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China Asset-Bubble Warning Threatens Stock Frenzy in Hong Kong

  • Hang Seng Index falls 2.6% after reaching highest since 2018
  • PBOC adviser: risk of bubbles may persist without focus shift
One Iconic Tower Shows the Pain in Hong Kong’s Office Market
Photographer: Billy H.C. Kwok/Bloomberg
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A chill swept through Chinese financial markets after the central bank withdrew cash from the banking system and an official warned about asset bubbles.

The People’s Bank of China drained about $12 billion via open-market operations on Tuesday. The decision was unusual in the weeks before the Lunar New Year holiday, which in 2021 falls in mid-February, because residents typically need more cash to pay for seasonal travel and gifts. It also went against recent reports in Chinese newspapers that liquidity wouldn’t be tightened before the holidays.