Company: HBCYF
Filing Date: 2025-07-30
Form Type: 6-K
Source: 0001089113-25-000052
Chunk: 31

Company: HSBC HOLDINGS PLC
Filing Date: 2025-07-30
Form: 6-K
Chunk 31
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 business inventory accumulation. In mainland China and Hong Kong, supportive fiscal and monetary policies continued to underpin growth. Over the remainder of 2025, tariffs may become an increasing headwind to global growth, and economic forecasts and economic expectations have been lowered accordingly. Risks to the global economy remain elevated due to the uncertainty over trade policies. High uncertainty may impact financial markets and further erode confidence, while higher tariffs could disrupt supply chains and reduce global trade. HSBC operates in several of the most affected markets, and such developments may adversely affect the Group and our customers. Tariffs, supply chain disruptions and reduced trade may also negatively impact fee income and demand for financing, although the reconfiguration of supply chains may also present new opportunities for investment and growth. We remain subject to interest rate risk, which can affect net interest income, the fair value of our assets and liabilities, and overall financial performance. In Hong Kong, our operations have been and continue to be exposed to fluctuations in HIBOR, which has experienced heightened volatility due to recent capital market activity and changing investor risk appetite. Major central banks have also adjusted their policy approach in light of recent economic uncertainty. The US Federal Reserve paused its cycle of interest rate cuts to assess the impact of tariff policies on consumer prices and inflation expectations. The Federal Funds Rate was left unchanged during the first half of 2025, at 4.25 to 4.5%. The Bank of England (‘BoE’) cut interest rates by a cumulative 50bps to 4.25%, amid concern that the weaker global backdrop may affect UK growth and employment, despite continued domestic inflation risk. Policy interest rates are expected to remain higher than prior to the Covid-19 pandemic. Higher rates may reduce loan demand across key consumer and business segments, which could lead to a deterioration in credit quality and weigh on real estate and other asset prices. In a number of developed markets, government debt levels are rising amid spending pressure from rising social welfare costs and increased expenditure on defence and climate transition. Our risk profile may be influenced by fiscal policies, public deficits and levels of indebtedness. For example, recent changes to US long-term interest rates and US dollar volatility could adversely impact the fiscal capacity and debt sustainability of highly-indebted sovereigns. In addition, a sharp rise in funding costs in our key markets could raise the credit and refinancing risks for our customers and counterparties. The geopolitical environment has continued to increase in complexity and tensions could impact the Group’s operations and its risk profile. The ongoing conflict in