Morgan Stanley's report pointed out that the Federal Open Market Committee (FOMC) in the USA has begun a rate-cutting cycle and will reduce the federal funds rate by 50 basis points. The bank believes that New World Development (00016.HK) has a high exposure to Hong Kong residential properties and is expected to benefit from the rate cut in the USA.

The bank stated that New World Development has a healthy debt ratio (18%) and estimated that for every 100 basis points cut in interest rates, its earnings per share/dividend could increase by 4%. The current price of New World Development is at a discount of 65% to its net asset value (NAV), with a yield of 4.8%. The bank expects that there is an over 80% probability that New World Development will outperform the market in the next 60 days and sets its target price at 102 yuan, with a rating of 'shareholding'.