Hong Kong: Monetary Statistics For January 2011

Hong Kong Monetary Authority just released the January Monetary Statistics for January 2011. Money supply was up after dropping slightly in November and December. On an unadjusted basis, M1 money supply increased 14.12% in Jan 2011 over a year ago, and M2 increased 9.79% over a year ago. On a month-on-month basis, M1 rose 6.23%, and M2 rose 0.88%.

The reason I monitor the money supply figure is because its relationship with property prices in Hong Kong.

Source: Hong Kong Monetary Authority, Centaline

The trend of slowing monetary expansion is obvious, and the pace of money supply growth is now back to a more reasonable level. The latest monetary statistics bodes well with the property prices, and I continue to expect property prices to reach the peak level of 1997 before any major correction will be imminent. The biggest risks around are, first of all, whether the tightening in China is going to slow down China economy significantly, and second, whether the spike in oil prices due to the unrest in North Africa and the Middle East will drag the global economy down.

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About Zarathustra

Zarathustra: Founder and Managing Editor of Also sprach Analyst. Once an analyst, now an investor and entrepreneur. Based in Hong Kong, but Londoner at heart.