News from the Financial Associated Press on May 12 (Editor Hu Jiarong)A few days ago, the Hong Kong dollar overnight HIBOR (Hong Kong Interbank Offered Rate) strengthened sharply, arousing market attention. According to the data disclosed by the Hong Kong Monetary Authority on May 11, the Hong Kong dollar overnight HIBOR was 4.76%; the one-month Hibor was 4.52%, both of which were lower than those on May 10.
Goldman Sachs Says Rising Interbank Rates Help Boost Bank Asset Yields
Regarding the once-strengthened Hong Kong interbank offered rate, Goldman Sachs’ latest report pointed out that assuming the London interbank offered rate (LIBOR) is 5%, the Hong Kong interbank offered rate (HIBOR) may remain relatively stable above 4% for the rest of this year High level, which has a positive impact on the net interest margin of Hong Kong banks. This trend is expected to reverse with persistently higher net interest margins.
In addition, Goldman Sachs expects the net interest margin of Bank of China and HSBC to increase by 5 basis points and 15 basis points quarter-on-quarter, respectively. Goldman Sachs also pointed out that Hong Kong banks are expected to raise their prime rates by 12.5 basis points following the U.S. rate hike, which could help boost asset returns. Still, bank share prices have not reacted to higher interbank rates. Goldman Sachs maintains its “buy” rating on HSBC and Bank of China, with target prices of 81 yuan and 33.3 yuan respectively.
In fact, long before Goldman Sachs released the report, some domestic institutions expressed that they should not worry too much about the rise in Hong Kong interbank offered rate. For example, Yan Zhaojun, a strategic analyst at Zhongtai International, told the Financial Associated Press yesterday that one-month HIBOR has risen by 85 basis points since the beginning of the month, and overnight HIBOR has hit the highest level since 2007. The Hong Kong-US interest rate gap has narrowed, and the incentives for carry trades have decreased At the same time, it reduces the pressure on funds to flow out of the Hong Kong dollar.
Wu Lixian, an international securities strategist at Everbright Securities, also told the Financial Associated Press on the same day that the overnight Hibor of the Hong Kong dollar has risen sharply in recent days, reflecting the increase in bank borrowing costs. This is firstly because the US Federal Reserve has just raised interest rates by 25 basis points in May. In addition, as the middle of the year is approaching and Hong Kong stocks are about to enter the peak dividend payout period, it is expected that the market’s short-term demand for Hong Kong dollars will increase.