Hong Kong faces no imminent danger of renewed asset-price inflation this year despite recent stock and property-market increases, according to Hang Seng Bank.
Vice-chairman and chief executive Vincent Cheng Hoi-chuen said sentiment had improved recently, and overseas investment managers were re-rating SAR stock values.
He said it would be premature to conclude Hong Kong's economy was turning around.
'The economic figures for the first quarter are very likely to be in bad shape as trade activity declined substantially in the first two months and consumption also declined.
Mr Cheng did not expect the recent property-market revival to be a precursor to a renewed trend of asset-price inflation.
'At least until the end of this year the market will continue to be flooded with fresh supply from developers. Supply may shrink a bit next year, reflecting developers' unwillingness to invest in new projects last year.' Mr Cheng warned of an escalating maturity mismatch risk as banks in Hong Kong continued to slash residential mortgage lending rates.
