HK - Economic Data & News 01 (May 08 - Sep 14)

[millionairemind]

Asia
November 8, 2008, 11.39 am (Singapore time)

HKMA says injected HK$1.937b into market

HONG KONG - Hong Kong's central bank injected HK$1.937 billion (US$248 million) into the territory's banking system late on Friday in New York trading to cap the Hong Kong dollar's rise and keep the currency within its trading band.

A spokesman from Hong Kong Monetary Authority confirmed on Saturday it had injected a total of HK$3.255 billion on Friday.

The injections included one in New York trading, as Hong Kong dollar hit the strong side of the band in which the authority is obliged to keep the currency under an arrangement known as convertibility undertaking.

'The strengthening of the Hong Kong dollar to the strong side of the convertibility undertaking level reflects the continued strong demand for the currency amid tight liquidity within the banking system and deleveraging of previously long US dollar positions on risk reduction,' the spokesman said.

The authority injected a total of HK$11.61 billion in the past week.

The monetary authority injected HK$1.318 billion into the banking system in Hong Kong trading hours on Friday when the currency traded at 7.7500/01 to the US dollar. It was quoted at 7.7501/02 at 0806 GMT after the injection.

Hong Kong's currency is pegged at 7.8 to the US dollar but can trade between 7.75 and 7.85.

Major Hong Kong banks cut interest rates on Friday as interbank rates fell sharply, but the Hong Kong dollar remained strong. It has been boosted in recent weeks by unwinding of carry trades amid rising risk aversion and demand for Hong Kong dollars by banks to ease liquidity. -- REUTERS

[millionairemind]

November 11, 2008, 8.37 pm (Singapore time)

HK central bank intervenes again to defend currency peg

HONG KONG - The Hong Kong Monetary Authority said it intervened three times in less than an hour in the foreign-exchange market on Tuesday to defend the Hong Kong dollar's peg to the US dollar.

The de facto central bank said it had bought HK$5.81 billion (US$745 million) worth of the US currency, after it hit its upper trading band of HK$7.75, an HKMA spokeswoman said.

Under the city's pegging system, the Hong Kong dollar is set at HK$7.80 to the US dollar, but is allowed to trade between 7.75 and 7.85.

The HKMA has now bought a total of HK$16.55 billion-worth of the US currency this month to add liquidity to the system and defend the peg.

Tuesday's injection increases Hong Kong's aggregate balance to HK$48.82 billion.

Traders said they expect continued strong demand for the Hong Kong dollar to prompt the HKMA to continue to intervene in the near term.

'The pressure on the Hong Kong dollar comes from the fact that it is linked to the dollar,' said an unnamed Singapore-based trader, according to Dow Jones Newswires.

'There is a shortage of the dollar globally, so naturally there is strong demand for the Hong Kong dollar because it is essentially an alternative to the dollar.'

Traders have also said there have been continued flows of cash into the city, where local bank deposits are fully covered by the government, adding to demand.

The currency is also more attractive as Hong Kong dollar interest rates are higher than most other Asian currencies.

During the 1997-1998 Asian financial crisis, several currencies around Asia were de-pegged under severe pressure from speculators, but Hong Kong maintained the link despite having to raise interest rates to spectacular levels. -- AFP

[winston]

HONG KONG ECONOMIC TIMES

-- The International Monetary Fund predicts Hong Kong's GDP growth will slow to just 2 percent in 2009 and it warned that the predicted rate could go lower.

[winston]

HKMA defends peg three times in two hours
BenjaminScent

The Hong Kong Monetary Authority was forced to intervene in the money markets three times in less than two hours yesterday, selling HK$5.813 billion of the local currency to defend the peg system.

The actions yesterday followed an injection of HK$1.938 billion late on Monday and brought the total injected so far this week to HK$7.751 billion.

Citi economist Joe Lo said persistent strong demand for Hong Kong dollars is likely from financial institutions and corporations in the SAR, who want more Hong Kong dollar liquidity amid the volatile conditions.

Foreign exchange traders said unwinding US dollar-Hong Kong dollar carry trades may have also contributed to the strength of the local currency.

The HKMA's actions were triggered automatically when the exchange rate hit HK$7.7500 to US$1, a spokesman said. The aggregate balance in the banking system will rise to HK$48.82 billion on Thursday when the trades are settled. The de facto central bank first sold HK$2.325 billion worth of the currency against the greenback yesterday afternoon to stop it from strengthening outside the trading band. It later sold another HK$775 million and HK$2.713 billion.

HKMA chief executive Joseph Yam Chi-kwong said the banking system remains strong and robust. "We will continue to ... take necessary measures to safeguard financial stability."

The International Monetary Fund yesterday praised the HKMA's recent measures to enhance liquidity. "These measures have begun to restore the workings of local interbank markets, although term lending has yet to normalize," the IMF said in its 2008 findings following staff visits to the SAR.

Financial Secretary John Tsang Chun-wah said the government is mindful of challenges from the severe economic and financial environment. "We will strive to uphold our principle of fiscal prudence," Tsang said.

[millionairemind]

November 12, 2008, 10.23 am (Singapore time)

HK says unlikely to meet 4-5% 2008 GDP forecast

HONG KONG - Hong Kong's economic growth this year is likely to fall short of the government's forecast 4-5 per cent given the impact of the global financial crisis and economic downturn, the Financial Secretary said on Wednesday.

'The latest indications suggest that our third quarter economic growth will moderate further from the 4.2 per cent growth in the second quarter, and there is little ground for optimism about economic conditions in the fourth quarter,' Financial Secretary John Tsang wrote in an article published in the South China Morning Post newspaper.

'It is likely that our earlier forecast for full-year economic growth in 2008 of between 4 per cent and 5 per cent will be difficult to attain.' He did not give a new forecast.

Third quarter growth data is due on Friday, with some economists forecasting the economy tipped into recession - defined as two consecutive quarters of negative quarterly growth.

As a small, open economy and re-export centre for Asian trade, Hong Kong is being hurt by weakening global demand for Asian goods. Consumer spending has also been crimped by heavy losses on the stock market, which has shed 50 per cent this year amid the global financial crisis.

The economic downturn ends an economic boom that began in 2003 and has seen Hong Kong average growth of 7.3 per cent annually over the past four years, one of Asia's best performers.

The International Monetary Fund forecasts economic growth in 2009 of 2 per cent. -- REUTERS

[winston]

Yam explains peg pressure
Friday, November 14, 2008

Pressure on the Hong Kong dollar to strengthen beyond its fixed exchange rate may have been caused by investors halting carry trades - purchases of overseas assets funded with loans from SAR banks - according to Joseph Yam Chi- kwong, head of the Hong Kong Monetary Authority.

The authority has injected HK$44.2 billion into the banking system to help maintain the peg to the US dollar since Lehman Brothers filed for bankruptcy on September 15.

The funds have helped lower short- term lending rates between banks, Yam said in his weekly online column.

"The strong demand for Hong Kong dollars was probably due to repatriation of funds and unwinding of interest carry trades as global financial jitters led market participants to deleverage and reduce their exposure to risk," he said. Policymakers would "take further measures if necessary," he added.

Pegged to the US dollar since 1983, the Hong Kong dollar is allowed to trade 5 cents on either side of HK$7.8. BLOOMBERG

[millionairemind]

Hong Kong follows Singapore into recession..

Business News

Hong Kong falls into recession
Posted: 14 November 2008 1713 hrs


HONG KONG - Hong Kong slipped into recession in the third quarter as the global economic slowdown took its toll on the financial hub, government figures showed Friday.

Hong Kong's gross domestic product fell 0.5 per cent from the previous quarter on a seasonally adjusted basis, following a fall of 1.4 per cent in the second quarter, the Census and Statistics Department said in a statement.

"The growth of the Hong Kong economy slowed notably further in the third quarter, as the external sector slackened amid the faltering global demand," said government economist Helen Chan, in the statement.

"And as domestic demand towards the end of the quarter was severely hit by the outbreak of the global financial tsunami that caused significant jitters in the local asset markets."

The standard definition for recession is two consecutive quarters of falling GDP.

The announcement means Hong Kong now joins Singapore, Germany, New Zealand and Italy in reporting a technical recession as the global slowdown bites into economies across the world.

Hong Kong cut its full-year 2008 GDP forecast to between 3 and 3.5 per cent from the previous 4 and 5 per cent, but kept its forecast for inflation at 4.2 per cent for the full year. Last year, Hong Kong's economy grew 6.4 per cent.

"The whole world has changed radically since September and we expect the recession will deepen," said Hang Seng Bank economist Irina Fan, according to Dow Jones Newswires.

"Hong Kong can't expect to recover until 2010 at the earliest," she said.

The government said merchandise exports were hit hard, giving their worst performance since the first quarter of 2002, as demand from the United States and other markets dropped away.

Consumption, one of the most solid performers in the city's shopping-mad economy, held firm in July and August but slackened distinctly in September, the statement said.

- AFP/ir

[millionairemind]

Transport
November 17, 2008, 3.17 pm (Singapore time)

HK airport loses passengers, cargo amid economic crisis

HONG KONG - Hong Kong airport saw a fall in passengers in October, while cargo volume plummeted due to a slowdown in business and trade activity amid the global economic crisis, officials said on Monday.

The Hong Kong Airport Authority (HKAA) released figures showing 4.07 million passengers used Chek Lap Kok airport in October, down 1.4 per cent from the 4.12 million recorded during the same month last year.

There was, however, a 1 per cent increase in the number of flights.

The HKAA also said the amount of cargo handled was 9.2 per cent down year on year to 320,000 tonnes.

HKAA chief executive officer Stanley Hui Hon-chung said: 'The global financial turmoil is biting deeper into world economies while business and trade activities are appreciably slowing down.

'These conditions have contributed to the continuous decline in passenger and cargo traffic that began in August.'

He said aircraft movements in November and December are expected to see marginal increases, but cargo traffic will likely fall.

The cargo business has been hard hit as the demand for Asian or mainland Chinese products has dwindled substantially in the ailing economies of major trading partners like the US and Europe, he said.

Air traffic figures for the first 10 months of this year recorded moderate growth over the same period in 2007. Passenger volume rose 3.2 per cent to 40.7 million, while cargo volume grew 1.6 per cent to 3.1 million tonnes.

Hong Kong carrier Cathay Pacific issued a profit warning earlier this month on the back of a slowdown in passenger demand and losses on fuel hedging contracts. -- AFP

[kennynah]

HK no longer entices me.... there were the susie wongs of the past...now? what have they got to offer?

[kennynah]

Hong Kong Jobless Rate Rises In August-October
11/18/2008 3:53 AM ET

(RTTNews) - Tuesday, data released by the Census and Statistics Department showed that Hong Kong's seasonally adjusted jobless rate rose to 3.5% in August-October from 3.4% in July-September. Economists were looking for a jobless rate of 3.6%.

On a not seasonally adjusted basis, the number of jobless declined by around 2,200 persons to reach 131,800 in August-October from 134,000 in July-September.

Employment grew by 3,600 persons to 3,546,700 in August-October, while the labor force increased by about 1,300 persons to a record 3,678,500.

The Hong Kong government spokesman noted that the seasonally adjusted unemployment rate moved up for the second consecutive period in August-October. "Yet, as the labor statistics are lagging in nature, they have yet to reflect fully the impact of the global financial tsunami".

The government expects joblessness to rise further in the near term as the global financial turmoil and its contagion effects take their toll.