• Wed
  • Jul 23, 2014
  • Updated: 5:16am
Occupy Central
NewsHong Kong
POLITICS

Occupy Central a danger to the Hong Kong property market, Barclays Bank warns

Barclays Bank says 'shocks' like Central protest could cause a slump from which it will take the city longer to recover than in 2003 and 2008

PUBLISHED : Tuesday, 08 July, 2014, 11:52pm
UPDATED : Wednesday, 09 July, 2014, 5:14pm

"Unexpected shocks" like the planned Occupy Central protest could trigger a property market slump, leading international bank Barclays warned yesterday.

And it would take Hong Kong longer to recover than after the crashes of 2003 and 2008, it said.

Barclays said prices had deviated too much from fundamentals, making the property market vulnerable to such shocks. Paul Louie, the bank's head of research for property in Asia ex-Japan, said in a report: "If a shock were to occur, we believe the subsequent recovery could take a long time, and better resemble 1998 [than the two later crises]."

Home prices fell 56 per cent between 1997 and 1998 after the Asian financial crisis. It took eight months for the prices to hit a trough and another five years to recover to the pre-crisis level.

In comparison, it took seven months in 2003 after the outbreak of severe acute respiratory syndrome (Sars) and a year in 2008 after the global financial crisis for prices to return to their previous levels.

Louie made only a vague reference to the Occupy Central movement in his report.

But he told the South China Morning Post later that the planned blocking of Central streets by pro-democracy protesters "could be one of the unexpected shocks".

The Barclays forecast came a day after the city's biggest bank, HSBC, issued a report that highlighted the risks posed to the stock market by the civil disobedience movement.

HSBC later diluted the report after criticism online.

But many hold different views. Several real estate agents have raised their forecasts for this year after property prices hit a record high.

Joseph Tsang, managing director of Jones Lang LaSalle, said there was no evidence to show political uncertainties such as Occupy Central had affected property market sentiment.

In the Barclays report, Louie did not predict by how much prices could fall. He said only that in such an event, it would take the city longer to recover. According to his analysis, the home-price-to-income multiple, which reflects housing affordability, stands at 13.5.

This is higher than the figures recorded on the eve of all three crises in the past two decades: 13.2 in 1997, 5.1 in 2003 and 8.8 in 2008. He argued that it would take longer for prices to be realigned with the fundamentals.

The Occupy Central organisers have said they may go ahead with the protest as soon as next month if the government does not come up with a universal suffrage proposal that they consider genuine.

Terence Chong Tai-leung, an economics professor at Chinese University, said he did not believe Occupy alone, without changes in interest rates and government policy, could pose a significant threat to the market.

"The impact of the protest, hitting Hong Kong only for a few days, will just be like a typhoon," he said.

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donniemcm
Well that's what we call open and public manipulation.
caractacus
Let's hope the property market falls big time so that one day ordinary people can afford to buy a home.
Property developers and bankers have preyed upon the public far too long.
tksiow
When it comes to predicting the housing market in Hong Kong, Barclays has been consistently off the mark by a big margin.More than a year ago they predicted that prices will drop by 30% by end 2014. Latest data and even the man in the streets says it will be no more than 10% but more likely 5%.
To make up for their wrong predictions,they now use the passing occupy central as a possible occasion to redeem their credibility with a silly prediction on the housing market.Paul Louie and his bunch of clowns from Barclays property research is an embarrassment to the bank.
When Barclays say buy,it means sell and when they say sell,you should buy.
Why does SCMP alway interview Barclays and publish their silly comments ?
53a0019b-d7ac-4e83-9939-08dc0a3209ca
Through what means can Occupy Central deal such blow to the stock market?
If a panic selling transpires, what drives the fear? That Occupy Central will threaten public security? Non-sensical. Just consider the ratio of the no. of cops present to the no. of radicals. Are the investors really that beguileless to think a few radicals mean the event morphing into a riot?
Crack down by the Central government? Just think of the considerable interests of the SOEs in the stock market.
It really takes fools to be spooked into panic selling
Sugelanren
Its not a danger - its a positive benefit, something the Government has been try to do for years - lower property prices. Thank you Occupy Central for this buying opportunity!
HK-Explorer
We live in a world of technology and HK has one of the best internets in the world. Companies will have staff that can legally work from home do so and they will just connect via VPN.
Those such as stock brokers they will just move tot heir DR site (all banks have one) or their other sites (HSBC, SC, Hang Seng, Citi) have offices all over HK. Companies will also book out Hotel rooms during the time for key staff so they don't need to take public transport (like during Y2K).
Most people just read and respond to Email such IPhone, Android and BBY will meet those needs.
The people who will feel occupy central are the ones who are at the bottom of the pecking order such as shop assistants, restaurant workers, street vendors etc...
Rich people will feel absolutely nothing. They have been talking about occupy central for so long now that companies are all ready to deal with it.
Worst case their regional offices around the world will deal with it.
This will be a non-event that will just be shown on the news. Just look at an areal map. Central is small and there are office buildings everywhere. Gone are the days when a small area is in total control.
HK-Explorer
I also get the feeling China would be quite happy if occupy central happens. They are much smarter now and will just sit back and let it happen. It will make HK a laughing stock and pull it down a peg or two. China will just say the same thing happened in NY (occupy Wall street) thus shows it is not really against the Chinese govt. HK people are just copycats.
I assume the instigators of Occupy Wall Street will sue occupy Central for breaking their copyright on civil disobedience :-)
ineslamyk@gmail.com
"Unexpected shocks" like the planned Occupy Central protest could trigger a property market slump...
How is it unexpected if it was planned months ago? What will be unexpected is if Beijing send the army in or if they put economic sanction on us to penalise us (because we want genuine democracy). This will cause real shocks in the stock market and impacts on the economy. Blocking a few streets in a few days will NOT.
allan94
i hope occupy central causes a property collapse. i have been saving so long to buy!
go occupy central....destroy everything!!
"when there is blood on the streets, buy property!"
Baggy
That's how many tycoons made their money, they bought when blood was on the street, and today the same people are trying to protect their interest by saying how wrong the fight for democracy is! they want our next generation to grow up to believe Mao was a god and sing communist songs and tap dance to work in their military outfits!

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