The ongoing social movement and the Sino-US trade war have caused Hong Kong to fall into a technical recession in the third quarter
The revised third quarter real GDP growth rate was negative 2.9%. Looking ahead, the outlook for the retail industry is not optimistic due to weak local demand. Unemployment rates in the consumer and tourism-related sectors (16.5% of the workforce) have jumped from 3.9% in June to 5.0% in October.
Surprisingly, property prices rebounded after the Policy Address. The October contract rose by 16.4% month-on-month
The latest best interest rate cut and the HKMA’s countercyclical capital buffer measures will continue to support asset prices. In addition, the land supply policy is only a medium- and long-term solution, such as the Land Use Resumption Ordinance and Toma Day tomorrow, which will not create additional supply to curb prices in the short term. Therefore, despite the widespread negative sentiment in Hong Kong in the short term, property prices are still difficult to fall. Investment prospects remain weak, with local fixed capital investment shrinking for the fourth consecutive quarter of GDP, now at 16.3%. Machinery, equipment and intellectual property products plummeted 26.6%, which is a leading indicator of business sentiment. PMI also fell to a low of 39.3 after the global financial crisis. The Quarterly Business Trends Survey (QBTS) also pointed out that both local and overseas investment prospects are not optimistic. Hong Kong’s capital expenditure has been weak. In fact, CAPEX has long been limited by the world’s most unaffordable high housing prices; the savings rate has dropped from 33.4% in 2006 to 21.8% in 2018, and further dropped to 18.7% in the first half of this year. . In an ultra-low interest rate environment, capital flows to real estate and financial markets, which indirectly hinders long-term capital investment.
Indeed, Hong Kong is still an important financing gateway for Chinese companies
The recent gathering of Chinese telecom giants in Hong Kong is an example. After the introduction of different rights to institutionalize the same stock, Hong Kong ranked first in terms of raising funds through IPO in 2018. More importantly, although Hong Kong’s ratio of China’s GDP to China’s GDP fell from 27% in the early 1990s to 2.7% in 2018, China’s foreign direct investment from Hong Kong/through Hong Kong increased from 27.8% in 2006 to 2018. 65.0% of the year. Therefore, the role of the super agent in the financial sector is expected to be replaced in the short term.