Hong Kong stocks could face greater volatility from renewed US monetary tightening, but the impact should be short-lived unless the Federal Reserve embarks on a sustained rate-increase cycle, according to China International Capital Corporation (CICC).
The Fed rate increase would not necessarily spell losses for Hong Kong stocks, as monetary conditions were only one of several factors driving the market, said Liu Gang, chief offshore China and overseas strategist and managing director at CICC Research.
“When fundamentals can outweigh [the impact of higher rates], it is not a major factor,” Liu said at a media briefing on Wednesday afternoon.
But Hong Kong stocks currently appeared particularly vulnerable to changes in US Treasury yields and global liquidity, as China’s domestic fundamentals remained relatively weak, Liu said.
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