Hong Kong Economic Growth Slows

123jump.com Staff
14 Nov, 2008
New York City

Hong Kong economic growth in the third quarter quarter to 1.7% from 4.2% rise in the second quarter. The economy contracted at seasonally adjusted rate of 0.5% after falling at a rate of 1.4% in the previous quarter. Econony in the first nine months rose at 4.3%.

[R]6:00AM New York, 6:00PM - Hong Kong’s gross domestic product falls 1.7% in the third quarter.[/R]

In Hong Kong trading Hang Seng increased 2.4% or 321.31 to 13,542.66, and the China Enterprises Index of Hong Kong listed mainland shares, or H shares, gained 3.3% or 226.06 to 7,021.64. In Shanghai trading CSI 300 Index advanced 3.7% or 69.57 to 1,943.65.

Daily turnover on main board declined to HK$44.7 billion from HK$51.8 billion yesterday.

Hong Kong GDP Falls to 1.7% in Q3

Xinhua News Agency reported today that the country’s gross domestic product dropped 1.7% in the third quarter to September 30 from a gain of 4.2% in the previous quarter.

The economy contracted at seasonally adjusted 0.5% rate in the quarter compared to 1.4% shrink in the first quarter ending in June. The two consecutive quarterly declines in economic rates qualify the economy into a recession.

GDP in the first nine months of the year rose at 4.3%.

Hong Kong Special Administrative Region government economist Helen Chan said economic growth for the year is forecasted to be between 3% and 3.5% from the earlier projection of 4% to 5%.

The external sector declined on falling global and domestic demand occasioned by the turmoil on the global financial markets.

Total goods exports increased 1.4% in the review period, while service exports eased to 5.3% on deceleration in exports of financial services and the temporary decline in in-bound tourism.

According to the report, private consumption spending increased 0.2% in real terms from a year ago.

Cumulative investment spending soared 3% in real terms in the period, but companies have recently been cautious in making new investments and hiring.

The seasonally adjusted unemployment rate increased to 3.4%, while headline consumer price inflation declined 4.6% on the government’s relief measures.

The index CPI, a measure of inflation has also declined to 6.1% in September from 6.3 the previous month.

Chan forecasts that increases in private residential rentals might continue to feed through to consumer price inflation in the coming months.

“With the favorable effects of the Government''s relief measures continuing in the rest of the year, the forecast headline consumer price inflation for 2008 as a whole remains unchanged at 4.2 %. Netting out the effects of Government measures, the forecast underlying inflation rate is also maintained at 5.5%,” said Chan in the report.

China Uses $81 billion in Foreign Investment in January-October period

People’s Daily Online reported today that the China $80.09 billion in foreign investment in the January to October period, a rise of 35.06% from the comparable year ago period.

The report noted that newly established foreign-invested enterprises fell 26.2% from a year ago to 22,736 in the first 10 months of the year.

China’s foreign investment dropped 2% from last year to US$6.7billion in October and newly established foreign invested enterprises fell 26.2% from last year to 1,935.

Gainers & Losers

Hong Kong stocks snapped a three-day decline on speculation that Beijing will lower its cash rate to support economic growth. Realty stocks gained as a result.

China Overseas Land jumped 3.8% and China Resources Land increased 2.3%.

Wharf Holdings rose 9% after Merrill Lynch raised its rating on the stock to “neutral” from “underperform”, citing that the company is trading at a 60% premium to its 2009 net asset value forecast.

China Mobile gained 3.7%, and China Life Insurance fell 5.8%.

Energy stocks rose on expectations that OPEC will cut production to forestall further price declines. PetroChina edged 4.4% on the news.

Chalco rose 2.6%.

CITIC dropped 7.1% after Goldman Sachs lowered its price target on the stock worries over the company’s earnings.

Tencent Holdings climbed 6.3%.

Cathay Pacific Airways increased 3.6% on the news that it may delay building of HK$4.8 billion third cargo terminal in Hong Kong for a year.

Huadian Power jumped 13% after the company said shareholders’ have approved plans to issue Rmb 3 billion worth of debt due up to 10 years.