Vibrant growth for Hong Kong helped by consumption

HONG KONG - The Hong Kong continued to grow vibrantly in the third quarter of 2017 as real GDP expanded by 3.6%YoY. Robust private consumption helped lift the economy, which grew 6.7%YoY. Retail sales increased by 5.6%YoY in September amid improving tourism and robust domestic demand.

On the external front, exports recorded notable growth over a year earlier (5.5%YoY for goods and 3.7%YoY for services), benefitting from a global economic upturn and contributing 1.2% to total GDP growth.

The Hang Seng Index has climbed to its highest close in nearly 10 years to become one of the best-performing Asian stock benchmarks so far.

Asset manager Natixis says that, noticeably, Chinese regulators will start to convert what are currently non-tradable H shares (held by Mainland-based major shareholders including state entities) to ordinary shares available to public investors.

This programme will significantly increase the supply of Chinese shares in Hong Kong, and bolster liquidity, Natixis says.

“At the same time, though, resident property market moderated in the third quarter, with price growth decelerating and trading activities cooling. However, housing prices have already soared to sky-high levels (460% of 2001’s price level) and the housing affordability ratio has further worsened to 68% in the third quarter.”

Natixis says the Hong Kong economy was largely on the rise in the third quarter alongside a Mainland economy that sustained medium-high speed growth and global recovery. “Looking ahead, the outlook for the Hong Kong economy remains positive as the Chinese economy will likely stay supportive in the medium term,” it says.  www.natixis.com (ATI).