Weak euro and home price drops

Investors may continue facing market uncertainties in 2012, when the global economy is expected to slow down and the European debt crisis is worsening.

Unless the debt crisis in Europe turns into an unexpected economic crisis, property prices in Hong Kong will not dip more than 20 per cent.

Negative real interest rates in the city and home buyers from across the border would act as a buffer against a big correction, despite an increase in land supply weighing heavily on prices.

Bank of America Merrill Lynch said yesterday that home prices would drop as much as 20 per cent in Hong Kong and first-tier mainland cities next year as austerity measures squeezed previously sizzling-hot property markets.

It is said that the European Central Bank might again cut interest rates and it might be decreased to zero from the current level of 1 per cent.

To increase the supply of floating capital, there would be a price to pay. The stability of the euro will be sacrificed. However, a weaker euro is not all bad news for Europe. For example it will be good for tourism, the consumption sectors and foreign direct investment.

Weak euro may also affect export and import from and to European countries, since china suppliers may calculate the cost in a long term conce
ing foreign exchange rate.

When we do foreign trade, we need to care about international economic situation since we need a sensation on foreign trade exchange.

IBUonline is a B2B foreign trade business platform and remind china suppliers and international buyers of noting foreign trade exchange rate closely.