HK property market's ultimate Minsky Meltdown Moment

Find out how Sino Land, Henderson Land will be affected.

According to Barclays, for the property developer stocks, hot money flow should be viewed as a near term positive, stimulating the market at a time when primary sales launches are increasing.

Here's more from Barclays:

There is an argument that despite medium-term concerns of a significant property price correction, that the short-term momentum warrants exposure to those developers – Sino Land, Henderson Land - with the highest Hong Kong property exposure.

Yet awaiting the government’s policy response is probably prudent, even if to date its policy moves have proved largely ineffectual.

On a longer-term basis, we prefer a more defencive benchmark position via Cheung Kong, for its faster asset turns, lower duration land bank and smaller Hong Kong property exposure.

It should, however, be remembered that the lack of exchange rate flexibility that is driving this cycle, also makes it more vulnerable to capital flow reversals, which could potentially trigger a significant credit tightening and asset price deflation.

Ironically, if hot money flows encourage more speculatively financed investors into the housing market, then they may actually bring forward this cycles ultimate ‘Minsky Meltdown Moment’.