Bloomberg reports that abundant liquidity acts a shield amongst other buffers.
According to Bloomberg, many factors suggest that, despite Hong Kong’s link to U.S. monetary policy via a pegged exchange rate, rising rates alone won’t kill off the property boom any time soon. Here are some of them.
Even as the Fed raises borrowing costs, an abundance of liquidity flowing into Hong Kong has enabled banks to keep a lid on local rates as a booming stock market is attracting ever larger amounts of Chinese money through the stock connect, and mainland home buyers account for as much as a fifth of property demand, according to Mark McFarland, chief economist for Asia at Union Bancaire Privee.
“Hong Kong’s property market appears to be in a similar state of mind to the period immediately before the handover in 1997 where optimism, equity market gains and inflows pushed property prices up in a feedback loop,” said McFarland, referring to the year the city returned to Chinese control. Now, like then, it would take an external shock to derail the market, he said.
Here’s more from Bloomberg:
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