2022 was a tumultuous year for most asset classes given the rate hikes and high inflation. The market expects the hiking cycle to peak in 2023. Hong Kong’s sovereign curve is inverted with the 5 year at 3.151% vs the 2 year at 3.767% (as at 31 January 2023), showing the market expects long term rates to ease as inflation subsides. Lower rates will bolster Hong Kong’s property and mortgage demand. Goldman Sachs predicts that China’s reopening will increase Hong Kong’s GDP by 7.6% whilst keeping unemployment low, thus maintaining a low mortgage delinquency rate. Meanwhile, we expect Hong Kong to consistently maintain a ~2% CPI, providing a positive real return versus the high inflation elsewhere. We strongly believe 2023 is a year of recovery and rebound. For our strategy in 2023, we are focused on opportunistic investments in real estate credit across the capital structure.