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remedial action. But what they did was only to hit the ball as it came. After the incident, a large amount of taxpayers' money was used to compensate the poultry merchants. Probably the Government had never expected the amount to be so huge. The root of the problem is that the Government does not have a sound system for the quarantine of imported poultry and the prevention of epidemic.
(2) Drop in property prices
The imbalance between supply and demand in Hong Kong's housing market has sent property prices rocketing. Tied down by the pegged exchange rate, the banks have maintained a low interest rate. Without any outlet for their capital, many speculators turn to real estate to make a fast buck. Under such circumstances, property prices have risen to a level that is beyond the affordability of most people. A free market is and should be a mechanism for self-adjustment. Under the mutually adjusting forces of supply/demand and affordability, it is only a matter of time that property prices will gradually go down in response to the market mechanism. However, as real estate companies and agents continue to paint a rosy picture and under the constant hype of the media, Hong Kong people are given a false picture of the situation. This is, in fact, a ticking time bomb. To cool down the property market, the Government announced the target of supplying 85,000 residential flats each year. As a result, the market could not hold up any longer and subsequently, when prices tumbled rapidly, it landed with a harsh bump. In the face of sudden economic change, people's assets become devalued. As complaints build up, social unrest may ensue. This is something that the Government failed to see in the beginning.
(3) Stock market slump
Stocks are instruments of investment. They go up and down in value; they bring profit or loss. In a well-ordered environment, stock trading is a normal activity of a free economy. However, speculators flooded the market last year and jacked up the prices of red chip stocks, creating a flurry in the market. Speculation in the stock market inevitably brings along with it an element of risk. The biggest problem is speculation in the concept of stocks which carries with it an extremely high risk. As everyone paints a rosy picture, many people get carried away by talks of high profit and invest their savings in stocks. As the prices of red chip concept stocks dropped and being caught in the tail of the financial storm in South East Asia, Hong Kong's stock market plummeted. This, together with the fall in property prices, brought fear to the people's hearts. The stock market plunged again and again.
Criticizing out of hindsight does nothing to help the present situation but the above example carries a message for us. The property market is closely tied up with the stock market, and the bird flu epidemic is closely tied up with the people's livelihood, the tourist industry, the local economy and the people's spending power. It is precisely because of this that I would like, first of all, to
Page 480 of 654
Page 480 of 654
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Page 480 of 654
Page 480 of 654
HONG KONG PROVISIONAL URBAN COUNCIL
475
remedial action. But what they did was only to hit the ball as it came. After the incident, a large amount of taxpayers' money was used to compensate the poultry merchants. Probably the Government had never expected the amount to be so huge. The root of the problem is that the Government does not have a sound system for the quarantine of imported poultry and the prevention of epidemic.
(2) Drop in property prices
The imbalance between supply and demand in Hong Kong's housing market has sent property prices rocketing. Tied down by the pegged exchange rate, the banks have maintained a low interest rate. Without any outlet for their capital, many speculators turn to real estate to make a fast buck. Under such circumstances. property prices have risen to a level that is beyond the affordability of most people. A free market is and should be a mechanism for self-adjustment. Under the mutually adjusting forces of supply/demand and affordability, it is only a matter of time that property prices will gradually go down in response to the market mechanism. However, as real estate companies and agents continue to paint a rosy picture and under the constant hype of the media, Hong Kong people are given a false picture of the situation. This is, in fact, a ticking time bomb. To cool down the property market, the Government announced the target of supplying 85 000 residential flats each year. As a result the market could not hold up any longer and subsequently when prices tumbled rapidly, it landed with a harsh bump. In the face of sudden economic change, people's assets become devalued. As complaints build up, social unrest may ensue. This is something that the Government failed to see in the beginning.
(3) Stock market slump
Stocks are instruments of investment. They go up and down in value; they bring profit or loss. In a well-ordered environment, stock trading is a normal activity of a free economy. However, speculators flooded the market last year and jacked up the prices of red chip stocks, creating a flurry in the market. Speculation in the stock market inevitably brings along with it an element of risk. The biggest problem is speculation in the concept of stocks which carries with it an extremely high risk. As everyone paints a rosy picture, many people get carried away by talks of high profit and invest their savings in stocks. As the prices of red chip concept stocks dropped and being caught in the tail of the financial storm in South East Asia, Hong Kong's stock market plummeted. This, together with the fall in property prices, brought fear to the people's hearts. The stock market plunged again and again.
Criticizing out of hindsight does nothing to help the present situation but the above example carries a message for us. The property market is closely tied up with the stock market, and the bird flu epidemic is closely tied up with the people's livelihood, the tourist industry, the local economy and the people's spending power. It is precisely because of this that I would like, first of all, to
Page 480 of 654
Page 480 of 654
Page 480Page 481
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