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

Author

Listed:
  • Yin-Wong Cheung

    (City University of Hong Kong)

  • Kenneth K. Chow

    (Hong Kong Monetary Authority)

  • Matthew S. Yiu

    (Hong Kong Institute for Monetary Research)

Abstract

The revival of strong capital flows to emerging economies following the Global Financial Crisis in 2008-09 has rekindled the debate on 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. It is found that the official and illicit capital flow measures display a low level of comovement and exhibit differential effects on Hong Kong’s equity and residential housing markets. The results highlight the complexity of managing capital flows, and the relevance of sector-specific capital management policies.

Suggested Citation

  • Yin-Wong Cheung & Kenneth K. Chow & Matthew S. Yiu, 2017. "Effects of Capital Flow on the Equity and Housing Markets in Hong Kong," GRU Working Paper Series GRU_2017_012, City University of Hong Kong, Department of Economics and Finance, Global Research Unit.
    • Handle: RePEc:cth:wpaper:gru_2017_012
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    File URL: https://www.cb.cityu.edu.hk/ef/doc/GRU/WPS/GRU%232017-012%20Cheung%20Chow%20Yiu.pdf
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    Cited by:

    1. is not listed on IDEAS
    2. Charles Ka Yui Leung & Joe Cho Yiu Ng, 2018. "Macro Aspects of Housing," GRU Working Paper Series GRU_2018_016, City University of Hong Kong, Department of Economics and Finance, Global Research Unit.
    3. Tang, Edward Chi Ho & Leung, Charles Ka Yui, 2024. "Icing on the cake: Can the Top-Floor Units serve as a status good and an investment simultaneously?," MPRA Paper 121937, University Library of Munich, Germany.
    4. Marco Hernandez-Vega, 2023. "How relevant are capital flows for house prices in emerging economies?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 159(4), pages 965-986, November.
    5. Charles Ka Yui Leung & Joe Cho Yiu Ng & Edward Tang, 2020. "Why is the Hong Kong Housing Market Unaffordable? Some Stylized Facts and Estimations," Globalization Institute Working Papers 380, Federal Reserve Bank of Dallas.
    6. Charles Ka Yui Leung, 2017. "Special issue on housing and financial stability: An introduction," Pacific Economic Review, Wiley Blackwell, vol. 22(3), pages 273-275, August.
    7. Cheung, Yin-Wong & Steinkamp, Sven & Westermann, Frank, 2020. "Capital flight to Germany: Two alternative measures," Journal of International Money and Finance, Elsevier, vol. 102(C).
    8. Wong, Siu Kei & Cheung, Ka Shing & Deng, Kuang Kuang & Chau, Kwong Wing, 2021. "Policy responses to an overheated housing market: Credit tightening versus transaction taxes," Journal of Asian Economics, Elsevier, vol. 75(C).
    9. Yang Zhou, 2022. "The Effects of Capital Controls on Housing Prices," Discussion Paper Series DP2022-29, Research Institute for Economics & Business Administration, Kobe University.
    10. Farhad Taghizadeh-Hesary & Naoyuki Yoshino & Alvin Chiu, 2019. "Internal and External Determinants of Housing Price Booms in Hong Kong, China," ADBI Working Papers 948, Asian Development Bank Institute.

    More about this item

    JEL classification:

    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General

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