UBS Group released a report indicating that local banks in Hong Kong have once again lowered the prime rate by 25 basis points, from 5.625% to 5.375%, a larger decrease than the expected 12.5 basis points, which is a positive surprise for the local property market. The latest mortgage interest rate for new properties will decrease from 3.88% to 3.63%, achieving a neutral interest spread compared to the latest rental yield of 3.6%. The bank expects the residential market to enter a positive interest spread in the early next year. However, after the U.S. presidential election, the market has lowered expectations for interest rate cuts by the Federal Reserve.

UBS Group anticipates that the larger-than-expected decrease in the prime rate should support recent property market transactions. Therefore, Henderson Land Development (00012.HK), Kerry Properties (00683.HK), and New World Development (00016.HK) are expected to benefit. In contrast, given that the U.S. 10-year Treasury yield has risen from 3.6% in mid-September to 4.3%, coupled with concerns about the depreciation of the Renminbi, the bank holds a cautious attitude towards property developers operating retail leasing business in Hong Kong, namely MTR Corporation (00066.HK), Link REIT (00823.HK), and K. Wah International Holdings (01997.HK).