Their currencies of emerging economies may soon depreciate — as they did in 2013 and 2014 – in the face of a looming rate hike cycle in the United States, Hong Kong Financial Secretary John Tsang Chun-wah warned.
Capital flight might ensue, causing a slump in property prices in the region, he said in the latest entry on his blog, the Hong Kong Economic Journal reported.
Economies with weaker fundamentals will be hit hard, adversely affecting economic and financial stability in the region, Tsang said.
He noted that a large sum of capital has flowed into Asian and emerging markets since 2008 amid quantitative easing in major countries.
Stock markets in the Philippines, Indonesia and Thailand have more than doubled in value from their levels that year, Tsang said.
Property prices in India and Malaysia have surged by more than 60 percent, while bonds issued offshore by private firms in emerging markets have increased by 1.6 times to over US$400 billion, he said.
Secretary for Financial Services and the Treasury Ceajer Chan Ka-keung, meanwhile, warned of the potential impact on property prices in Hong Kong of a long-awaited interest rate hike in the US that is highly likely to be imposed this year.
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