Financial conditions and the well-being of the real estate sector—A bottom-up default analysis on five ASEAN economies |
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Authors: | Wei Sun Matthew S Yiu |
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Institution: | 1. ASEAN+3 Macroeconomic Research Office (AMRO), Singapore, Singapore;2. ASEAN+3 Macroeconomic Research Office (AMRO), Singapore, Singapore
Hong Kong Monetary Authority (HKMA), Hong Kong, China |
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Abstract: | This paper investigates the impact of financial conditions, for example, cross-border capital flows, interest rates and foreign exchange rates, on the well-being of the real estate developers in five Association of Southeast Asian Nations economies. The study uses a Bottom-up Default Analysis model to stress test their creditworthiness by reproducing the financial shocks during the global financial crisis, taper tantrum, and the U.S.-China trade war and COVID-19 pandemic. The median developers remain sound under the prescribed adversities. The performance is underpinned by their strong fundamentals and a conducive mix of monetary, foreign exchange, and open capital account policies by national authorities. |
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Keywords: | ASEAN Bottom-up Default Analysis (BuDA) probability of default real estate |
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