Deflation has created an economic puzzle in the Greater China economy. The Mainland is enjoying an economic boom on the back of pricing power erosion. But Hong Kong is suffering from severe economic pains, as deflation has taken its toll in economic growth Chart. How can the Mainland enjoy a deflationary boom while the SAR suffers an economic doom under the same deflationary environment What are the implications for their respective asset markets
Deflation has exerted a tremendous stress on Hong Kong but not China because the Mainland is a source of deflation while Hong Kong is a recipient of it. Both Hong Kong and China have been stuck in...