Hong Kong apartments and tulip bulb mania?
Money pours into Hong Kong markets
Chinese takeover fears are fading in 'Wild West of the East'
Keith Woolhouse
The Ottawa Citizen
<Picture>Reuters / A trader makes a recent deal on the Hong Kong Stock Exchange. On his desk is the Chinese national flag.
The price of land is soaring, frenzied buyers on weekend spending sprees are snapping up apartments by the hundreds, the stock market regularly hits new highs, and the chief regulator has warned that the place is in danger of becoming the "Wild West of the East."
This is Hong Kong after one month under Chinese rule. The fearful threat of a Communist crackdown that was waved by Western media like a red rag before a bull in the months leading up to the handover hasn't materialized. And what's more, it won't, says Doris Lau, a director and vice-president of Nesbitt Burns of Toronto.
"The money was pouring into Hong Kong months before the handover, and there will be lots more pouring in," Mrs. Lau said yesterday.
"In the last 100 years, the money has flowed in from Britain, Japan and Taiwan. But now it's Chinese money from China which is supporting 80 per cent of the Hong Kong economy. And if China does well -- and I think it will -- Hong Kong will do very well."
Since early April, the 33-stock Hang Seng index has risen by 31 per cent. It closed yesterday at 15,772 points, yet another high since trading resumed at 15,196 points on July 3 with the Chinese authorities in power.
In that time, the Hang Seng has risen 3.79 per cent, compared with the Dow's 6.30 per cent and the TSE 300's 5.83 per cent.
"But watch it in the months ahead," said Mrs. Lau. "You're going to see it go to 20,000 easily."
If her forecast is correct, that would represent a 25-per-cent increase.
An unabashed supporter of Hong Kong, Mrs. Lau, who was born in the colony and who emigrated to Canada in 1975, was a guest of the Beijing and London governments for the handover ceremony on July 1.
"Under British rule, everything was very shortsighted," she said. "There was no R&D, no long-term planning. When it was a British colony, there was no democracy, anyway. There was freedom but no democracy. So the Hong Kong people don't really care about all these politics. They care about economics because in Hong Kong, nobody has really experienced democracy, they have no idea of democracy. To them, freedom to make money is the most important thing.
"No matter whom I talk to in Hong Kong -- from the middle class to businessmen to taxi drivers to labourers -- that's how they see Hong Kong. That's the uniqueness of the Hong Kong people, because Hong Kong has been like this for 100-something years."
Evidence of the capitalist fervour still raging there was the sale this past weekend of some apartments in the Vista Paradiso project in Ma On Shan in the New Territories. A previous batch had sold in a snap the previous weekend for $1,100 Cdn a square foot. (That compares with about $100 a square foot for an average Ottawa apartment.)
But with pent-up demand still evident, Cheung Kong (Holdings) Ltd. calmly increased the price of this weekend's allotment to $1,220 Cdn a square foot. All 894 apartments were bought within hours.
But it was not such sales as this that prompted the colony's chief regulator, Anthony Neoh, to deliver his "Wild West of the East" warning. That came after a huge surge of trading in red chips, the stock of companies based and listed in Hong Kong but backed by mainland Chinese government agencies. Their value has risen by more than 50 per cent since April.
"In fact, the traditional blue chips haven't moved for some time," said Mrs. Lau. "Most new issues and Chinese-backed securities are oversubscribed 300 times. When the blue chips start to move, Hong Kong will boom like hell."
Her optimism is shared by Kenneth Tsang, senior vice-president of Midland Walwyn. "Everything has gone pretty much as expected," he said. "The Chinese government wants things to remain as stable as possible. I mean, the stock market still goes on in its volatile way, but that happens all the time in Hong Kong, anyway.
"The real estate market is the core of the Hong Kong market, and that has been very bullish. It's all very positive at this stage, and, speculation and volatility aside, I feel the Hong Kong market in general looks pretty favourable." |
