As the ringgit depreciates and as US quantitative easing tapers off, the era of low interest rates and cheap credit via bonds – the primary drivers of speculative investment – could soon end. Could that, in turn, lead to the popping of the property bubble?
Are there signs that this is already happening as heavily indebted Malaysian households tighten their belts in anticipation of further inflationary pressure? Will hot money from QE head for the exit doors at the first whiff of uncertainty? Check out the weakening ringgit in recent months after the QE tapering was first announced in June 2013.
And this is the stock market trend in recent times:
The China bubble also has an important influence on the regional bubble. Have a look at these photos of the ghost cities built in China. Impressive-looking skyscrapers but hardly any residents.
Makes you wonder if the Menara Warisan project in KL will be the next watershed indicator on the Skyscraper Index, which some regard as a tool to foresee an impending slump. Food for thought, eh?
Have you seen any signs to suggest that the bubble is already being pricked?