Glonghui, January 18 | Damo released a report saying that starting in the second half of this year, interest rate cuts should help interest expenses, but the housing market needs support from lower mortgage interest rates and improved market sentiment, but this probably won't happen this year. Property prices in Hong Kong are expected to drop 10% throughout the year, returning to August 2016 levels. Damo predicts that it will take longer for the US interest rate cuts to benefit the Hong Kong housing market. The actual mortgage interest rate is likely to remain around 4% this year, leading to negative interest spreads and harming end users and investment demand. As of the third quarter of 2023, the volume of goods sold in the Hong Kong housing market increased to 20,000 units, the highest in 20 years. Damo predicts that in the first half of this year, the Hong Kong interbank interest rate will be about 100 basis points higher than the same period last year, which is bad for companies with high debt and high floating interest rates. The bank believes that only companies with strong balance sheets are more likely to maintain or increase their dividends in this environment, such as Sino Land, Changshi Group, and Swire Properties. In terms of stock selection, compared to office buildings and residences, the bank favors retail, preferring the Link, Hysan and Changshi Group, giving it an “increase” rating; it also gave New World, Henderson Land, and Kowloon Tong a “reduced holdings” rating.