With the Federal Reserve's Federal Open Market Committee (FOMC) set to announce its interest rate decision on Wednesday, market odds for a rate increase this meeting stand at a striking 90%. mReferral Chief Vice President 曹德明 suggests that should the Fed raise rates by 0.25%, Hong Kong banks are likely to follow suit, albeit potentially with a smaller increment of 0.125%.

The key focus for this FOMC meeting rests on the post-meeting statement's tone, which will signal whether the Fed is leaning toward a single hike or a series of increases. If a sustained hiking cycle is indicated, Hong Kong banks would face significant pressure to not only follow but also match the full margin.

Turning to the commercial and industrial property sector, Midland Holdings and Midland IC&I Chief Executive Officer 马泰阳 characterizes this year's market trend as "volume up, prices down". While transaction volumes show a notable rebound, total transaction values continue to decline, with some properties now trading over 40% below their historical peaks. This "price-volume divergence" is particularly evident as average per-square-foot prices for both Grade A and Grade B offices hit record lows, suggesting property prices are still in a phase of searching for a bottom.

马泰阳 further warns that declining commercial and industrial property values represent more than just a loss on paper for property owners; they pose systemic risks to Hong Kong's broader economy. These properties are crucial collateral for corporate loans and financing. A sustained slide in both capital values and rental income could weaken the borrowing capacity of owners and businesses, potentially forcing some borrowers to face margin calls, accelerated repayment schedules, or difficulties in refinancing.

Confronted with elevated credit risks, banks may respond by increasing provisions, tightening lending standards, or trimming credit lines tied to the sector. If the market correction becomes too abrupt, it could trigger a perilous cycle of falling valuations, stricter credit conditions, forced sales, and further price depreciation. Should banks broadly shift toward a more conservative risk posture, the impact would extend beyond highly leveraged owners or those with weak rental cash flows to squeeze the working capital of retailers, restaurants, logistics firms, trading houses, professional services, and other SMEs. The prolonged weakness in the commercial and industrial property market also risks dampening business investment and hiring sentiment.