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S&P: Downturn in commercial real estate in Hong Kong spreading to banks, small and medium-sized banks may be affected.
Rating agency Standard & Poor's Global stated that the commercial real estate industry in Hong Kong is facing the most severe downturn since the Asian financial crisis, expecting that some non-first and second-tier, as well as financially aggressive real estate companies will be most severely affected. Small banks closely associated with these real estate companies will also be affected. Standard & Poor's mentioned that non-first and second-tier real estate companies include mainly rental companies that own office and retail properties. If small real estate developers also participate in office and retail property projects, they are believed to face pressure. Small and medium-sized banks may underestimate the risk of non-performing loans in the real estate industry. Compared to large banks, small and medium-sized banks in Hong Kong may have a high exposure to real estate.
In September, the overall consumer price index in the Hong Kong rose by 2.2% annually according to the Economic Index, and Dah Sing Financial expects it to fall to below 2% in the fourth quarter.
Hong Kong's overall consumer price index rose by 2.2% year-on-year in September, slowing down by 0.3 percentage points from the previous month. Dah Sing Financial Group (00440.HK) Chief Economist and Strategist Kelvin Yam stated that the September overall consumer price index increase was slightly lower than the market's and the bank's expectations of 2.4% and 2.3% respectively. Excluding one-off relief measures, underlying inflation rose by 0.9% year-on-year, also slowing down by 0.3 percentage points from the previous month. Yam mentioned that overall food prices saw a slowdown in the year-on-year growth rate by 0.8 percentage points to 1%, reaching the lowest increase since January this year. Among them, basic food prices shifted from rising to falling, ending three consecutive months of increase; going out.
AM Best Affirms Credit Ratings of Dah Sing Insurance Company Limited
Citi: Relaxing the maximum loan-to-value ratio and further introducing 'interest-only repayment' to support small and medium-sized enterprises, additional bullish for Hong Kong banks. Prefer boc hong kong (02388.HK) and Dah Sing Bank (02356.HK).
JPMorgan released a report stating that the new policy address mentioned the HKMA further relaxing the cap on loan-to-value ratios and introducing measures to support small and medium-sized enterprises with 'interest-only' repayment. The bank believes that this will help banks manage the asset quality risks of related industries more flexibly and bring positive impacts to the banking industry in Hong Kong. The bank explains that although the HKMA's increase in the maximum loan-to-value (LTV) ratio mainly benefits properties worth over 30 million yuan, it does help to some extent alleviate the potential asset quality risks for Hong Kong banks in mortgage loans and commercial real estate loans, despite the limited impact on the growth of property mortgage loans. Similarly, enhancing
HKMA: The maximum loan-to-value ratio for all properties is set uniformly at 70%. The maximum debt-to-income ratio is uniformly set at 50%.
The Monetary Authority issued guidelines to banks today (16th) to revise the countercyclical macro-prudential regulatory measures applicable to property mortgage loans. Taking into account various considerations, the Monetary Authority believes that there is room to further revise the countercyclical macro-prudential regulatory measures while continuing to maintain the stability of the banking system and ensuring proper management of risks associated with property mortgage loans. First: For all residential properties, regardless of their value or occupancy status, the maximum loan-to-value ratio is unified at seventy percent. Second: The maximum loan-to-value ratio for property mortgage loans based on 'asset levels' as the approval basis has been increased from sixty percent to seventy percent, aligning with those based on 'payment to income ratios' as the approval basis.
Dah Sing Financial: Retail sales value in Hong Kong fell more than expected in August, expecting a moderate decline in the number of units for the whole year.
In August of this year, the retail sales value in Hong Kong fell by 10.1% year-on-year, lower than the market's expected decline of 9%, but the decrease from the previous value of 11.7% narrowed. Dah Sing financial conglomerates' Chief Economist and Strategist, Kelvin Wong, stated that the decline in retail sales value in August was higher than the market and the bank's expected 9%, marking the sixth consecutive month of decline; the total sales value was 29.2 billion yuan, remaining near the lows since September 2022. Kelvin Wong mentioned that major categories generally showed improvement in sales value. Specifically, sales of food, alcoholic beverages, and tobacco shifted from decline to growth. As for luxury goods, clothing, department stores, supermarkets, and fuel, the declines in sales value have all narrowed.
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