Understanding the Market | Hong Kong Real Estate Stocks Under Pressure, Strong Non-Farm Payrolls Weigh on Rate Cut Expectations, Citigroup Expects Hong Kong Property Prices to Fall by 3% This Year

Hong Kong property stocks are under pressure. As of the time of writing, Henderson Land is down 2.69%, trading at HKD 21.7; Link REIT is down 2.18%, trading at HKD 31.4; SHK PPT is down 1.9%, trading at HKD 69.85; Hang Lung Properties is down 1.66%, trading at HKD 5.91. On the news front, the U.S. non-farm payroll data for December far exceeded expectations, increasing market expectations for a second inflation wave in the U.S. Bank of America expects that the December employment data may finalize the pause in interest rate cuts in January. The Federal Reserve made a strong hawkish turn at the December FOMC meeting, and a pause in interest rate cuts in January is clearly the baseline scenario, with the upcoming employment report closely predicting this decision. Citigroup's research report states that compared to November last year, the outlook on Hong Kong's real estate has become more pessimistic, expecting property prices to decline by 3% this year, mainly due to record-high supply and prolonged high interest rates, which may prompt developers to accelerate price cuts to reduce inventory. UBS has also revised its forecast for Hong Kong property prices this year from an increase of 0% to 5% to flat, reflecting the potential reduction in rate cuts after the U.S. elections