Bank of China Hong Kong (02388): Investors should be wary of the risk of a recession in the US economy and expect the strong trend of Hong Kong's foreign exchange rate to continue

The Zhitong Finance App learned that at the interest rate meeting, the Federal Reserve decided to keep the federal funds rate within the target range of 4.25% to 4.5% unchanged, in line with market expectations. Wang Zhaozong, general manager of investment management at Bank of China Hong Kong (02388), said that recent remarks by Federal Reserve officials tend to wait and see if the market shows signs of weakening. If the labor market clearly deteriorates or the economy risks recession, expectations of interest rate cuts will be released. Wang Zhaozong also mentioned that investors should be wary of a recession in the US economy.

Wang Zhaozong pointed out that although the latest US non-farm payrolls and unemployment rate data all show that the overall economy is still resilient, the relevant data is lagging behind. In contrast, the ISM manufacturing index for April showed that manufacturing activity was still shrinking, the consumer confidence index continued to weaken, and trade policy uncertainty had begun to affect corporate production capacity and public consumption expectations.

Wang Zhaozong said that US policies were erratic during the year, and that the pace of interest rate cuts by the Federal Reserve did not necessarily meet market expectations. The pessimism that was brewing may lead to a so-called “self-fulfilling prophecy” (self-fulfilling prophecy), causing the US economy to decline, and investors should be wary.

However, the recent inflow of capital into Hong Kong also reflects some investors' risk diversification arrangements. Against the backdrop of continued uncertainty in geopolitics and trade policies, I believe the trend of strong Hong Kong's foreign exchange rate will continue.