The Impact of Quantitative Easing and Carry Trade on the Real Estate Market in Hong Kong

38 Pages Posted: 7 Oct 2020

See all articles by Tatsuyoshi Miyakoshi

Tatsuyoshi Miyakoshi

Osaka University

Kui-Wai Li

Munk School of Global Affairs, University of Toronto

Junji Shimada

Aoyama Gakuin University - School of Business

Yoshihiko Tsukuda

affiliation not provided to SSRN

Date Written: August 18, 2020

Abstract

This paper examines how the quantitative easing (QE) policy conducted by Japan, EU and the US raised Hong Kong’s real estate prices through activities in carry trade and in Hong Kong’s real estate investment trust (H-REIT) market. The empirical results demonstrated two new channels of impact. The first new channel shows that Japan’s QE policy did affect the H-REIT prices in money market, which then led to a rise in office price after a lag of three months. The office prices were more persistently affected by the channel through the H-REIT than through the stock prices. Another new channel shows that the QE policy by Japan, the EU and the US since 2008 directly pushed up the office prices. These two new channels imply that the QE policy spilled over to not only the money market, but also the real estate market through the H-REIT market and carry trade. Moreover, the empirical finding is stronger in the price of the ordinary grade office than in the high-grade office, suggesting these new channels have already become common. Moreover, even though introducing control variables in the real estate economics literature, the results are robust.

Keywords: Quantitative easing, real estate prices, two channels, REIT markets, carry trade

JEL Classification: G01, G12, O16

Suggested Citation

Miyakoshi, Tatsuyoshi and Li, Kui-Wai and Shimada, Junji and Tsukuda, Yoshihiko, The Impact of Quantitative Easing and Carry Trade on the Real Estate Market in Hong Kong (August 18, 2020). International Review of Economics & Finance, Vol. 69, 2020, 958–97, Available at SSRN: https://ssrn.com/abstract=3676596

Tatsuyoshi Miyakoshi

Osaka University ( email )

1-1 Yamadaoka
Suita
Osaka, 565-0871
Japan

Kui-Wai Li (Contact Author)

Munk School of Global Affairs, University of Toronto ( email )

Toronto
Canada

HOME PAGE: http://https://kw-consultancy.com/

Junji Shimada

Aoyama Gakuin University - School of Business

4-4-25 Shibuya, Shibuya-ku
Tokyo, 150-8366
Japan

Yoshihiko Tsukuda

affiliation not provided to SSRN

No Address Available

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