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Ezra Cheung

Hong Kong is set to record further growth in the second quarter following a double-digit increase in the export of goods, the finance chief has said, stressing the city will cultivate new productive forces as it continues to tap into the national momentum.
Financial Secretary Paul Chan Mo-po also said on Sunday an expected cut in interest rates in the second half of the year would encourage investment and boost the performance of asset markets.
The minister revealed the value of merchandise exports grew by 12.5 per cent in the second quarter compared with a year ago.
“Recent figures also show an increase in exports of goods and overall investment,” he said on his weekly blog. “The country’s economy remains stable and is progressing, providing the most significant support for Hong Kong’s economy.
“Many companies are actively pursuing plans to list in Hong Kong. The string of national policies benefiting Hong Kong is expected to play a supporting role in different economic sectors when they are rolled out successively.”
In the first quarter, the city’s gross domestic product (GDP) expanded by 2.7 per cent compared with the same period last year, climbing at the lower end of the government’s forecast. On a full-year basis, GDP is expected to grow by between 2.5 and 3.5 per cent, with the advance estimate for the second quarter due on Wednesday.
Chan also pointed to a visit he made with other key financial and regulatory officials to the capital last week. He met the heads of various ministries and commissions, including Xia Baolong, Beijing’s point man on Hong Kong affairs, and Li Yunze, director of the National Financial Regulatory Administration.

Xia said Hong Kong was facing profound shifts in its internal and external environments and called on the city’s leadership to respond to the challenges to “achieve better development through reform”.
The director of the State Council’s Hong Kong and Macau Affairs Office also urged all sectors to be proactive and focused on ensuring the financial hub’s “golden brand” continued to shine.
Chan said in his Sunday blog that the city had to embrace and understand changes.
“We need to grasp the direction of the country’s future policy development and understand its thinking so as to ensure Hong Kong can take advantage of the country’s development momentum,” he said.
“We must make good use of Hong Kong’s status as an international financial, shipping and trade centre to help direct funding projects that can accelerate the cultivation of new productive forces through goal-oriented policies and an efficient market, and attract hi-tech and leading talent from all over the world.”
A government spokesman, however, earlier said the city faced challenges arising from weak consumer spending as Hongkongers headed north to shop and dine as inbound mainland Chinese tourists refrained from making many purchases while visiting the city.
Several economists also cautioned against an overly optimistic GDP prediction, citing continued pressure on the service industries, such as retail and finance.
Hong Hao, chief strategist at hedge fund Grow Investment, said the expected interest rate cut might lead to only a temporary rebound in the stock market.
“It takes a long time for companies to plan to go public,” he said. “Although this change in the market environment is for the better due to a technical rebound caused by loosening liquidity conditions, it may not lead to companies going public immediately.
“[The financial secretary’s] interpretation might be too superficial.”
Hong noted that GDP growth was a lagging indicator of the economy’s overall performance and warned against being “overly optimistic” when interpreting the figures.
Accounting firms PwC and Deloitte recently slashed their projections for capital raised through initial public offerings, with the latter expecting to cut its previous estimate of HK$100 billion for the year by as much as 40 per cent.
Gary Ng Cheuk-yan, a senior economist at Natixis Corporate and Investment Bank, said that although exports were supporting Hong Kong’s GDP growth, the situation for other sectors, such as finance and retailing, remained “very challenging”.
He said the “persisting pressure” in consumption and investment could put second-quarter GDP growth at 2.3 per cent.


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Hong Kong economy

Hong Kong set to post growth for second quarter, as exports expand 12.5%

The government is due to reveal the advanced estimate for the second quarter’s GDP figure on Tuesday. Photo: Sam Tsang

Financial Secretary Paul Chan says the city must embrace and understand changes in its economy. Photo: Xiaomei Chen

Hong Kong must recognise and respond to profound shifts to lift economy: Xia Baolong

Xia Baolong (right) met Financial Secretary Paul Chan on Tuesday in Beijing after the end of the third plenary session for the party’s 20th Central Committee last week.

The central government will support Hong Kong fully in consolidating and upgrading its advantages as global hubs of financial services, shipping, trade and top talent, Xia Baolong has said. Photo: May Tse

John Lee to promote Hong Kong in trip to 3 Asean countries, vows ‘big efforts’ on economy

John Lee addresses the media before attending an Executive Council meeting on Tuesday morning. Photo: Eugene Lee

The Patuxay Monument in the Laotian capital of Vientiane. Laos is the current Asean chair and is the first destination on Chief Executive John Lee’s itinerary. Photo: AFP

News

Hong Kong

City will also cultivate new productive forces, finance chief says, but economists caution against excessive optimism


City will also cultivate new productive forces, finance chief says, but economists caution against excessive optimism.


Paul Chan