Which overseas property markets will be the winners and losers if Fed raises US rates?
Fed chairman’s focus on inflation at meeting last month has heightened expectations of monetary tightening
Comments by US Federal Reserve chairman Kevin Warsh at its annual economic policy symposium in Jackson Hole last month have reinforced expectations of an impending interest rate rise in the world’s largest economy, which would have significant impacts on assets and investors around the world.
In the wake of Warsh’s comments, analysts said several property markets were more sensitive to higher interest rates in the United States and some stood to benefit.
Hong Kong
With the local currency pegged to the US dollar in a trading band of HK$7.75 to HK$7.85, property agents said any Fed movement would be mirrored by the Hong Kong Monetary Authority (HKMA), the city’s de facto central bank.
“The HKMA’s base rate tracks the Fed’s moves and borrowing costs linked to Hibor [the Hong Kong interbank offered rate] follow suit,” said Pamela Ambler, head of Asia-Pacific investor intelligence at consultancy JLL. “With Hong Kong’s debt costs rising in contrast to China’s … that makes Hong Kong less attractive to southbound capital from mainland China.”