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CHINA / Taiwan, HK, Macao |
HK monetary chief warns of uncertainties ahead(Xinhua)
Updated: 2007-10-26 11:13 HONG KONG - Hong Kong Monetary Authority Chief Executive Joseph Yam said Thursday there were currently a lot of uncertainties or even risks ahead in spite of impressive performance of the global financial markets lately. "Investors should remain alert," Yam, who has been heading the Monetary Authority - virtually the special administrative region's central bank - since its establishment in 1993, wrote in a latest article published on the institution's official website. The economic and financial outlook for China's mainland and the United States stood out among the uncertainties confronting "our economy and financial markets," he said. He said the possibility of a recession in the United States could not be ruled out as the American sub-prime crisis persists and tight credit conditions were threatening to slow down the US economy and lead to further downward pressure on property prices. Yam noted the plans to encourage the orderly outflow of capital from Chinese mainland had yet to be implemented while domestic savings continued to accumulate. "The imbalance in the supply of and demand for financial instruments other than bank deposits persists, leading to prices being much higher than would otherwise be the case, and causing concerns about the possibility of a stock market bubble," he said. The macro monetary conditions in the mainland were causing considerable concerns and it was not clear how this scenario might develop, he said, adding that the inevitable market adjustment, if sharp and destabilizing, would have serious implications for monetary and financial stability, for the mainland as well as Hong Kong. Yam said developments in both the United States and China's mainland in the next few months would be crucial. In the US there was hope that normal money-market conditions return shortly, limiting adverse impact on the economy and the housing market there. "On the mainland there is hope for more concerted and effective macro-economic adjustment measures. But there are structural issues in the financial system that will need to be addressed to make it conducive to promoting sustainable economic expansion." "Against this complex background we in Hong Kong have to be cautious about our short-term economic prospects despite the different and bullish signals our financial markets are sending us. Perhaps there are factors that I have failed to see. Irrational exuberance or not, investors should act with caution," he said. |
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