THE president of a prominent US research group has joined the growing ranks of economists warning against escalating asset prices in Asia.
The huge fiscal stimulus packages and flush liquidity set ‘the stage for asset bubbles to move out of the United States and into Asia’, said The Conference Board’s Gail Fosler at the CapitaLand International Forum yesterday.
Asia needs to keep a close eye on this risk, she emphasised. ‘Valuations at which acquisitions are made, at which underlying business investments are made, these acquisition prices are going to be almost generically extremely high, and I think this is going to pose a significant business challenge.’
Several economists have cautioned against potential speculation in the region’s equity, real estate and commodity markets after governments turned to fiscal stimulus and looser monetary policy to counter the downturn. Bank of China’s vice-president Zhu Min also said this week that liquidity could be heating up these markets.
Observers are training their attention on China, where property prices have risen rapidly on the back of record lending and growing optimism. Home prices in the country’s 70 biggest cities went up one per cent year-on-year in July, and again by 2 per cent year-on-year last month. Continue reading
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