"I saw this article in The Daily Telegraph and wondered how closely you guys are monitoring this Chinese/Hong Kong property bubble and what is the effect going to be when it bursts. Always interested in your astute observations".

Eoin Treacy's view Thank you for this interesting first-person account of the Hong Kong property market. Wealthy mainland Chinese have been notable participants in property market price appreciation in cities such as Hong Kong, Vancouver, Sydney and more recently London. Many reasons for this outflow have been posited such as tighter controls on property speculation in China, desire for a bolt hole in the event of social unrest at home or securing better education prospects for their children. The Hong Kong Dollar's peg to the US Dollar has also kept interest rates lower than would otherwise be appropriate for a significant period. This has also contributed to heightened speculative interest in the territory.

Hong Kong has been through a number of property bubbles and this occasion is likely to be little different. There is no doubt that when the current bull market turns some investors will take heavy losses. However, the overall effect is likely to be limited to Hong Kong and perhaps those mainlanders who have become heavily exposed to the market. Longer term, the broader question remains how appropriate a US Dollar peg is for Hong Kong when an increasing amount of its business is conducted with China.