Sunday 19 November 2017

Hong Kong exchange rally amid slowdown

Hong Kong
Hong Kong
Colm Kelpie

Colm Kelpie

The market capitalisation of Hong Kong-listed shares hit a new record yesterday, highlighting the emergence of China as a major financial world power.

China Construction Bank has overtaken United States giants JP Morgan, Facebook and Chevron in terms of size, with Hong Kong-listed shares now passing the HK$30tn mark for the first time, the 'Financial Times' reported.

That suggests concerns about a slowdown in the world's second largest economy is not affecting investor confidence.

But news of the rise of the Hong Kong exchange came on the day that new data showed China's exports contracted 15pc last month, a shock report that raises concerns about sputtering Chinese growth.

The tumble in exports - the worst in about a year - compared with expectations for a 12pc rise and could heighten worries about how a rising yuan has hurt demand for Chinese goods and services abroad, analysts said.

And in a sign that domestic demand may also be affected, imports into the country shrank 12.7pc last month from a year ago.

By volume, coal imports plunged a massive 40pc.

"It's a very bad number that was much worse than expectations," Louis Kuijs, an economist at RBS in Hong Kong.

"It leads to warning flags both on global demand and China's competitiveness."

Buffeted by lukewarm foreign and domestic demand, China's trade sector has wobbled in the past year on the back of the country's cooling economy.

Chinese Vice Premier Wang Yang was quoted by Xinhua state news agency as saying earlier this month that authorities must arrest China's export slowdown amid fears that it might further dampen economic growth.

Anaemic growth in the trade sector could hurt jobs, which the government wants to protect for fear that widespread unemployment could fuel social discontent and trigger unrest.

So far, China's labour market appears to be holding up well, despite signs that economic growth is steadily grinding to its lowest in a quarter of a century of around 7pc.

China expanded grew its trade sector by 3.4pc in 2014, according to government data, missing the government's growth target of 7.5pc by more than half.

Taking that disappointing outcome into account, the government has lowered its growth target for 2015 combined imports and exports to around 6pc.

(Additional reporting Reuters)

Irish Independent

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