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Effects of Capital Flow on the Equity and Housing Markets in Hong Kong

Yin-Wong Cheung, Kenneth K. Chow and Matthew S. Yiu
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Kenneth K. Chow: Hong Kong Monetary Authority
Matthew S. Yiu: Hong Kong Institute for Monetary Research

No 12017, Working Papers from Hong Kong Institute for Monetary Research

Abstract: The revival of strong capital flows to emerging economies in the aftermath of the Global Financial Crisis in 2008-09 has rekindled the debate on the adverse effects of excessive capital inflows. We study the effects of official and illicit capital flows on Hong Kong, which is a small and open economy with minimal restrictions on cross-border fund movements. To illustrate the effects of different types of capital flows, we study official and illicit flows on Hong Kong¡¯s equity and residential housing markets. It is found that the official and illicit capital flow measures reflect different facets of flow movements and exhibit differential effects on the equity and residential housing markets. The results highlight the complexity of managing capital flows, and the relevance of policies targeting specific sectors.

Keywords: Capital flows; currency-based measure; illicit flow measure; equity market; real estate market (search for similar items in EconPapers)
JEL-codes: F32 E42 G15 R30 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ifn, nep-opm and nep-ure
Date: 2017-01
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Related works:
Journal Article: Effects of capital flow on the equity and housing markets in Hong Kong (2017) Downloads
Working Paper: Effects of Capital Flow on the Equity and Housing Markets in Hong Kong (2017) Downloads
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