2013-02-20 05:25:08 - Fast Market Research recommends "Hong Kong Business Forecast Report Q2 2013" from Business Monitor International, now available
Our 2013 real GDP growth forecast stands at 2.5%, which remains below consensus projections of 3.7%.
The Qianhai-Hong Kong special economic zone will help to bolster Hong Kong's financial sector, and that the sector will continue to be one of the city's main engines of growth. Additionally, the city's banks will see increased opportunities in the offshore yuan services sector which will in turn help to cement its role as the leading global offshore yuan trading centre.
Despite the recent run up in property prices, we are not abandoning our bearish take on the sector. That said, we are not discounting a further marginal near-term upside in prices, as investors ride on bullish sentiment from the equity markets. We believe, however,
that receding demand, stemming from further economic deterioration and the government's tightening measures, coupled with the anticipation of a meaningful increase in the housing supply in the coming years, will combine to enforce a correction in property prices in 2013.
Full Report Details at
- www.fastmr.com/prod/536359_hong_kong_business_forecast_report_q2 ..
Chief Executive Leung Chun-ying's endeavours to improve his public profile through enhancing the city's welfare infrastructure, and the government's use of public infrastructure investment to support economic activity are likely to carry fiscal pressure. However, we believe that Leung's pragmatic policymaking style thus far should help to keep the rise in government expenditure in check. Additionally, the planned increase in government land sales should mitigate, to a certain extent, the fall in tax revenues. We consequently do not envisage much structural risk to the government's fiscal health.
Key Risks To Outlook
Downside Risk To 2012 Growth Forecast: Should the mainland economy experience a sharper-than-expected slowdown, or the sovereign crisis in Europe take a turn for the worse, the ripple effect on Hong Kong means its economy would be disproportionately affected.
Partial Table of Contents:
Key Risks To Outlook
Chapter 1: Political Outlook
BMI Political Risk Ratings
Benign Outlook Despite Democratic Reform Uncertainty
- While we believe Hong Kong will remain at or near the top of our political risk ratings table over the next decade, a number of risks could lead to rising political instability. The sluggish pace of democratic reforms will continue to cause anger among pro-democracy supporters, and there is the potential for large-scale public protests. A lack of affordable housing and rising income inequality also could pose threats to social stability.
TABLE: POLITICAL OVERVIEW
Long-Term Political Outlook
Chief Executive To Remain On The Defensive
- Despite rising political and public discontent with Hong Kong's Chief Executive Leung Chun-ying, Beijing's recent endorsement of his administration suggests that his position is safe, for now. Leung's policies in the coming year are likely to be tailored towards boosting public support for his administration and are likely to centre around curbing anti-mainland sentiment, as well as the city's spiralling property prices. That said, we do not expect his policies to negatively impact Hong Kong's business-friendly environment.
Chapter 2: Economic Outlook
BMI Economic Risk Ratings
SEZ Bodes Well For Banking Sector
- We believe that the Qianhai-Hong Kong special economic zone will help bolster Hong Kong's financial sector, which will continue to be one of Hong Kong's main engines of growth. Additionally, the city's banks will see increased opportunities in the offshore yuan services sector, which will in turn help to cement its role as the leading global offshore yuan trading centre.
TABLE: ECONOMIC ACTIVITY
Welfare, Infrastructure To Take Centre Stage
- Hong Kong's Chief Executive Leung Chun-ying's endeavours to improve his public profile through enhancing the city's welfare infrastructure, and the government's use of public infrastructure investment to support economic activity are likely to carry fiscal pressure. However, we believe that Leung's pragmatic policymaking style thus far should help to keep the rise in government expenditure in check. Additionally, the planned increase in government land sales should mitigate, to a certain extent, the fall in tax revenues. We consequently do not envisage much structural risk to the government's fiscal health.
TABLE: FISCAL POLICY
Inflationary Pressure Capped In 2013
- We expect consumer price inflation in 2013 to come in marginally lower in Hong Kong as economic lethargy, stemming from a subdued global trade landscape and an expected domestic property market correction, collectively place downward pressure on prices. Additionally, as before, we do not envisage any change to the city's exchange rate regime despite renewed calls for a review. We expect the currency peg to remain in place at least for the next five years.
TABLE: MONETARY POLICY
Balance Of Payments
Trade Weakness Eventually But Financials May Support
Full Table of Contents is available at:
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