Bloomberg - Hong Kong’s Economy Unexpectedly Contracts in First Quarter
http://bloom.bg/23MCepp
Recession starting in hongkong?? Beginning of another AFC??
Sent from my MotoG3 using Tapatalk
expected as they have been overdrive for so long, china's trade decreasing even though with fudge numbers,
Li-KS waiting for the best time to bring his money back from UK/EU to HK/China again...
I think its due to the overheated property cycle and how reliant they are on the ppty/construction and banking industry; and unfortunately these two sectors go hand in hand. Now that Hk ppty is slowing; things are getting bad. It comes to show how much Hong Kong's recent growth was propelled by a property bubble. Now the key is how long can landlords fight in this downturn, if they are too over leveraged and ppty goes down, they go bust which will lead to a full blown recession
This too will apply to Singapore which IMO is in a property bubble especially in office, retail and residential, where it depends on whether individuals//corporations are able to service their loans while the ppty cycle is in its doldrums.
Don't think it will be full-blown recession, plenty of cash-rich pax waiting to go-in to scope up HK's property at discount... expect just a correction bah, 20-30%... let's see how it unfolds over the next 2-3 years...
Given how levered REITS can be, a 20-30% decrease in property price is enough to do tremendous damage.
For a REIT currently at a conservative gearing ratio of 35%, a fall in 30% of prices means their gearing ratio increases to 50%. That itself is enough to cause trouble. And for individuals owning a ppty, I am pretty sure their leverage taken is definitely higher than 35%. In such trying times, the relationship with your relationship manager will be put to the test.
Hong Kong retail sector has done poorly, without the support from China visitors. The scenario remains the same, based on few companies' financial reports, with retail biz in Hong Kong. The chaos will sustain for quite a long time, I guess.