Posted by: Bruce Einhorn on March 12, 2008
Five years after the SARS outbreak shut down Hong Kong, there’s a new flu scare in the city. Over the past fews weeks, four young children have died after coming down with what what the South China Morning Post calls “flu-like symptoms.” It’s not avian flu, and it’s not SARS, but still, people are worried and today the government closed primary schools for two weeks.
Is this an overreaction? Back in 2003, Hong Kong officials got slammed for keeping schools open well into the outbreak before finally closing them down, so maybe they’re feeling the need to show they’re on the ball this time. Besides, this time most schools would have been out anyway starting in the middle of next week for the Good Friday-Easter break, so the education officials probably figured it wouldn’t hurt to take a few extra days.
Let’s hope this all ends soon. In the meantime, since this is BusinessWeek, here’s a business angle to this story: For years, friends of mine have admired the way a handful of our savvier friends bought apartments in Hong Kong during the SARS outbreak, when there was panic everywhere, Hong Kong’s economy froze and property market plunged. People who invested then have turned a very nice profit in the years since as Hong Kong real estate prices went through the roof.
Is this new flu scare a new buying opportunity? Don’t count on it. With Hong Kong’s currency pegged to the U.S. dollar, and with the Fed’s rate cutting leading to rate cutting locally in order to maintain that peg, Hong Kong has negative interest rates. That’s helping fuel a new market boom. It will take a lot more than the current flu scare to stop that.