Hi QPK, I hold some residual position in HongKong & Shanghai Bank (HK.5) in HK, my residence and two industrial properties right outside the old HK airport, all bought between September 1997 to April 1998. I have no mortgage outstanding as there is no point for mortgages in HK given the short term and monthly fluctuating interest rate demanded by the banks.
A US recession will affect all economies. The more affected will be the smaller ones, and the export dependent ones. Given that oil price is going up for reasons aplenty, the oil import dependent countries will also be hit.
Hong Kong is small, is tagged to the US Dollar, is re-exported oriented, and imports oil, and so HK will be hit.
I do not think HK will be hit particularly badly, as HK's economy is tied to many economies (US, Japan, China, Europe), all much larger than HK, and all at different point in their respective economic cycle. The HK property market had a 40-60% clean out, depending on location, in 1998. The HK stock market only had an intense though brief forey into never dot.land. The economy is forever adapting to changing environments, being financial capital of SEAsia/China one day, and B2B kingdom the next. Given the tax system, the ease to start new ventures, the free labour market (work visa and a business card is all that is required to make a start), the high savings rate, the high forex reserve (only behind Japan and China, for all of 6 million folks), the family structure, etc etc, HK will only recess and probably not depress.
Having said my pitch for HK, I do not intend to buy any new "thing" directly tied to HK, though I have no intention to sell the industrial properties either. They were originally bought for about US$ 120/sqft, leased for warehouse/office use at 7% yield, and is now surrounded by newly cleared land zoned for residential, commercial and hotel use.
On residential property, the transaction volume has dropped a lot, and the forced sales are exacted a penalty of about 20% from previous market price. These typically are not people's homes but investment/rental properties. Homes are treated as an investment, but generally not for sale in HK as the savings pool is too large and social stigma too negative for folks to be selling homes. The next Mercedes may be delayed, as they were in the last recession.
Depressions are treated as opportunities by many out here, to be welcomed, even anticipated with relish, and not to be feared. We only fear things we do not understand. |
