10-01-2019

According to the minutes of the Federal Reserve’s December meeting, most participants expressed the view that, especially in the environment of muted inflation pressures, the FOMC could afford to be patient about further policy firming. The Chinese economy is showing clear signs of slowing down, as the trade war with the United States continued to take a toll on growth. More and more Fed officials are agreeing to a dovish approach to interest rate hikes in 2019. The pace of rate hike is anticipated to slow down.


In December 2018, the Fed officials forecasted two hikes in 2019, down from three raises previously projected in September. The latest minutes of the Federal Reserve’s December meeting further signals a dovish tilt in the Central Bank, which helps improving the atmosphere of the local property market and therefore leads to a positive impact on local property sector.


Furthermore, Financial Secretary Paul Chan said the loan-to-value ratio may be relaxed in the future, considering factors including the extent and speed of the decline of house prices. Such measures are expected to lead to a surge on local house prices which favors local property sector. With a relatively lower impact from the trade war, coupled with a slowing pace of U.S. rate hike, the sector is anticipated to gain drivers for a rerate.

Reference:
Bloomberg
Caixin
FOMC

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