HSBC: Asia’s Giant Asset Bubble Unsustainable

From a report in The Asset Magazine:

“It is time. According to HSBC, one of the biggest banks in the region, it is time for sharper rises in interest rates and more restrictive monetary policies to counter the disturbing trend of asset prices in the region that are rising to unsustainable “bubble” levels.

In a report entitled “Tayloring Asia” released to the media on April 8, the bank’s economists argue that the time might have finally arrived for monetary authorities across the region to finally start adopting more restrictive monetary policies to quell the potential of a massive asset bubble surfacing in Asia.

The economists say the spectre of a massive asset bubble underway in Asia could threaten the region’s prospects, bringing it to the edge of an economic precipice similar to what the US experienced in recent years.

They argue that the time has come to finally adopt more prudent policies after the massive stimulus spending pursued by governments last year and the willing cooperation of central banks to ease monetary policies to allow many economies to shield themselves from the impact of the global financial crisis.

“You’ve probably read it in these pages first. And you’ll read it here several times more: unless something more drastic is done, Asia is headed straight into an asset bubble,” warns the report by economists Frederic Neumann and Song Yi Kim.” (emphasis mine)

To read the full report go here.

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