Bloomberg Talk - How Rate Hikes & Inflation Could Impact the Property Market in 2023

I would like to thank Bloomberg for the invitation to be on the panel on November 8, 2022. At the event, I highlighted the impact of rate hikes & inflation on global housing markets and discussed the opportunities that may lie ahead.

Below is a short extract of some salient points in the presentation.

Event overview:

Aggressive interest-rate hikes could worsen the outlook for global housing markets, particularly Hong Kong, which might continue to follow the U.S. in lifting mortgage rates aggressively until mid-2023. The Hong Kong housing market 2023 outlook versus other major markets like the UK and Singapore will be discussed, and explore if commercial and industrial properties could be an inflation hedge and outperform home prices in Hong Kong.

HK economics - recovery distorted by base effect

Good 2021 growth figures, but...

After the atrocious contractions of 2020 thanks to lockdowns, recent forecasts on 2021 GDP have turned distinctly rosy, ranging from 3.3% to 4.2% and averaging 3.8% growth. 

However, given the traumatic falls of 2020, these growth figures may still not be enough to take us back to pre-lockdown levels, and the chart below demonstrates this disconnect due to base effect:

Chart 1 : YoY economic growth forecasts mask low base in 2020

 

The year-on-year growth in GDP (blue line above, extended by forecasts of 2021 represented by yellow line) may appear strong, but if we were to compare this year's performance to pre-lockdown levels, as represented by 2-year changes (red line) , normalcy will not return until Q1 22. The positive blip in the red line in Q3 21 is the result of a bad comparable Q3 19 when the street protests disrupted economic activities.

In fact, the current recession looks much more like the post-dot-com/SARS one in 2001-3 than the GFC episode in 2009-10, as the latter bounced back much faster. Given the shape of the current recovery, 2021 will remain below 2019 levels for sure, and probably 2022 as well.

Return to 2018 unlikely until 2023 at the earliest

So when is the most likely time we will see the economy return to pre-lockdown days? Perhaps not widely known, HK's economy actually peaked in 2018, and has been on a downtrend in 2019 (protests) and 2020 (lockdowns), this year's recovery is yet uncertain, as it depends on how quickly the govt reopens the economy to normal business.

Even assuming immediate opening, which most market forecasts probably factored in already, we are unlikely to see the economic level return to 2018 peak levels until 2023, as the arrows in the chart below suggest:

Chart 2 - Indexed GDPs suggest return to 2018 peak after 2022

If lockdowns are extended, or global travel opening were delayed, the 2023 recapturing of prior high becomes even less probable. As a reference to the last big recession - the 2000 peak was only recaptured in 2004; we reckon the 2018 peak will most likely be retaken in 2023 at the earliest, if the side effects of lockdowns/money printing/supply chain destruction do not stoke second order economic problems or worse political unrests before we get there.

 

6 pieces on Pandemic forever, doctors speak out, vaccine side effects, etc...

 1) Update on the total signatures of Great Barrington Declaration 

- the number of professionals urging rational opening of social/economic activities (and implicitly condemning the harsh lockdowns imposed around the world) has ballooned to >13k scientists and >42k medical experts. It is now the professionals against the bureaucrats (and their panel of 'experts'), somewhat ironic:

 - our previous post when the GBD was launched can be found here: Scientists against lockdown/vaccine - 5 recent references 

 Sign the Great Barrington Declaration - Note "Signatures of Medical & Public Health Scientists will be made public below after verification, approval, and vetting process." (updated on 16/04/2021), this is indeed becoming highly credible and persuasive.

 

2) "The Lockdowns Are Creating a New Virus. Then We Have a New Epidemic." — Dr Knut Wittkowski

- virus mutate constantly, which is why pharma companies produce annual flu jabs

- by targeting coronavirus annually as 'pandemic', govt policy may be perpetuating lockdowns, and/or making annual vaccinations mandatory for a flu with a 0.03% death rate (see comparison with other causes of death here)

 3) Dr Ryan Cole : some common sense facts on Covid

- Corona viruses are seasonal and usually follow a 6-9 month life cycle 

- Average Covid-19 age of death is 78.8 years old, no different from the average annual US age of death of 78.6

- Highest risk factors: age, obesity, low vitamin D

- The virus is fragile and is inactivated by sunlight and ventilation (masking outside is insanity)

 

4) Canadian Doctors speak out: Top reasons not to be afraid of COVID

This is the message being conveyed to the public by a group of doctors in Canada with Canadian Health Alliance, which issued a press release and video this week, opposing the Government’s response to COVID: Stop fearing the Coronavirus, the new COVID “variants” are a hoax, let children go back to normal activities, take off your mask, and avoid the experimental COVID “vaccines”

According to their press release:

    The CANADA HEALTH ALLIANCE is a non-profit collaboration of medical doctors, nurses, chiropractors, naturopaths, pharmacists, and other healthcare practitioners from across Canada whose common goal is to protect the rights of our patients to access the highest quality healthcare available, continued freedom of choice, and autonomy through informed consent.

    Our goal is to halt the misuse of power by politicized public health “experts” currently being conveyed through damaging COVID-19 public health policies that are destroying Canadian society and the health of Canadians.

Here is what they are demanding be stopped immediately:

    We call on all levels of government to immediately stop promoting the following measures:

    · Lockdowns and physical distancing
    · Promoting the use of masks
    · Handwashing and cleaning surfaces with toxic disinfectants
    · Quarantines of asymptomatic people and social isolation
    · Using RT-PCR testing on people
    · Advocating inadequately tested gene-modifying COVID-19 vaccinations (insufficient human and animal trials)
    · Unnecessary COVID-19 policies at hospitals and other health care facilities
    · Business closures or restrictions
    · Restrictions on churches and places of worship
    · Closures of public facilities including schools, playgrounds, parks and recreational facilities
    · Misrepresentation of the COVID situation in the media
    · The use of fear and other psychological coercion techniques

Watch the 11 minutes Video

5) Experimental vaccine death rate for Israel’s elderly higher than COVID-19 deaths?

- per this article, analysis by 'Dr. Hervé Seligmann, a member of the faculty of Medicine Emerging Infectious and Tropical Diseases at Aix-Marseille University, and engineer Haim Yativ reveal, in short, that the mRNA experimental vaccine from Pfizer killed “about 40 times more (elderly) people than the disease itself would have killed” during a recent five-week vaccination period.'

- again, having the alternative data and analyses help us see the broader perspective, which sadly the mainstream media is censoring - one sided information is often, if not always unbalanced for rational decision making

 

6) HK's inbound quarantine laws: dangerous, irrational and unconstitutional 16 March 2021

1. Infection during quarantine

2. False positives

3. The ban on arrivals from some countries is irrational