Pressure stiffens on the currency peg after the US rate hike, and stocks fall to lows not seen for more than a decade.
Eddie Yue, Hong Kong Monetary Authority's head, seemed slightly more tight-lipped this time, but his message was largely the same.
He expects the weak side of the city's currency peg to be tested again given the incentive in the market to trade against it after the city's regulator was again forced to identically match the Federal Reserve's 75 basis point hike overnight, bringing the base rate to what would have been considered an unimaginably lofty 3.5 percent a little more than a year ago.
Yue also noted that banks have been raising interest rate caps on new mortgages and he once again asked potential buyers to weigh their decisions carefully, as he had in previous statements.
Falling Markets
Equities are already having a bad hangover, with the Hang Seng Index falling to lows on Thursday that had not been seen since at least 2012 when millennials weren't yet a thing, or at least not yet part of the workforce.
If that was not enough, the government's financial secretary, Paul Chan, told the «Standard» newspaper that he expects the city to end this year in full recession, as opposed to the technical one it is currently in, as interest rates were being raised at a pace that had not been seen in 3o years.
«There is a very high chance for Hong Kong to record a negative GDP growth for this year,» he indicated.
No Confidence
Property, even if it has declined slightly, is still extremely expensive but the step will likely exacerbate an already weak-spirited market. The confidence index of a local property broker, Midland Realty, is currently at 37.0, down from highs well above 80 just four years ago. The index measures price changes in properties for sale and how confident owners are that they can sell their property at the price they want.
But all this tallies with much of the previous commentary on finews.asia that argued that economic growth and assets in Hong Kong had been artificially buoyed by importing US interest rates following the financial crisis. The opposite is now true, and the downward impact is likely to be just as exaggerated.
That means that if the ride was just starting in June, it is now kicking into high gear.
