SINGAPORE (June 4): Rising US interest rates and expectations of further US rate hikes should inevitably imply an upward trajectory for the Hong Kong Interbank Offered Rate, owing to the established linkages in monetary policy. In Hong Kong, a rising Hibor impacts mortgage repayments, consumer discretionary spending, the real-estate sector, financials and the local equity market as a whole. Increased mortgage repayments dampen demand in the residential property sector and decrease monthly net disposable income for consumers. This puts a strain on the consumer discretionary sector. Expansion of capitalisation rates and discount rates will put pressure on the value of commercial properties. Real-estate companies could struggle as sales slow. Banks and financial institutions would then be hit, as falling loan demand or higher loan default rates mean a lower return on equity.

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