HSBC warns of property bubble in Singapore, China and Hong Kong
So it seems an Asian asset bubble is forming again according to HSBC: "In Asia, liquidity is far too abundant to keep interest rates this low...an asset bubble could also emerge in Singapore...although the economy is not out of the woods, developers have enjoyed months of buoyant sales. And prices at some projects have risen as much as 7 per cent."For the laymen who ask how this happens:
1. Financial crisis worldwide, banks are reluctant to lend money (happened)
2. Governments step in to ease monetary policy (happened)
3. Ease to borrow money from banks and low interest rates encourages investing in assets (happening)
4. Too much investment in a single asset class such as property hyper inflates the market (might happen)
5. Hyper inflated market might pop when poor fundamentals cannot meet strong sentiment (might happen)
More here in the article from The Business Times - "HSBC warns of asset inflation risk"
Posted on 27-07-2009 17:44 | By Francis
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