I would not presumed to be an expert at understanding the economics of this region, but it does appear that Hong Kong is in a 'Catch 22' situation. In order to protect their currency peg, the HKMA will have to raise interest rates and this will hurt the market. If they let the peg go, confidence will be eroded. In my opinion, they will not let the peg go (face i.e. China's, will have a great influence).
Economically, everything appears to be good (at the surface). But, deep down, it's anybody's guess. Who would have thought that Japan could go in a recession (or very low growth) that do not appear to go away even after 6 years. Some analysts are predicting for this region to go into very low growth (2%) or even recession in the next 2 years. I believe that this region accounts for over 25% of the world's trade and this might have some worldwide repercussions. Japan, again, will be in a difficult position, because they are heavily invested in the rest of the Asian economies. Europe will also be affected somewhat e.g. ABB (an European company that deals mainly in construction projects) shares have already taken a beating since Malaysia announced the delay of several infrastructure projects.
CREAF will do well in the area of lower costs. In terms of growth in the Asian market for its products, this will be adverse news. But growth in the European and US markets will more than make up for it.
Thanks for the concern, but personally I'm not that badly affected. My core holdings is CREAF, the majority of which I bought at S$8.
Regards.
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