Hong Kong’s Hang Seng Index was the biggest loser among Asian benchmarks, falling over 2%. This was due to real estate stocks being severely hit after the People’s Bank of China chose to maintain its one-year and five-year loan prime rates at 3.45% and 4.2%, respectively. The HSI’s largest loser was China Resources Land, a property developer, which saw a plummet of 9.54%. Additionally, Longfor Group and Haidilao fell by 5.99% and 6.27% respectively, demonstrating a widespread negative impact on residential and commercial properties.
Investors are awaiting a decision from China’s central bank on the one- and five-year loan prime rates, but are not expecting any change. The one- and five-year LPR stand at 3.45% and 4.2%, respectively, and PBOC is expected to keep the rates unchanged. Market analysts believe powerfully that these rates will not change, and also noted that China’s foreign direct investment registered its most significant annual decline since 2009. In addition to economic slowdown, high global interest rates, and growing regulatory risks, FDI in China fell by 8% last year, with multiple contributing factors. Commerzbank analysts made these points in a client note, elaborating on the many factors that have contributed to the drop in investment rates.