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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: elmatador who wrote (59031)	12/16/2009 8:48:56 PM
From: TobagoJack	Respond to of 218046

<<TJ we are prepared to do the utmost nott to let the world economy tank ... gulp Starbucks coffees>> most admirable, for we all must chip in, and enjoy doing so, starting as young as ready ;0) hkg authorities are beginning to fret over a supposed asset bubble, which, to me, merely means a bubble of scripture serving size is yet to be. just in in-tray bloomberg.com Hong Kong Risks Sharp Corrections in Asset Prices, HKMA Says Share Business ExchangeTwitterFacebook\| Email \| Print \| A A A By Sophie Leung Dec. 17 (Bloomberg) -- Hong Kong may face “sharp corrections” in asset prices should fund flows reverse, the Hong Kong Monetary Authority said, adding to recent concerns voiced by Japan, China and South Korea about speculative capital. A rally in the stock market was fueled by capital influx as investors’ risk appetite gained and they bet on an improving outlook for China’s economy, the de-facto central bank said in a quarterly report. Outflow of funds may bring “volatilities in the real economy,” the authority known as HKMA said. Housing prices in Hong Kong have gained for 10 months, while the benchmark Hang Seng Index has surged 50 percent this year. Financial officials in Japan and China, Asia’s two largest economies, warned last month that the Federal Reserve’s interest rate policy risks spurring speculative capital that may inflate asset prices and derail an economic recovery. “It’s highly probable that the asset markets would show fluctuations once the fund flows reverse if the U.S. raises interest rates,” Peng Wensheng, a Hong Kong-based economist with Barclays Capital said by phone. “The risk isn’t restricted to Hong Kong, but extends to emerging markets, especially in Asia.” Asset bubbles are the No. 1 threat to financial stability in Asia, Norman Chan, HKMA’s chief executive officer, said Dec. 14. More than HK$640 billion ($83 billion) has flowed into the city since October last year, he said. The U.S. Federal Reserve has kept benchmark interest rates near zero percent since December 2008 to revive lending after the worst financial crisis since World War II. China has also adopted a loose monetary policy, fueling record lending. Asset Risks “The resultant loose monetary environment may heighten the risks of asset-price and consumer-price inflation through the expectation and credit channels,” the HKMA said yesterday. Hong Kong has kept its base lending rate at the record-low 0.5 percent since December and asked banks to help support the economy. The HKMA has also added money to the market by buying U.S. dollars to prevent the city’s currency from strengthening beyond its fixed-exchange rate maximum. The peg means the city’s interest rates track the U.S. Donald Tsang, Hong Kong’s chief executive, said Nov. 13 that he was “scared” that money flowing into Asia could lead to another crisis. “We have a U.S. dollar carry trade at the moment,” Tsang had said. “Where is the money going -- it’s where the problem’s going to be: Asia. You can see asset prices going up, not only in Korea, in Taiwan, in Singapore and in Hong Kong, going up to levels that are incompatible or inconsistent with the economic fundamentals.” The carry trade is where investors borrow cheaply in one currency and use the funds to invest in other currencies. Home Prices Prices for existing Hong Kong homes rose 29 percent this year, according to the Centa-City Leading Index, a weekly measure developed by Centaline Property Agency Ltd. and the City University of Hong Kong. The price jump has sparked a public outcry, spurring the government to tighten down-payment requirements for luxury homes for the first time since 1991 to curtail speculation. Hong Kong’s economy will further improve next year, and consumer-price inflation is expected to “remain anchored” in the first half of 2010, HKMA said in its report. Consumer prices rose 2.2 percent in October from a year earlier, after the biggest fall in five years in August, as the economic recovery encouraged spending. The city’s economy grew for a second straight quarter in the three months through Sept. 30 as consumption and investment gained. Separately, the HKMA also said yesterday that the value of structured securities held by local banks surveyed fell 55.3 percent at the end of June, compared with December last year. The market value of debt securities held by the banks surveyed stood at HK$1.78 trillion at the end of June, up 4.9 percent from December. Most of the debt securities held were issued by banks and sovereigns, including the U.S. treasury, with investment-grade credit ratings, the HKMA said. To contact the reporter on this story: Sophie Leung in Hong Kong at sleung59@bloomberg.net Last Updated: December 16, 2009 11:01 EST