The impact of quantitative easing and carry trade on the real estate market in Hong Kong

Tatsuyoshi Miyakoshi, Kui-Wai Li (), Junji Shimada and Yoshihiko Tsukuda

International Review of Economics & Finance, 2020, vol. 69, issue C, 958-976

Abstract: This paper examines how the quantitative easing (QE) policy conducted by Japan, EU and the US raised Hong Kong’s real estate prices through activities in carry trade and in Hong Kong’s real estate investment trust (H-REIT) market. The empirical results demonstrated two new channels of impact. The first new channel shows that Japan’s QE policy did affect the H-REIT prices in money market, which then led to a rise in office price after a lag of three months. The office prices were more persistently affected by the channel through the H-REIT than through the stock prices. Another new channel shows that the QE policy by Japan, the EU and the US since 2008 directly pushed up the office prices. These two new channels imply that the QE policy spilled over to not only the money market, but also the real estate market through the H-REIT market and carry trade. Moreover, the empirical finding is stronger in the price of the ordinary grade office than in the high-grade office, suggesting these new channels have already become common. Moreover, even though introducing control variables in the real estate economics literature, the results are robust.

Keywords: Quantitative easing; Real estate prices; Two channels; REIT markets; Carry trade (search for similar items in EconPapers)
JEL-codes: G01 G12 O16 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:69:y:2020:i:c:p:958-976

DOI: 10.1016/j.iref.2020.05.006

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