"London has proven to be a strong, liquid real estate market with robust demand for grade A office and retail assets over different market cycles."
Hong Kong Monetary Authority, November 7
And so saying, the HKMA announced that it has jumped into the London property market by paying HK$2.5 billion for a joint venture with Great Portland Estates to build a Mayfair office and shop complex.
You may have noticed the abundance of London property ads in this newspaper recently. They all look much the same - an arrow pointing to a dot somewhere on an aerial photo and a banner above saying, "There, that's us, only 20 seconds from Buckingham Palace, 15 from Regent Street and 10 seconds at most to get to Harvey Nichols. Get one now, cheap at £10 billion (HK$124.6 billion) per shoebox."
And from all over Russia, Saudi Arabia and inner China the money comes pouring in. If that money is parked in London property that money is safe. Britain doesn't like whistle-blowers. It has just had all three of its spy agency chiefs tell parliament so.
But why does the HKMA wish to set its own feet in these rather dubious tracks? It has nothing to hide. It doesn't need a bolthole for a quick run in case of regime change. It can park its money in perfect safety anywhere in the world. Why join the greasy lot in this queue, then?
I shall tell you why. It is because the HKMA doesn't know what it is doing.
First of all, it has too much money to do it with, almost HK$3 trillion in total assets and HK$1.5 trillion in net assets on which only the Hong Kong public has any call. Managing that much money would be a daunting task for any fund manager. Wisely, the HKMA has in the past mostly put the money in the most boring bonds it can find or let others run it.
But its executives have never favoured a passive role. With so much money, they would like to be real gods of the market whom brokers worship and business newscasters speak of in awe. As a starter they have set up a playschool called the Hong Kong Mortgage Corporation.
It has drawn mostly laughs. It has played in taxi licence speculation, Korean property bonds and other peripheral games and mostly keeps going by occasionally begging real bankers for a few crumbs from their table.
And now we're off to London through the HKMA itself. I am, of course, not privy to the deliberations behind this but, as these people are civil servants, I am sure they went through all the proper processes, hiring the best consultants at every stage.
This is a bad idea in investment. Consultants are paid fees, not percentages of the profit. They get their money whether the investment idea later proves bad or good and all that concerns them is that the idea not look bad at the time. They therefore invariably take the conventional view - do whatever everyone else is doing.
Now here is Jake's No5 Rule of Investment: the only time the herd is all headed one way is when it is headed to the slaughterhouse.
I cannot be absolutely sure of an imminent collapse in the London property market, of course, but the odds on a good solid crash have certainly become better if the HKMA has decided to jump in. Some people have a knack for joining a bull market at the top. You get a feel for them if you spend any time in the investment business and the HKMA certainly has that feel about it
Meanwhile, with the fees for all the consultants, survey agents and due diligence reports, I doubt there will be much of a return on this venture.
And could we be told, please, if the HKMA has agreed to give its joint venture partner any call or put options on this project? We would not want to be surprised by news of such things later. Just asking in the cause of transparency.