Hong Kong logged 783 personal bankruptcy applications last month, a 21% jump and 4-month high
- March figure is up from 648 petitions logged in February following 753 in January
- But experts differ over outlook, with one saying worse numbers could be on way, while another maintains levels are normal
More than 780 people applied for bankruptcy in Hong Kong last month, a 21 per cent jump over February’s number and marking a four-month high.
But experts differed over their interpretation of the figure on Friday, with one saying worse numbers could be on the way, while another maintained levels were normal.
Data released by the Official Receiver’s Office showed the city recorded 783 applications for bankruptcy in March, up from the 648 petitions logged in February following 753 in January.
The 2,184 personal bankruptcy applications in the first quarter represented a 20 per cent increase over the same period last year.
The figure for March marked a four-month high since 814 applications were received in November last year.
Simon Lee Siu-po, an honorary fellow at the Chinese University of Hong Kong’s Asia-Pacific Institute of Business, was among those warning worse could be yet to come amid a gloomy economic outlook.
“The pace of the city’s economic recovery has not been as quick as expected,” he said. “Retailing has also been hit by the exodus of Hongkongers spending across the border.”
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Lee said he believed the number of bankruptcies might still rise in the near future, given the continued weak sentiment in the housing and stock markets.
“If broadly held assets such as property and stocks are rising in value, there will not be a big jump in bankruptcies. But unfortunately, both markets have remained dull,” he said. “So I would not be too surprised if the bankruptcy numbers keep going up.”
But bankruptcy lawyer Tang Tat-ming, a partner at Yip, Tse and Tang, said there was no need to be too pessimistic.
“The number is still smaller than 1,000 a month and can be said to be at a normal level,” he said. “According to our cases, many clients are resorting to bankruptcy because of credit card debt. The housing market appears to be staying stable and we do not see a rise in owners of negative assets.”
According to the Official Receiver’s Office, the number of bankruptcy orders also rose to 641 in March, up from 554 in February. The number of compulsory winding-up petitions for businesses reached 69 last month, up from 53 in the previous month, an increase of 30.2 per cent. It was also the highest monthly number since May 2009.
“Some operators may consider giving up sooner if they do not expect the future to be much better,” Lee said. “Facing high interest rates, it would make borrowing money for investment unfavourable and some operators may consider folding up instead.”
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Lee warned the outlook would remain dim in the near future and the economy would take longer than expected to fully recover, citing high interest rates.
United States Federal Reserve chairman Jerome Powell earlier this week noted a “lack of further progress” on inflation, and analysts said they believed his comments meant interest rates could remain high for longer.
Lee also expected the city’s jobless rate to continue edging up. The unemployment rate was largely stable at 3 per cent for the January to March period, up 0.1 percentage points compared with the December-February stretch, according to official data. About 111,700 people were jobless, an increase of about 9,400.
The underemployment rate also rose 0.1 percentage points to 1.1 per cent.
