HK faces high risk of asset bubble, monetary chief warns

Money has flowed into Hong Kong in the past year, mostly from mainland China, sending property prices up 29 percent and the stock market's Hang Seng Index up by more than 50 percent.

Norman Chan, chief executive of the Hong Kong Monetary Authority, warned legislators that there could be a sharp reversal when global interest rates rise.

“Under the current very low interest rate environment and very abundant supply of liquidity to Hong Kong, the potential risk of an asset bubble is not small - it is significant,” Chan said.

“It is important we do everything possible to prevent an asset bubble being formed in Hong Kong, so that when the reversal of flows takes place in the future the impact on the asset markets in Hong Kong will be small,” he said.

Hong Kong officials have issued several recent warnings of a bubble forming in real estate and the stock market.

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