CNBC has an article expressing some concerns about Asian household debt with the article noting that Frederic Neumann, an economist at HSBC, commented in a note on Friday:
“In the last several years, consumer debt has surged across the region, financing not only purchases of new, flashy condos, but also of cars, motorcycles, and everything else the heart desires.”
The article goes on to explain that pawnshops are on the rise in Singapore with pledges at the city state’s pawnshops rising to 4 million in 2012 from 2.7 million in 2007 while loans have surged around 344% over the same period to 7.1 billion Singapore dollars in 2012.
Analysts Jarick Seet and Terence Wong were also quoted as saying that while the 2010 opening of the city-state’s casinos is likely a key driver for pawnshops’ growth, they also believe the government’s clampdown on unsecured lending and credit cards means more borrowers are facing difficulties with debt payments and are turning to their local pawnbrokers.
Nevertheless, HSBC’s Neumann believes a sudden credit blowup is unlikely due to the region’s stricter lending standards compared with the US and the UK, but he cautioned:
“Household debt may not be as big a systemic financial risk as it was in the West, but it highlights a potential growth problem in Asia: without it, how resilient would consumption spending really be?”
To read the whole article, Are Asian households over their head in debt?, go to the website of CNBC.
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