Trump eventually won the election and became the new president of the United States. This extremely unpredictable politician has already stated before the election that he will take a series policies against China once he starts his presidency.
These policies include to increase the import tariffs on Chinese goods by 60%, canceling its most-favored-nation status, and limiting the import of Chinese electric vehicles. Those actions will certainly reduce the total value of China's exports.
On Wednesday, Trump's victory day, Hang Seng Indexes closed down 468 points, while the Dow Jones rose 1100 points the following day. In the currency market, Renminbi fell 0.7% against the dollar after the victory day.
In mid and long-term, China’s exports will drop, the depreciation of the Renminbi is likely to accelerate. As a result, the prices of domestic consumer goods are naturally reduced, and Hong Kong people will travel more frequently to Shenzhen for shopping. In this situation, Hong Kong's retailing and F&B industries will surely be hit hard.
Retail consumption has decreased significantly, which will cause the shop rents and sales prices to fall,
and the landlords are certainly to face the mounting pressure. With the depreciation of the Renminbi and the shrunken exports, the weaken purchasing power of domestic buyers is forced to reduce their expenditures in the property market in Hong Kong.
Therefore, the sales prices of first-hand properties must be reduced so that they can attract potential buyers to the market. As the prices of first-hand properties are cut, the prices of second-hand properties must follow to reduce. Finally, the downward property market will fall into the death spiral.
Trump has pledged to make America great again, so the political conflicts and trade disputes between China and the United States are likely to increase significantly, and Hong Kong, which is located in the crevice, will not be unaffected. When China exports fall significantly, the GDP (gross domestic product) will certainly decline, and the stock prices of Chinese companies in Hang Seng Indexes are expected to drop either.
As the number of buyers continues to decrease, developers have almost stopped replenishing their land bank, resulting in the government’s tender lands unable to attract strong bidders.
Occasionally, the sole bidder will offer an ultra-low bidding price to test the bottom line of the government. The government is often to accept the offer as the buyer market is overwhelming. Otherwise, the annual land premiums will drop to an extreme low level.
As it is expected, the urban residential land price will fall below HK$2,000 per square foot. Therefore, a deep adjustment of the property market is inevitable to emerge.
