Following the announcement that Hong Kong's three currency-issuing banks would be cutting their best lending rates, stocks in the city immediately surged. The increase in major stocks on Thursday managed to break the two-day losing streak, with the increase being led by banking and property stocks.
Stock prices of the currency-issuing banks rose on Thursday following news of their rate cuts in response to the Hong Kong Monetary Authority (HKMA) and the US Federal Reserve's rate easements. HSBC saw its stocks rise by 0.5 percent to HK$9.50, while Standard Chartered saw its shares rise by 0.9 percent to HK$71.90.
The prospect of lowered lending rates pushed property stocks up in the city. Hong Kong's largest builder of commercial buildings and shopping centers, Hang Lung Properties, saw its shares rise by 0.5 percent to HK$19.66.
Meanwhile, Hong Kong's largest listed developer by value, Sun Hung Kai Properties, saw its shares rise by 2 percent to HK$118.90.
Eight other property stocks were close to hitting the Hong Kong Stock Exchange's 10 percent upside limit. The stocks that moved the most during the day included real estate developer Xinhu Zhongbaol.
Other stocks that made the most movements during the day include Ping An Insurance, which saw a 0.2 percent gain, and Jiangsu Hengrui Medicine, which saw a 0.8 percent gain. ACC Technologies saw it's stock prices increase by 3.5 percent.
According to market analysts, the recent rate cuts will greatly help the city's market, with the property sector getting the most benefit. In conjunction with the government's easement of mortgage requirements, the property market is expected to greatly improve in the coming months.
Hong Kong's economy also desperately needs the boost as it officially slipped into a technical recession. The city's economic growth shrank by 3.2 percent in the third quarter, mainly due to the effects of the protracted trade dispute between China and the United States as well as the recent domestic unrest.
Due to the recent developments in the city, Hong Kong also saw a significant 34.2 percent decline in tourist arrivals for the month of September. According to government data, tourist arrivals from the mainland had declined by 35 percent during the same month.
Analysts have revealed that most investors had already expected poor performance and growth in the third quarter. Supporting factors, such as manufacturing activity and the US' GDP growth, all pointed to reduced rates, which means that investors were not at all surprised at how things have turned out.
