Interest rate cut expectations cool, Hong Kong stocks once fell over 500 points, LINK REIT continued to drop nearly 6%, losing the 250-day moving average

There are significant differences within the Federal Reserve regarding whether to cut interest rates at the December meeting, leading to a cooling of rate cut expectations. The three major U.S. stock indices experienced substantial fluctuations on the evening of the 20th, with the Dow Jones Industrial Average closing down 386 points or 0.8%, and the S&P 500 and Nasdaq dropping nearly 1.6% and almost 2.2%, respectively. The Hong Kong stock market opened lower by 375 points this morning (21st), initially falling by 551 points to a low of 25,283, and is currently reported at 25,384, down 451 points or 1.7%, with a turnover of HKD 8.0936 billion.

Link REIT (00823.HK) faced selling pressure after releasing its interim results for the period ending September, following a sharp decline of 6.4% the previous day. This morning (21st), it opened down 2.1% and the decline expanded, falling below the 250-day moving average (approximately HKD 38.4), reaching a low of HKD 36.46, marking a more than six-month low. It is currently reported at HKD 36.52, down 5.88%, with a turnover of 14.6609 million shares, involving HKD 539 million.

JP Morgan stated that Link REIT's management tone during the earnings conference was more cautious than expected, indicating that "the operating environment in the second half will slightly worsen before bottoming out." Although the bank originally anticipated a mid-single-digit percentage negative growth in renewal rents for the full fiscal year, it now expects the decline in renewal rents for the second half of the 2026 fiscal year to worsen to a high single-digit percentage. After a year-on-year decline of 6% in the distribution per unit (DPU) for the first half of the 2026 fiscal year, it is expected that the full fiscal year DPU will decrease by 8% year-on-year, implying a 10% year-on-year decline in DPU for the second half of the 2026 fiscal year, partly due to a higher comparative base. JP Morgan downgraded its rating from "Overweight" to "Neutral," with a target price reduced from HKD 48 to HKD 38.

Bank of America Securities stated that Link REIT's interim results were below expectations, noting that it is in a transformation period, but the valuation is attractive, with a target price lowered from HKD 45 to HKD 43, maintaining a "Buy" rating