A lot of people view the property market as almost  an extension of the stock market.
A lot of people view the property market as almost  an extension of the stock market.

Ghost of 1997 Crisis Haunts Hong Kong

Ghost of 1997 Crisis Haunts Hong Kong

In 1997, the Asian financial crisis touched off a six-year property bust in Hong Kong that shaved more than two-thirds off prices and saddled the city with a stagnant economy and deflation.
As Hong Kong gets ready to celebrate the 20th anniversary of its handover to China, which happened just as Asia’s crisis began to unfold, that pain seems all but forgotten. Prices are at all-time highs. Mortgage borrowing is booming. Developers are bidding up the cost of land to records. People young and old are lining up to buy newly built apartments. In short, the kind of fervor that preceded the last bust is back, Bloomberg reported.
That’s got experts fretting about the potential fallout should the city of about 7.4 million people experience another crash. By several measures, Hong Kong looks more vulnerable this time around. On Friday, the de facto central bank announced new measures to contain risks—its second action in a week.
“When things move to the downside here, they move big time,” said Peter Churchouse, author of a financial newsletter bearing his name and a veteran analyst of Hong Kong’s property sector. “A lot of people here view the property market as almost an extension of the stock market and treat it as such.”
As central banks flooded the world economy with cheap money over the past decade, property markets in cities from Sydney to Stockholm skyrocketed. Perhaps nowhere was this more pronounced than in Hong Kong, where demand from mainland buyers contributed to the boom.
Hong Kong is particularly exposed because of a huge accumulation of household wealth in property and the fact that banking is one of the main pillars of the local economy, said Xia Le, chief economist at Banco Bilbao Vizcaya Argentaria SA in Hong Kong. A property crash could drag down banks and lead to a “full-fledged financial crisis,” Xia said.

Short URL : https://goo.gl/G8ci70
  1. https://goo.gl/xLfaos
  • https://goo.gl/OxzEjY
  • https://goo.gl/7TNqNo
  • https://goo.gl/swmFXS
  • https://goo.gl/l4avDQ

You can also read ...

Bithumb Hacked, $32m in Cryptocurrency Stolen
Cryptocurrencies dropped after the second South Korean...
South Africa GDP Shrinks
South African gross domestic product shrank 2.2% in the first...
Saudi Arabia, which employs about two-thirds of its citizens, is chipping away at a budget deficit that ballooned to almost 16% of GDP after the oil shock of 2014, while FDI slumped more than 80% last year.
Show up, swipe in. The routine is familiar to office workers...
Washington in March imposed tariffs of 25% on steel and 10% on aluminum, in a move mainly aimed at curbing imports from China.
Russia said on Tuesday it would impose import duties on US...
Taxes in Italy Drive Economy Underground
Italy grew rapidly over the 20th century, and its black market...
European businesses say it has become harder to do  business in China over the past year.
European companies complain they still face a tough business...
Australian Telecom Co. to Axe 8,000 Jobs
Australia’s dominant telecommunications company Telstra...
South Korea to Grow 3 Percent
The Organization for Economic Cooperation and Development has...

Add new comment

Read our comment policy before posting your viewpoints