To: Chip McVickar who wrote (5689 ) 8/20/1998 8:36:00 AM From: Bosco Respond to
G'day all - while it is true that there were excessive speculations in the HK RE market, such speculations were not a new phenomenon for people who has witnessed the changes of that region for the past several decades. Also, the housing problem is a real issue for the region of close to 7MM people. This is in contrast with the overbuilding in Bangkok [or in Macau] for example. Speaking of contrast, it is important to note that the nature of HK economy is quite different from Thailand [or even Singapore.] To say that HK must de-peg b/c others have done so may imply they are competing economies. Having said that, there is no denying certain vulnerability in the HK economy. It is true that it is joint to the hip with that of China, for ways more than one. Also, the equity market is highly affected by the RE market as the property values weigh heavily in the valuations of many cos [including many blue chips like Cheng Kong etc.] IMHO, I do not see devaluation will benefit HK businesses as much as one would think [let alone the MAD effects of devaluation spiral.] Also, such an action will only place additional burden on the lower and middle segments of the population, which have already taken the blunt of the asian crisis. Noone with any political savvy in HK [and in China, for that matter,] will attempt such a feat without worrying about the wrath of the masses. We got to remember, there is more than HK and China at stake here. The amount of investments, in terms of financial infrastructures, by the multinationals, especially the US cos, are staggering. The fall of HKD is not the same as the fall of the Thai baht.
