, Columnist
Hong Kong’s Economy Has Two Gravity-Defying Puzzles
Investors ask why the city’s interest rates are so low and the housing market so bad.
Hong Kong is in unchartered territory.
Photographer: Paul Yeung/BloombergHong Kong is confronted with two gravity-defying puzzles this year. Investors are asking why the city’s interest rates are so low, and yet the housing market is so bad.
Because of its peg to the US dollar, the city’s borrowing costs should move in lockstep with those in the US. However, the gap between the one-month Hong Kong interbank offered rate, or Hibor, and the US secured overnight financing rate, or SOFR, has been widening to unprecedented levels since May, even as the Hong Kong Monetary Authority tightens liquidity.