Hong Kong Monetary Authority chief executive Norman Chan said Monday more than HK$640 billion had flowed into the city from overseas since October last year, putting upward pressure on asset prices.
Asia's economic recovery and positive outlook have attracted massive fund flows to the region, including Hong Kong, Chan said at an economic conference.
"Due to the ample liquidity and capital inflows, the risk of an asset bubble is not small," he said.
Chan said the city's asset market has been very active in recent months, with both property prices and the volume of transactions in the property market returning to where they were before the financial crisis.
"The major risk for financial stability is not inflation, but the formation of an asset bubble," Chan said.
-By Chester Yung, Dow Jones Newswires; 852-2802-7002; chester.yung@ dowjones.com