Sunday, August 28, 2011

My Question to Sng Seow Wah, Alliance Bank group CEO

6. Are Malaysian and Singapore banks able to absorb a 50% drop in property prices? Any stress tests before? Ong Ting Lip, Segamat, Johor

I believe that the steady increase in Malaysian property prices over the last few years has been due to economic fundamentals rather than speculation. As such, I do not expect to see a drastic scenario of property prices retracting by 50% in the near future.

Price increases (or decreases) in Malaysia have not been on the same scale as in Hong Kong or Singapore. Speculation in Hong Kong and Singapore has been higher, leading to severe anti-speculation measures introduced in the past year.

Malaysian banks (including Alliance Bank) are generally well-capitalised and conduct regular stress tests to ensure continued preparedness.

Source: Bizweek The Star