Correct. What few realize though is that the archaic pegged exchange rate is the key contributor to this. In a typical exchange regime, such an influx of capit

Correct. What few realize though is that the archaic pegged exchange rate is the key contributor to this. In a typical exchange regime, such an influx of capital would push the exchange rate higher and provide a balancing effect. Instead, you get asset price inflation while wages in local currency remain flat. This makes the rich richer and the poor poorer. [1] Compounding the effect is the inability to have any kind of independent monetary policy since the rate is pegged and there are no currency controls. Consider an economy with strong growth, 6% inflation, and interest rates on home mortgages of .....~1%? Welcome to HK. [1] http://www.businessweek.com/news/2012-06-18/hong-kong-s-wealth-gap-widens-amid-aging-population-inflation http://www.businessweek.com/news/2012-06-18/hong-kong-s-weal...