Read the news and understand the economy (Fang Baoqiao)

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go through Hong Kong Economic Times August 26, 2024

This articleauthorFang BaoqiaoHe is the Honorary President of the Hong Kong Information Technology Industry Association and writes a column for the Hong Kong Economic Times.“Kami Shingo”.

Earlier, Cheung Kong Group (01113) Chairman Li Zeju said at the 2024 interim performance analyst meeting, “I dare not bet that the Hong Kong market will be too bad. Past history tells us that anyone who bets that Hong Kong will be bad in the long run is wrong.” He said there is no crystal ball to predict the overall market, but described Hong Kong as having experienced many economic cycles. Every time, those who make the most money enter the market when everyone is pessimistic, and the speed of market reversal makes many people unable to react in time. As soon as this report came out, everyone was speculating whether there was any hidden message behind Mr. Li’s words?

For most Hong Kong people, the biggest investment in their life is the property they live in. I still remember that in 1997, I bought a property in Amoy Gardens. When SARS hit Hong Kong in 2003, Amoy Gardens became the hardest hit area. The property valuation was less than one-fifth of the purchase price. At that time, I was so depressed that I hit the bottom. I believe most people feel the same way. After SARS, the central government opened up the “free travel” policy, and the Hong Kong economy and property market rebounded rapidly. However, when I sold this property in 2005, I still lost 50% of the purchase price. Coupled with the high interest rate environment at that time, I was seriously injured. In the gloomy situation at that time, have you ever considered investing in the market? If investors with sufficient cash at that time had bought real estate properties at a low price, I believe that today, even if they are not billionaires, they will at least have no worries about food and clothing.

If investors who were well-funded back then had bought real estate properties at a low price, I believe that even if they are not billionaires today, they would at least have enough food and clothing. (Photo from Hong Kong Economic Times)

After the COVID-19 pandemic, the economic recovery is not as expected, and there are still signs of decline at the end of 2023. In view of this, the Hong Kong government “withdraws” the property market in the hope of warming up the Hong Kong economy. As a result, the property market has seen a small spring at the beginning of this year, and new properties are selling well. However, everyone should pay attention to a lot of real estate news recently. Second-hand loss cases are frequent, and some of the declines are even more than 20% to 30%, which is terrible. But if everyone pays close attention, it is not difficult to find that some loss cases are actually purchased during the COVID-19 pandemic. In recent years, property prices have continued to fall. After the “withdrawal of the spicy” at the beginning of this year, the threshold for selling has been lowered. Many owners have no choice but to “lose less and win”, and leave the market. However, if the market lacks purchasing power, who will be willing to take over these new properties and loss units? In recent years, there are more mainland students and people who come to Hong Kong under the professional program to rent houses, making the Hong Kong rental market more prosperous than before, becoming another support point for the Hong Kong property market.

Of course, I don’t have a crystal ball, so I can’t tell you whether now is the best time to enter the market, whether the Hong Kong economy has reached the bottom, and when will it rebound from the bottom and resume growth? Investors always hope to make the most profit in the investment market, and hope to “test the bottom and buy in” as much as possible. In addition to requiring a unique eye, it also tests patience, and funds need to be sufficient, because the process of testing the bottom may be very long. If you don’t have the ability to “cover your position”, it’s like a buyer who bought a new property in Hung Shui Kiu last year, and when he saw the price drop, he cancelled the order, and the developer demanded the difference. This case has also been reported by many media. However, most of the smart netizens believe that buyers who cancel the order should respect the spirit of the contract, so the developer’s “call for margin” is absolutely reasonable.

Last year, a buyer purchased a new property in Hongshuiqiao. When he saw the price drop, he cancelled the order and was eventually charged the difference by the developer. This case has been reported by many media. (Photo courtesy of China News Service)

As Mr. Li Zeju said, those who make the most money enter the market when everyone is bearish, so is the bad news enough now? Or do we have to wait for the results of the US election to confirm that the US dollar has entered a rate cut cycle before everyone will “buy first”?