Hong Kong's tempest in a shoebox may save the market

Singapore

WHEN pro-market authorities tamper with prices to cool asset bubbles, economists speak of "throwing sand in the wheels of finance." Having emptied its bucket of sand without stanching the desire to own property, Hong Kong decided to derail the out-of-control streetcar in a pit of exorbitant taxation. Considering the more painful alternative, it's a wise move.

Now that foreigners, including all-important mainland Chinese buyers, must pay a 30 per cent stamp duty to buy overpriced shoeboxes, transactions could drop by 70 per cent, Bloomberg News reported. Weaker demand might jolt earnings of the city's developers. That's what the plunge in Cheung Kong Property Holdings Ltd's shares suggested on Monday.