The roller-coaster ride taken by financial markets in Asia in the wake of the United States subprime mortgage crisis is likely to stir interest in Hong Kong property derivatives, says the brokerage behind most of the deals done to date on the market, GFI Colliers.
'The primary purpose of the derivatives, and the reason they will prove increasingly popular in the present climate, is to provide a hedge for holders of property who are concerned that the value of their holdings may fall,' GFI head of property derivatives Stephen Moore said.
And with a cloud of uncertainty hanging over property prices as global economic growth slows and the effects of the US subprime crisis continue to rock financial markets, more Hong Kong developers could turn to derivatives to limit losses on their property portfolios, he said.
Mr Moore was commenting after the announcement last week that Goldman Sachs and Lehman Brothers Global Real Estate Group had signed the first long-dated Asian OTC (over the counter) option written on Hong Kong property price movements.
Neither the size nor the tenor of the option was revealed in the joint announcement by the two investment bankers.
But market talk is that it was the largest property derivative deal done in Hong Kong thus far, which would put it at HK$180 million plus.
