Citi: Hong Kong interbank offered rate under short-term pressure, preferred LINK REIT, etc
Citi released a research report stating that due to the interest rate compression cycle in China leading to a decline in required returns, it is expected that investors will continue to focus on high-yield stocks, with Hongkong Land, LINK REIT, SHK PPT, and HENDERSON LAND as top picks, all rated "Buy" with target prices of HKD 47.25, HKD 88.8, and HKD 25.6 respectively. Citi noted that the Hong Kong dollar earlier triggered the weak-side Convertibility Undertaking, prompting the Monetary Authority to buy Hong Kong dollars for the first time since 2023. The Monetary Authority withdrew liquidity in May, but as of July 7, the one-month Hong Kong Interbank Offered Rate has rebounded to 1.05%. The bank believes that as the USD/HKD exchange rate remains close to the upper limit of the range, coupled with strong U.S. non-farm data, the likelihood of a U.S. rate cut in July is low, and the Monetary Authority may continue to withdraw Hong Kong dollar liquidity, putting short-term pressure on Hong Kong interbank rates. For the Hong Kong real estate market, the rise in Hong Kong interbank rates and weak earnings in the first half of the year will reduce the favorable factors already priced in by the market, but they are not strong negative catalysts
According to the Zhitong Finance APP, Citibank released a research report stating that due to the compression cycle of interest rates in China leading to a decline in required returns, investors are expected to continue focusing on high-yield stocks, with a preference for Hongkong Land, LINK REIT (00823), SHK PPT (00016), and HENDERSON LAND (00012), all rated "Buy," with target prices of HKD 47.25, HKD 88.8, and HKD 25.6 respectively.
Citibank noted that earlier, the Hong Kong dollar triggered the weak-side Convertibility Undertaking, prompting the Hong Kong Monetary Authority (HKMA) to buy Hong Kong dollars for the first time since 2023. The HKMA withdrew liquidity in May, but as of July 7, the one-month Hong Kong Interbank Offered Rate (HIBOR) has rebounded to 1.05%. The bank believes that since the USD/HKD exchange rate remains close to the upper limit of the range, coupled with strong U.S. non-farm payroll data, the likelihood of a U.S. rate cut in July is low, and the HKMA may continue to withdraw Hong Kong dollar liquidity, putting short-term pressure on HIBOR. For the Hong Kong real estate market, the rise in HIBOR and weak earnings in the first half of the year will reduce the favorable factors priced in by the market, but they are not very strong negative catalysts
