Hong Kong poised for 2024 recovery amid external challenges: Financial secretary

Legislative Council Panel on Financial Affairs Paul Chan Mo-po also said that the city’s property market is in a period of orderly adjustment, as the high interest rates have led to a cautious mindset among prospective homebuyers.


In this undated file photo, Hong Kong Financial Secretary Paul Chan Mo-po gives an interview. PHOTO: CHINA DAILY

December 6, 2023

HONG KONG – Hong Kong is expected to further recover in 2024 from the COVID-19 pandemic, despite the challenges and uncertainties, Financial Secretary Paul Chan Mo-po said on Monday at a meeting hosted by the Legislative Council Panel on Financial Affairs.

“Given Hong Kong’s status as a small and fully open economy, its economic performance is inevitably susceptible to external conditions,” Chan said.

Hong Kong’s property prices has experienced a decline of about 4 percent from January through October this year, accompanied by a significant contraction in transactions. But Chan said the city’s property market is in a period of orderly adjustment, as the high interest rates have led to a cautious mindset among prospective homebuyers.

READ MORE: Chan shows HK’s economic recovery picture to US figures

The Hang Seng Index — the benchmark of Hong Kong’s stock market — has seen a decline of about 14 percent as of November, with the average daily trading volume decreasing from HK$125 billion ($16.0 billion) last year to the current HK$105.6 billion.

In the face of the Hong Kong stock market’s low liquidity, the government established the Task Force on Enhancing Stock Market Liquidity on Aug 29. Chan said the task force members will provide recommendations on various aspects, including the improvement of listing and trading mechanisms, and enticing more international firms to list in Hong Kong.

In light of the challenges encountered by the overall economy and capital market in Hong Kong, the government’s revenue has fallen short of expectations, the finance chief said, projecting that the fiscal deficit for 2023-24 is likely to surpass HK$100 billion, exceeding the estimated HK$54.4 billion made in February’s budget.

There is potential for improvement of the global economic landscape if the major economies’ central banks with market expectations to reduce interest rates from the second quarter of 2024, the finance chief added.

Although Hong Kong’s path to economic recovery won’t be smooth sailing, Hong Kong Chief Executive John Lee Ka-chiu has strong confidence in the city’s prospects, given its latest economic developments. Hong Kong’s economic resurgence has shown robust momentum despite the recurrent geopolitical conflicts and the mounting pressure of economic downturns worldwide, Lee said on Monday at the Hong Kong Economic Summit 2024.

In the third quarter of this year, Hong Kong’s real GDP experienced a year-on-year growth of 4.1 percent, with a rise of 6.3 percent in private consumption expenditures. The values of both exports and imports in October demonstrated a reversal from the previous downward trend, registering year-on-year increases of 1.4 percent and 2.6 percent respectively.

READ MORE: UBS: HK facing modest recovery prospects, cyclical challenges

As Hong Kong embraces a return to full normalcy, the number of visitors during the first 10 months of this year was 26.8 million, with tourists from Southeast Asian countries such as Thailand and the Philippines surpassing 90 percent of the levels observed in the same period in 2017 and 2018.

In terms of capital market, Asia Pacific’s first exchange-traded fund (ETF) to track Saudi Arabian equities — the CSOP Saudi Arabia ETF — listed on the Hong Kong Exchanges and Clearing on Wednesday. “The development is conducive to enhancing the global connectivity of Hong Kong’s ETF market and solidifying its position as a premier ETF market in Asia,” Lee said.

These data reflect undeniable realities, which can showcase Hong Kong’s innate capacity for success, the chief executive added.

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