Stay calm in times of market volatility

Last month, Donald Trump and Xi Jingping declared a 90-day trade ceasefire after their dinner meeting during the G20 summit in Argentina. As the good news gave the stock market a much-needed boost, relieved investors thought the housing market, too, would be out of the woods for the time being. However, a mere few days later, Meng Wanzhou, CFO and heiress of China telecom giant Huawei, was arrested during a layover in Canada, facing possible extradition to the US. Despite efforts from both sides to de-escalate the situation, Meng’s detention surely has put a huge damper on the warm fuzzy feeling brought about by the ceasefire agreement.

Trade war or criminal prosecution, the end goal of the Trump administration is to ultimately hinder the rise of China as a global superpower, but both measures are rather moronic and will probably hurt American interests more in the long run. Still, such thoughtless agendas will have thoughtless supporters for now, and so may just carry on for a while longer. Looking into the future, however, it’s more likely for the US to lose more allies along the way and sabotage its own global standing.

For investors, what lies ahead are waves of market instability. Apart from the US-China conflicts, Brexit is certainly going to deal a serious blow to the market. As Theresa May postponed the final Parliament’s vote on the Brexit deal that was previously slated for December 11, the possibility of her being booted out of office grows with every passing day and it seems rather likely for the UK to end up leaving the EU with no deal. To be honest,
I didn’t think Brexit was going to end well from the get-go: on the one hand, the EU was never going to make the UK good offers, understandably because that could open Pandora’s box and lead to a slew of exits, ultimately threatening the very existence of the EU; on the other hand, a Brexit deal with so many inherent flaws would never get the Parliament’s backing. The only outcome is doom.

Having taken a number of hits in a short period of time, Hong Kong’s housing market has experienced a notable decline in sales. While those in a rush to cash out will have to slash prices significantly to attract prospective buyers, we have seen that once a property’s price has dropped by 20%, it tends to get snatched up very quickly. A large new urban development just opened for sale in December with an average per-square-foot price of HK$17,388—30% lower than expected. Since its release, the developers have received over 6,000 applications from eager home buyers and can probably expect a total sellout. This further proves that as long as prices adjust downward, there is a sizable demand for homes. 

If you do have properties to sell off right now, a price slash is almost inevitable, but there’s no need to panic. I believe the city’s housing market will still be in robust shape in the long term, so stay calm and don’t make any hasty moves if you are not in urgent need of cash.