HK's dollar peg faces US tapering concern
But top HK official says peg has spurred prosperity
NOW that Hong Kong's dollar peg has crossed a milestone - it celebrated its 30th anniversary yesterday - it faces an immediate threat. Will it safeguard the city from the negative effects of the US tapering, which is sooner or later expected?
Many critics have blamed the peg for causing the sharp asset price inflation in recent years and in the process making Hong Kong the world's most expensive property market. With the prospects of the US tapering drawing near, real estate analysts have been advising caution against a radical turn in the property market.
The latest warning comes from Raymond Ngai, a property analyst with Merrill Lynch, part of Bank of America, who yesterday forecast home prices to drop 5 per cent this year and a hefty 15 per cent next year.
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