Market turmoil has stalled inflation’s rise, but real solutions are needed
David Li, CEO of Bank of East Asia, Hong Kong, feels that market turmoil has been a wakeup call for US and EU governments to address debt issues and structural problems. August 15, 2011 | David LiI do not see major new risks for banks in the region arising from the US downgrade; I see the turmoil more as an act of frustration at the inability of governments to address sovereign debt. The root of the problem is not in Asia; we are largely bystanders. We have not changed our business outlook for the remainder of the year after the US ratings downgrade. We continue to see good demand for loans. In the Greater China region, policy-makers have spent the past year and a half dealing with inflation and rising property prices. Various measures have been introduced, using monetary, fiscal and administrative tools, in an attempt to break the upward spiral in prices. While we never like to see turmoil in the markets, the current volatility is not entirely bad news for our region. This just may provide the shock that is needed to forestall further price rises, and allow regional authorities a little breathing room. The rise in property prices in Hong Kong over the past year has not been good news for local banks. The government and the banking regulator have introduced a series of administrative measures in an attempt to bring greater order to the market, and all banks in Hong Kong now face severe constraints on mortgage lending. Transaction volume has declined. As a result, we have re-focused our attention on other, more profitable business areas. We look forward to a better market for mortgage loans once the Government’s efforts to increase housing supply start to take effect. Of course, we do not want to see theturmoil persist. We hope that governments in Europe and America will view the present volatility as a vote of no-confidence in their actions—or lack of action—and that they will now take concrete measures to address sovereign debt issues and larger structural problems in their economies. ...Please login to read the complete article. If you already have an account, you can login now or subscribe/register.
Categories: China, Government Finance, Hong KongChina,Government Finance,HK, China,Government Finance,Hong Kong, , Capital Marketscapital, Capital Markets, Keywords:David Li, Bank Of East Asia, Sovereign Debt, Inflation David Li, Bank of East Asia, Sovereign Debt, Inflation
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