Housing market inhibitor of strong credit expansion in 2014

Property cooling measures are accountable as well.

It has been observed that a moderate cyclical recovery should translate into some pick up in credit demand in 2014.

According to a research note from UBS, however, the subdued housing market and the property cooling measures will likely preclude any strong credit expansion.

Meanwhile, HKD loans expanded 11.5%y/y in 2Q14. Broad money picks up in tandem with credit growth, the report also noted.

The report said as well that money and credit are pro-cyclical indicators.

Normally a large expansion in base money will lead to an expansion in broader liquidity aggregates and help boost the economy.