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1.Market Observations, 8.Was Sticky

24 May 2017 (AFR) – Ghost of ’97 stalks Hong Kong economy infected by housing debt

(24 May 2017, AFR, p34, by Alfred Liu, Moxy Ying and Enda Curran)

‘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 fervour that preceded the last bust is back. 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.’

Read more at AFR.com (might need AFR login access, or try: AFR.com/trial)

or see Bloomberg.com

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