Hong Kong taxi licences hit record high of almost US$1m
Price of vehicle with permit jumps 80pc from 2009 to record HK$7.66 million as low interest rates attract investors
Allan Shek, the owner of a shop selling gold and jade jewellery, says he has made millions on the side by riding wild swings in the stock market and by buying into the city's property boom. No more.
Last month, he bought five taxis and the licences to operate them. Seven or eight of his friends have bought taxis too, he says.
The bubble is already there. Investors feel that there aren't many good investment tools in the market, as there are restrictions on the property market, and the stock market is not performing that well
"If I have the ability, I will buy 15 more taxis this year," says Shek, speaking with rapid-fire enthusiasm over the latest way to make money in a city where the benchmark Hang Seng Index has fallen almost 7 per cent from the year's high and record property prices have started to decline because of government curbs.
Prices have surged more than 80 per cent since taking off in September 2009, as cheap financing and expectations of continued gains draw investors.
The run-up is sparking warnings of yet another investment bubble in a city that is no stranger to them, says Billy Mak, an associate professor of finance at Hong Kong Baptist University.
The prices for the cars - most are shiny, red Toyota Crown Comfort models imported from Japan - and their licences have increased at a faster rate than the income the taxis generate.
