years.
Moreover, while the city's mini-constitution gives it autonomy over its currency and monetary system, in practice it would almost certainly need Beijings tacit approval for any major changes to the peg, particularly if it wants to involve the yuan.
PROPERTY BUBBLE?
For now, the risks of a sizeable real estate bubble forming in Hong Kong and other Asian markets like China and Singapore appear to be mounting, and could burst if the U.S. sharply tightens policy or there is a major external shock.
Hong Kong property prices have risen around 50 percent over the past two years and those for luxury homes are above the peak they hit in 1997 before the Asian financial crisis hit.
The territory has moved to cool the market with a number of measures including imposing high stamp duties on deals in which homes are bought and then sold soon afterwards to try to smother rampant speculation and selling more government land for the construction of residential units. [ID:nTOE6B105L]
Nevertheless, UBS expects the Hong Kong property market to rise another 40 percent in the next two years, taking prices around 20 percent above 1997 peaks.
An implosion of Hong Kong's property market could bring the territory's economy and stock market to its knees and have potentially deep repercussions for the Chinese market.
"The problem is this is mainly liquidity driven ... without any fundamentals to support the asset prices," said Irina Fan, a senior economist at Hang Seng Bank.
"We can't say that it's safe. When things start to correct, it could overshoot." (Additional reporting by Christina Lo) (Editing by Kim Coghill)