Edward Yau: The start of an interest rate cut cycle is expected to bring cautious positive impact to the Hong Kong economy

Zhitong
2024.09.19 07:23
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Hong Kong Financial Secretary Paul Chan stated that the Federal Reserve cut interest rates by 50 basis points, initiating an interest rate reduction cycle, which is expected to have a cautiously positive impact on the Hong Kong economy. Hong Kong interest rates will follow the trend of the United States, with the funding conditions expected to become more accommodative, easing corporate pressures and supporting investments. The rate cut may also attract tourists, promote consumption, and retail sales. Despite facing external challenges, the Hong Kong economy and financial markets are developing steadily, with an increase in bank deposits and IPO fundraising exceeding HKD 50 billion. It is expected that the new stock market will continue to warm up

According to the Wisdom Financial APP, on Wednesday local time, the Federal Reserve announced a significant 50 basis point rate cut, the first rate cut in over four years, lowering the target range to 4.75% to 5%. Hong Kong Financial Secretary Paul Chan Mo-po stated that the rate cut cycle has begun and is expected to bring a cautiously positive impact on the Hong Kong economy.

Paul Chan Mo-po expressed on social media that the rate cut in the United States this time is in line with market expectations, with the general expectation in the market that interest rates will continue to be lowered this year. With the linked exchange rate, Hong Kong's interest rate trend is expected to roughly follow the trend of US interest rates. The previously tight funding conditions are expected to gradually become more relaxed, which will help alleviate the pressure on business operations and support fixed asset investment. Furthermore, with the US rate cut, the Hong Kong dollar exchange rate is expected to soften slightly, attracting tourists and benefiting local consumption and retail businesses.

However, he pointed out that due to local fund flows and market sentiment, the actual rate cut magnitude and pace in Hong Kong may not necessarily be completely consistent with the United States. In addition, although the rate cut cycle has begun, the speed and magnitude of future rate cuts in the US will be influenced by various factors such as the local economic and employment situation, presidential elections, as well as ongoing geopolitical uncertainties, requiring continued caution.

Paul Chan Mo-po stated that despite external challenges, Hong Kong's overall economic and financial market development remains stable. So far this year, Hong Kong has continued to record net inflows of funds, with bank deposits increasing by about 4% to HKD 16.8 trillion in the first seven months of this year. In terms of the stock market, Hong Kong's IPO fundraising total has exceeded HKD 50 billion this year, surpassing the total for the entire previous year, currently ranking fourth globally in terms of fundraising amount. In addition, with leading mainland Chinese companies listing in Hong Kong with the support of the China Securities Regulatory Commission, it can be expected that Hong Kong's new stock market will continue to heat up

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