Government's standing guard for downside risk mitigation over asset prices

Partly due to high household debt ratio.

The government introduced some tough property cooling measures on 22 February last year, as property prices re-accelerate and capital inflows resume.

According to a research note from UBS, high household debt ratio, plus the extreme level of property prices, suggests that the government will be on guard to mitigate the downside risks.

The report also said that property prices have picked back up since April, coinciding with the latest episode of inflows into HKD.

The CCL—property price index compiled by Centaline property agency—has risen 5.6% since March 14.

The report noted further that Hong Kong asset prices typically benefit when the Federal Reserve eases monetary policy aggressively, because Hong Kong’s linked exchange rate with the USD means that it imports 100% of the US Fed’s monetary policy.