Source: Euronews

Hong Kong eased its mortgage rules to allow homebuyers to fork out lower down payment, aiming to address a prolonged property slump in the city.

The loan-to-value (LTV) ratio for all residential properties is now set at 70%, Chief Executive John Lee said in his policy address on Wednesday. The change reduces the required down payment for homes valued above HK$35 million (US$4.5 million or RM19.35 million), which had a ratio of 60% previously. The LTV ratio for company-held properties rose to 70% from 60%.

The measures took effect on Wednesday, the Hong Kong Monetary Authority (HKMA) said in a statement. Citing the softening property market in recent months, the HKMA said “there is room to further adjust” the measures.

The city’s New Capital Investment Entrant Scheme will also be expanded to accept investment in homes at HK$50 million or above as qualified investments, with the amount of real estate investment to be counted towards the total capital investment capped at HK$10 million, Lee said. 

Hong Kong’s Hang Seng Property Index rose as much as 3.9%, following the announcement of the measures, outperforming the main Hang Seng Index.

The moves mark the latest attempt by the Hong Kong government to perk up its property market. But the changes pale in comparison with last year’s, when it slashed extra stamp duties for some homebuyers. 

The city’s real estate market continues to be pressured by high borrowing costs, a glut of home inventory and a weak economy. However, the lack of stimulus for the industry from the government shows that the administration has few options to boost the market after having removed all extra property taxes earlier this year.

Thomas Chak, the head of capital markets and investment services at Colliers International, said the new home investment policy will help attract high-net-worth individuals to the city and boost transaction volumes of luxury properties, but will have limited impact on the general residential market.

The recent reduction in interest rates in Hong Kong hasn’t translated into a market rebound. Developers are still pricing their projects modestly to absorb as much demand as possible amid an oversupply of homes. Used-home values are even lower than the level before the banks’ rate cut in September.

With housing inventory elevated, residential prices will likely remain under pressure in the near term despite the lower rates, according to Bank of America Corp. The backlog for unsold residential properties is at a 20-year high, data from Bloomberg Intelligence showed.

Source: The edge markets

Thailand’s central bank cut its benchmark interest rate for the first time in more than four years, a surprise move given it has long resisted the government’s calls to ease monetary policy. 

The Bank of Thailand (BOT) voted 5-2 to cut the one-day repurchase rate by a quarter of a percentage point to 2.25% at Wednesday’s meeting, as predicted by only five out of the 28 economists surveyed by Bloomberg. The last time it cut rates was in May 2020. 

Two members of the Monetary Policy Committee (MPC) called for the rate to be kept unchanged. The Thai rate had been kept at 2.5% since the fourth quarter last year. 

The MPC said inflation expectations remain within target. It expects core inflation this year at 0.5%. 

The central bank had consistently signalled that it won’t easily yield to the government’s pressure to cut rates and boost the economy. BOT governor Sethaput Suthiwartnarueput said late last month it’s crucial for central banks to have independence in setting monetary policy.

Just hours before the decision, Commerce Minister Pichai Naripthaphan called for a 50-basis-point cut this year. The Federation of Thai Industries also reiterated its call for a 25-basis-point reduction to ease the financial burden for businesses. 

The baht slipped to a session low against the dollar in response to the rate cut, trading at 33.384 per dollar. Thai shares extended gains.  

New Prime Minister Paetongtarn Shinawatra is continuing her predecessor’s agenda to wield more control over the central bank. While she hasn’t directly pushed for a rate cut herself, ministers in her Cabinet have repeatedly called for lower borrowing costs, citing low inflation and the strength of the baht currency. 

The local currency gained 14% last quarter, making the nation’s exports more expensive compared to its competitors.

While Southeast Asia’s second-largest economy grew at the fastest pace in five quarters in the April-June period, it continues to lag the expansion of its neighbours, hobbled by massive household debt and a manufacturing sector hurting from cheap imports coming mostly from China.

Source: The edge markets

The EUR/GBP pair surges to near 0.8380 in Wednesday’s European session. The cross strengthens after the release of the United Kingdom (UK) Consumer Price Index (CPI) report for September, which showed that price pressures grew at a slower-than-expected pace.

Signs of inflationary pressures taming have prompted expectations of more interest rate cuts by the Bank of England (BoE) in the remaining year.

The CPI report showed that the annual headline inflation decelerated to 1.7%, below the bank’s target of 2%. Month-on-month headline CPI remained flat, which was expected to hardly grow. Annual core CPI – which excludes volatile items – rose by 3.2%, slower than estimates of 3.4% and the former release of 3.6%.

Meanwhile, inflation in the services sector also slowed sharply due to lower wage growth. The Service inflation, a closely watched indicator by BoE officials, grew by 4.9%, slower than 5.6% in August.

The Pound Sterling (GBP) was underperforming against its major peers from a few days after BoE Governor Andrew Bailey’s interview with the Guardian newspaper in which his comments were a bit dovish on the interest rate outlook. Bailey said the BoE could become "a bit more activist" and "a bit more aggressive" in its approach to lowering rates if there was further welcome news on inflation for the central bank, Reuters reported.

On the Euro (EUR) front, investors await European Central Bank (ECB) President Christine Lagarde’s speech for fresh guidance on interest rates, which is scheduled at 19:40 GMT. Comments from ECB Lagarde could be on the dovish side as price pressures in the Eurozone have decelerated sharply in September.

According to revised estimates, the annual CPI (EU norm) in France slowed to 1.4% in September from expectations and the prior estimates of 1.5%.

Source: FXSTREET

Over 115 representatives of the country's 82 renewable energy firms attended a seminar co-hosted by the Export-Import Bank of Korea (Eximbank) and the Korea Chamber of Commerce and Industry (KCCI), the organizer of the event said Wednesday.

They discussed market trends in the renewable energy industry in developing economies and deepened their understanding of the state-run lender's financial assistance programs for Korean companies seeking to expand their presence there.

The topic centered on renewable energy policies and industry trends in Vietnam, Africa and Central Asia.

Those economies are strengthening efforts toward the development of renewables to enhance power generation capacity to better meet surging energy demands.

Among emerging economies, Southeast Asian countries are mostly seeing demand for electricity surpassing supply, while African countries are suffering from a shortage of power supply. Those in Central Asia, meanwhile, are pondering over ways to overcome the stagnant power production. They are all turning their eyes to renewable energy as a possible solution.

An overseas economic research institute under the state-run lender distributed a booklet on-site.

It had information in detail on the renewable energy industry trends in the aforementioned countries, as well as business strategies for Korean firms.

"We will fortify tailored financial support for renewable energy companies to help with their business planning in developing countries," an Eximbank official said.

Meanwhile, Tuesday's development is a continued effort to foster renewables by the country's public and private sectors.

In May last year, the KCCI and the industry ministry launched a forum to review and promptly implement ways of reaching zero-carbon power generation, including nuclear energy and clean hydrogen, mostly by establishing internationally recognized energy certification systems.

Central to the initiative was the rapid popularity of RE100, a global initiative embraced by advanced economies whereby all energy is sourced from renewables. 

Source: Koreatimes