While many investors in property markets in developed countries have decided to diversify their investments in the wake of the property market downturns that have occurred in many first world nations, at the same time there are other investors that have found a solution to the problem abroad. These investors have taken money from their investments in North America and Europe and put that money towards investments in Asia.
The logic of such a move is rather simple to grasp. These investors are counting on the Asian property markets largely being able to survive downturns in the United States and other first world nations due to the economic independence and geographical distance of the Asian property markets.
However, a recent report released by S&P has suggested otherwise. Because of the operations in equity markets of many Asian countries and the way in which their central banks operate vis-à-vis interest rate decisions, it is now expected that even banks in Asian countries would not be immune to a global crash that might accompany a severe economic recession within the United States.
India and China are the two countries likely to be affected most by such a recession, according to the S&P report released yesterday. This is because they have the largest amounts of foreign investment in their property markets and also because their central banks control liquidity and volatility in the market in ways that are very similar to how American and European banks operate.
However, China and India would not be the only Asian property markets affected by that recession. Almost every single Asian property market with significant foreign investment has been affected negatively in some way by the global credit crunch that started in the United States and it is expected that every Asian property market will suffer similar downturns at some level if the US enters a recession that is severe enough that a global critical point is reached.
