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Sparc Capital 2026 Outlook: Finding Stability in a Late-Cycle World

Updated: 6 hours ago

In a late-cycle global economy, investors should shift to defensive strategies: focus on capital preservation, maintain good liquidity, and diversify across assets. Hong Kong offers a strong stability option through high-quality residential mortgages.


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The Sparc Mortgage Income Fund mainly invests in premium Hong Kong RMBS (residential mortgage-backed securities). It targets steady income with low risk, thanks to the Fund's risk management and historically low defaults in HK mortgage loan market. Key Factors Driving the Fund in 2026:


  1. HK Property Market

    Prices have bottomed out in 2025 after years of decline. Market consensus expect a cautious recovery: mass residential prices up ~3-5% in 2026, supported by better buyer sentiment, lower rates and mainland demand.


  2. HK Mortgage Market

    Activity is rising strongly. New mortgage loans and applications grew in 2025, driven by lower rates. Transactions hit multi-month highs, with healthy origination volumes and very low delinquency (~0.13%).


  3. Global & HK Interest Rates

    HK rates follow the US (currency peg). More Fed cuts expected in 2026, potentially lowering HIBOR and Prime Rates. This improves affordability, boosts refinancing, and supports higher fund yields.


  4. Unemployment Rate

    Remains low and stable at ~3.8% (late 2025). Forecasts stay around 3.5-3.9% in 2026. Low unemployment means strong borrower repayment ability and minimal credit risk for mortgages.


These factors point to a stable, recovering HK residential mortgage sector – ideal for income and preservation in uncertain times. The Sparc Mortgage Income Fund provides a reliable "stability engine" in this environment. For investors seeking defensive income with low volatility, Sparc Fund stands out. Contact us to learn more about positioning for 2026.


Reference: Read the full 2026 Investment Report attached below for our complete asset allocation model, geopolitical risk framework, and detailed market forecasts.



 
 
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