Last month, the Federal Reserve of the USA announced a 0.5% rate cut, followed by local banks in Hong Kong such as HSBC, Bank of China (02388.HK), and Hang Seng (00011.HK) immediately reducing their prime interest rates by 0.25%.

HSBC Hong Kong's Chief Executive Lin Hui Hong stated in a local media interview that currently, the vacancy rate for Grade A office buildings in Hong Kong remains at a historical high. It is expected that the overall commercial real estate market will remain weak, and the demand for credit in Hong Kong will not immediately rebound. She expects that the Federal Reserve will cut rates by 0.25% at each of the next six meetings, bringing the federal funds target rate range down to between 3.25% and 3.5% by June next year.

Lin Hui Hong emphasized that the outlook for US interest rates is uncertain and quite dynamic at the moment. Adjustments to Hong Kong's prime interest rates will depend on the situation at that time, and it cannot be expected that every US rate cut will lead to a corresponding decrease in Hong Kong's prime interest rates.

Lin Hui Hong mentioned that under the prudent regulation of the Hong Kong Monetary Authority, Hong Kong banks are cautious in providing loans for commercial real estate. Therefore, she is confident in the overall management of banks in Hong Kong's real estate sector.

Lin Hui Hong hopes that the start of reducing the prime interest rate in Hong Kong can be seen as a signal of the beginning of an interest rate downward cycle, leading to improved trading and economic activities, and customers diversifying their funds from time deposits to wealth management products. She also pointed out that although reducing the prime interest rate will not immediately stimulate loan demand, increasing financing for corporate clients and choices in business strategies may drive corporate capital expenditure plans next year.