persistent HK problems:
1) HK banks have one one of the highest exposure to property rates in Asia - over 40% ot total loans committed to real estate...1998 projections were for both private and public sectors to supply 30,000-40.000 dwellings each...market can only absorb this supply if banks continue to finance puchasing which could mean exposure rate of abot 50%...even if banks take this risk, possibility of downgrading by international rating agencies and investors looms... a situation calling for HK government intervention to fixing the mortgage rate and/or collaterize local bank mortgages?...of course, attempts to shore up the property sector in this manner will not benefit working people who cannot afford to purchase homes...
2) the 1983 pegging of HK currency at HK$ 7.8 to US$ 1 meant an effective depreciation of 40% in exchange rate...this resulted in a sharp boost in HK exports, which, when combined, with the opening of the Mainland's economy led to economic growth in the '80s...HK business had access to new markets, international capital poured into the colony seeking opportunities in China while utilizing HK's developed infrastructure and business culture, cheap land and labor in the Pearl delta offered HK businesses alternatives to restructuring and upgrading productivity...since the early '90s, HK's economy has been experiencing lagging productivity growth, due, in part, to the fact that the initial 'benefits' from China have begun to fade...hence the 'bubble economy' - finding it harder to profit from expanded production or new businesses, investors turned to real estate and equities... unemployment is rising, wages are declining, no unemployment compensation system exists, no minimum wage law exists...meanwhile, the HK gov't budget places emphasis on the financial and property sectors...Michael Hoover