Shares of Hong Kong property developers are trading mostly lower in Wednesday's session, weighed down by renewed market expectations for US interest rate hikes.

HENDERSON LAND (00012) dropped 6.76% to HK$27.02, while SHK PPT (00016) declined 5% to HK$115.80. HANG LUNG PPT (00101) fell 3.45% to HK$6.995, and SWIREPROPERTIES (01972) shed 2.2% to HK$23.98.

On the macro front, Federal Reserve Chair Warsh delivered his most hawkish Jackson Hole speech since 2009 during his debut at the symposium, signaling that rates could rise if inflation does not cool quickly. Market pricing for a September rate hike has climbed from 35% to nearly 60%, with traders now pricing in the possibility of two rate increases by March 2027.

Where the pressure is coming from

Adding to the headwinds, data released on August 27 by the Hong Kong government's Rating and Valuation Department showed the city's private residential property price index fell to 321.5 points in July, down 0.46% month-on-month, snapping a 13-month winning streak.

Separate data from the Land Registry also showed that July saw 6,715 building sale agreements, a sharp 28.8% drop from the previous month. Residential property transactions plunged 41.7% to 4,462 contracts, while the total value of these deals fell 44.6% to HK$41.9 billion.

Analysts at BofA Securities note that rising US rate expectations are contributing to early signs of softening in Hong Kong property prices. After gaining 8% in the first half of the year, prices are likely to face near-term pressure, although the bank does not expect a major trend reversal. Resilient rental demand is seen as a key factor limiting downside risks for the housing market.