Morgan Stanley pointed out that due to the weakness of the US dollar and restrictions on the Hong Kong dollar's appreciation by the linked exchange rate, the one-month Hong Kong Interbank Offered Rate (HIBOR) dropped from 4% to 1.9% within four days. High-leverage stocks such as Hong Kong Telecom (06823.HK), Power Assets (00008.HK), and New World Networks (01686.HK) are beneficiaries.
The bank believes that if HIBOR remains below 3% for a longer period (2 to 3 months), compared to the 3.5% to 4% at the beginning of this year, there could be significant growth in cash flow and profits for the related companies. The bank estimates that for every 100 basis points change in HIBOR, Hong Kong Telecom, Power Assets, and New World Networks could save interest of 0.178 billion, 0.22 billion, and 0.135 billion yuan respectively.
