Listed Real Estate Asia, KT Capital Group

Jacob Cheng

Jacob has 7 years of professional buy-side experience in real estate investment and listed equities.  Jacob worked as a portfolio manager/analyst in Global Listed Real Estate team in AMP Capital and Macquarie Asset Management.  Prior to that, Jacob has spent 5 years in APG asset management, in the listed real estate team.  As one of the largest RE funds in Asia, he co-managed EUR6bn investment portfolio with the team with a focus on Hong Kong and China property.  He led the USD200m cornerstone investment in Wanda Commercial Properties IPO (the largest mall operator and developer in China).  Prior to this, Jacob has 3 years of experience in investment banking in Bank of America Merrill Lynch, covering equity, debt and M&A transactions across real estate, consumer& retail and TMT sectors.  Jacob specializes in fundamental bottom up research.  Aside from work, Jacob has a personal interest in spirituality and personal development.  He practiced meditation and has published a book about meaning of life in 2016.

Listed Real Estate Asia

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HK Property Update:  The Fed, the Policy Address and the Physical Market

KT Capital Group

Principal investments and advisory firm that focuses on connecting the CIS countries with East Asia.

Principal investments and advisory firm

Thematic (Sector/Industry)

Hong kong Real estate / Thematic (Sector/Industry)

<ul>
<li>1M HIBOR has declined by 300bps to 0.6%, which is a sharp decline. Mortgage rate, which is tied to HIBOR, will have to be adjusted downward</li>
<li>Mortgage rate declines, affordability will improve, and there is positive carry.  Developers will enjoy lower borrow cost and better earnings. 100bps change in rates leads to 2% earnings impact</li>
<li>However, the HIBOR decline can reverse, if capital flow changes and affects HKMA’s aggregate balance.  US/China interest rate movements and geo-political risks also have to be monitored closely</li>
</ul>


1M HIBOR has declined by 300bps to 0.6%, which is a sharp decline. Mortgage rate, which is tied to HIBOR, will have to be adjusted downward
Mortgage rate declines, affordability will improve, and there is positive carry.  Developers will enjoy lower borrow cost and better earnings. 100bps change in rates leads to 2% earnings impact
However, the HIBOR decline can reverse, if capital flow changes and affects HKMA’s aggregate balance.  US/China interest rate movements and geo-political risks also have to be monitored closely


Quick Note: 1M HIBOR Decline by 300bps – Implications for Hong Kong Real Estate