Hong Kong's first quarter negative asset balance increased by about 6.1%, Morgan Stanley: There is a chance to fall back from the high level.

The Hong Kong Monetary Authority announced that the number of negative equity cases in Hong Kong at the end of the first quarter of this year was 40,741, an increase of approximately 6.1% from the 38,389 cases at the end of the fourth quarter of last year. These cases mainly involve loans for housing mortgages or mortgage insurance plans of bank employees, with generally higher loan-to-value ratios. Knight Frank stated that with the expectation of further interest rate cuts in the United States, Hong Kong banks may also have the opportunity to follow suit, bringing positive support to the property market, and property prices are expected to stabilize and develop. It is believed that cases of negative equity may have the opportunity to decline from their high levels. Knight Frank's chief analyst, Liu Jiahui, pointed out that the rise in negative equity in the first quarter of this year is once again related to the decline in property prices during the quarter. According to the "Knight Frank Property Price Index," property prices fell by approximately 1.33% in the first quarter of this year. Although the number of negative equity cases rose again in the first quarter, the trend in the past three quarters has fluctuated between 38,000 and 41,000 cases. More importantly, the latest ratio of residential mortgage loans with arrears of more than 3 months is recorded at 0.17%, still at a low level. With the unemployment rate remaining at a low level of 3.2%, it is believed that the stable employment situation will have little impact on the repayment ability of most borrowers. Even if properties are temporarily in a negative equity state, borrowers' repayment ability remains strong.