Chief Executive Donald Tsang said there was a risk of "unprecedented market turbulence" in currencies, bonds and stocks and warned that Hong Kong is ready to take new, anti-speculative steps to cool its over-heated property market.

"I am very much concerned about the impact of the US second round of quantitative easing on Asian economies," Tsang said, referring to the Federal Reserve's controversial 600-billion-dollar attempt to reflate the US economy.

Critics worry the cash surge will not only further dilute the value of the dollar but add to the flood of money that is chasing higher returns in Asia and dangerously inflating stock, bond and property markets.

"This has increased the risk of asset bubbles, which will impact on our financial stability as well as regional and global economic growth," Tsang said at a business forum in Yokohama, Japan.

The popping of "emerging bubbles in different pockets" of Asia's securities and property markets would be "highly infectious", he said.

"And the end result is you can see a second wave... similar to the one we had in 1997 and 1998, when there was an over-exuberance in our markets. This is exactly the case now.

"All you need is one major conglomerate or one large bank... suffering a shock... and suddenly you can see a tsunami-style" effect, Tsang said at the event, held on the eve of an Asia-Pacific Economic Cooperation (APEC) summit.

There has been widespread foreign condemnation of the US policy of printing billions of new dollars as a stimulus measure, including at the G20 summit which US President Barack Obama was attending in Seoul Friday.

Critics say the fresh liquidity could further drive down the dollar and exacerbate the threat of "currency wars" in which nations seek to cap or weaken their currencies to make their exports more competitive.

New Zealand's Prime Minister John Key, speaking at the same business event, warned on currency policies that "if we don't get this right, it's my view that we will see currency wars, we will see retaliatory action taken.

"That would be bad for economic growth, it would have unintended consequences and it would be bad for integration in the region," he said.

Key added that "escalating tensions when it comes to exchange rate policy run the risk of derailing economic growth. That would not only be bad for Asia but that would be bad globally."

Hong Kong's Tsang said the "exceptionally abnormal" environment called for vigilance from policymakers, who should be "fully prepared and take all forms of action to avoid systemic risks that might disrupt our recovery".

Hong Kong last month laid out measures to cool the world's hottest property market, including a halt to granting automatic residency rights to rich buyers and a rise in stamp duty on luxury sales.

"But we will not stop here. We will not hesitate to introduce further anti-speculative measures when there is need to do so," Tsang said, adding that to maximise the impact "there will be no prior notice" before they are imposed.

del.icio.us	Digg	Reddit
YahooMyWeb	Google	Facebook

Memory Foam Mattress Review

SPACE MEDIA NETWORK PROMOTIONS Solar Energy Solutions Tempur-Pedic Mattress Comparison ... Newsletters :: SpaceDaily :: SpaceWar :: TerraDaily :: Energy Daily XML Feeds :: Space News :: Earth News :: War News :: Solar Energy News