Hong Kong Warns: Its Housing Bubble is a ‘Dangerous Situation’

The HK financial system is ‘very strong’ and ‘can withstand an adjustment in the property market.’
The Hong Kong dollar is pegged to the US dollar. Hong Kong’s monetary policy is follows the Fed’s monetary policy. The Fed has embarked on a tightening cycle, raising rates four times so far. The Hong Kong Monetary Authority has followed each time. Last week, it raised its policy rate by 25 basis points to 1.5%. This will have consequences for the most expensive and ludicrously inflated housing bubble in the world.
‘We have to warn our people about the dangerous situation of the property market at the moment,’ Hong Kong Financial Secretary Paul Chan told Bloomberg TV.
‘No one can tell how deep the adjustment will be or what is the appropriate level of adjustment because it is market force,’ he said. ‘It is not up to the government to dictate, but I think it is important for people to recognize it is risky.’
But he doesn’t expect a repeat of what happened when Hong Kong’s prior housing bubble imploded during the Asian Financial Crisis.

This post was published at Wolf Street on Jun 20, 2017.