Lenders to trim rates 25 basis points
Hong Kong banks will cut interest rates 25 basis points today - matching a move in the United States - after interbank rates dived following an injection of liquidity by the Hong Kong Monetary Authority on Wednesday.
The move sparked a rally in the stock market yesterday, with the Hang Seng Index closing 0.45 per cent higher at 31,492.88 points. Property stocks were the top winners. The H-share index climbed 0.41 per cent to 20,164.22 points.
The rate cut announced by the banks was welcome news, although its effect on mortgage holders will be small. Hong Kong interest rates generally move in tandem with those in the US because the Hong Kong dollar is pegged to the US dollar.
Peter Wong Tung-shun, an executive director at Hongkong and Shanghai Banking Corp, the Asia-Pacific unit of HSBC Holdings, said interbank rates fell at least 60 basis points after the US rate cut, giving the bank room to lower its interest rates.
HSBC, Hang Seng Bank and Bank of China (Hong Kong) today will lower their prime rates to 7.25 per cent. Other lenders, including Standard Chartered, Bank of East Asia and medium-sized and smaller banks will cut their rates to 7.5 per cent.
The banks also trimmed their savings deposit rates 25 basis points.
