Allan Shek, the owner of a Hong Kong shop selling gold and jade jewelry, says he’s made millions on the side by riding wild swings in the stock market and by buying into the city’s property boom. No more.
Last month, he bought five Hong Kong taxis and the licenses to operate them. Seven or eight of his friends have bought taxis too, he says.
“If I have the ability, I will buy another 15 taxis this year,” says the 60-year-old Shek, speaking with rapid-fire enthusiasm over the latest way to make money in a city where the benchmark Hang Seng Index (HSI) has fallen almost 7 percent from the year’s high and record property prices have started to decline because of government curbs.
The price of a license combined with a taxi reached a record HK$7.66 million ($987,600) on June 6, the highest since Taxixchange.com Ltd., which brokers deals, started tracking the data in 2000. Prices have surged more than 80 percent since taking off in September 2009, as cheap financing and expectations of continued gains draw investors. Ten taxis sold Aug. 5 for HK$7.1 million each.
The run-up is sparking warnings of yet another investment bubble in a city that’s no stranger to them, said Billy Mak, associate professor of finance at Hong Kong Baptist University. The prices for the cars — most are shiny, red Toyota Crown Comfort models imported from Japan — and their licenses have increased at a faster rate than the income the taxis generate.
“The bubble is already there,” said Mak. “Investors feel that there aren’t many good investment tools in the market, as there are restrictions on the property market, and the stock market is not performing that well.”