The best things in life are not free, they are PRICELESS! Your position:Home->china news-> Building A Bubble In Hong Kong A bubble may be forming in Hong Kong. The city's currency peg gets the blame, or credit, depending on your perspective. A newfound faith in China's economy has investors looking to buy into Hong Kong's stock market. The peg means the territory's central bank is busy printing Hong Kong dollars to meet the wave of demand for the currency. The Hong Kong Monetary Authority sold US$11 billion worth of its currency in foreign-exchange markets in March and April. In May, so far, the bank has intervened on at least nine days -- selling an additional US$1 billion of its currency last Thursday alone. The last time the HKMA was an active seller of Hong Kong dollars was 2004, according to its Web site. The central bank also sells bonds to Hong Kong's banks to offset some of this, but the ultimate effect of all the intervention is that cash is piling up in the banking system and interest rates are falling. 'That liquidity has to go somewhere,' says Nomura strategist Sean Darby. Typically it winds up in one of two places: property or stocks. Put the two together and the Hang Seng Properties subindex has risen 54% since early March. This could continue. The property developers still trade below many estimates of net asset value, and the impact of cheap mortgage loans is evident: Transactions have begun to rebound, rising more than 38% in number in April from March, and 2% from a year earlier. After recent gains, a key benchmark of housing prices is now up 13% for the year. The risk is that Hong Kong's dismal economic reality will set in again. Hong Kong's property market tracks the territory's GDP growth closely, so the recent uptick in prices isn't likely to continue, Credit Suisse says. Shares of the developers, then, have overshot the mark. Then again, newly forming bubbles often don't burst as quickly as the bears expect. Mohammed Hadi / David Roman Contact Us-------------------------------------ddpcn.com * Required information Full Name: * Your Email: * Message:* Preview:An Odd Concept Even in      Next:Chinese Singing Show To China will offered A$146bn to Australia in 20 years China Private Equity Stresses the Equity and not Debt IEA: oil-price surges within three years Hang Lung gets two pieces of land in mainland China Chinese Singing Show To Go On, With a New Name and Conditions An Odd Concept Even in China: Stock Holdings of Anticorruption Organs Fees Are Key To Tencent Baidu Employees Put Their Strike On Hold Cnooc To Buy Australian Gas From BG Hong Kong Bank Shift Brews