch smaller projects like NWD's (00017) 313-unit Atrium
House (Yuen Long) and SHKP's (00016) 495-unit Mount Regency Ph2 (Tuen Mun) first and
followed by major launches like Wheelock's (00020) 504-unit Grand Montara (TKO).
Morgan expects a total of 7,726 units available for launch in 2H.
It noted that Hang Seng Property Index and HK property stocks fell by 4% and 3% in the
first two weeks of May, respectively, while Hang Seng Index fell by 8%. Stocks have been
defensive due to high dividend yield, strong balance sheets and higher property prices.
Morgan said high dividend yielding companies with strong balance sheets are defensive in
this macro environment. (KL)