Edward Yau: Hong Kong economy maintains growth momentum, capital market sentiment improves

According to the Wise Finance APP, Hong Kong Financial Secretary Paul Chan published a blog today (May 5th) stating that in the first quarter of this year, Hong Kong's GDP grew by 2.7% year-on-year, marking five consecutive quarters of growth. After seasonal adjustment, the quarterly growth rate accelerated to 2.3%, maintaining the growth momentum of the Hong Kong economy. The Hang Seng Index has risen for nine consecutive trading days, with a cumulative increase of nearly 14%, and an average daily trading volume exceeding HKD 128 billion, indicating an improved capital market sentiment. Following the withdrawal of the "harsh measures," the Hong Kong property market has become more active, with transaction volumes increasing and property prices stabilizing.

Paul Chan pointed out that one of the main drivers of Hong Kong's economic growth in the first quarter of this year came from inbound tourism. With the increasing number of visitors to Hong Kong, the service sector has continued to show significant growth. During this year's May Day Golden Week holiday, the first three days saw nearly 650,000 inbound tourists, a 25% increase from the same period last year. Better-than-expected external demand has also supported the improvement in overall goods exports in the first few months of this year.

However, the external environment remains complex and uncertain. The recent announcement by the Federal Reserve to maintain interest rates, coupled with the stagnation of the slowdown in U.S. inflation in recent months, has significantly dampened market expectations for interest rate cuts in the U.S. this year compared to the beginning of the year. The prolonged high level of interest rates will have an impact on global economic recovery, Hong Kong exports, investment intentions in Hong Kong, and asset market performance.

Paul Chan also mentioned that the sustained strength of the Hong Kong dollar has affected the willingness of foreign tourists to spend in Hong Kong. Coupled with changes in the consumption patterns of Hong Kong residents and inbound tourists, challenges have arisen for the retail and catering industries in Hong Kong. In order to support Hong Kong's economic and tourism development, the central government has actively responded to the Hong Kong government's proposal to gradually optimize the individual visit scheme. In February, the scheme was expanded to include Xi'an and Qingdao.

In the face of major changes, in addition to focusing on creating consumption opportunities and scenarios, including vigorously promoting event-based economy, it is equally important for enterprises to grasp the key aspects of "new product development" and "new operational models" during the transition of consumption market models. New products not only meet the evolving needs of consumers but also help create new demands and increase sales. As for new operational models, they enable enterprises to utilize more data-based management solutions, helping to reduce costs and improve efficiency. This year's Budget proposed various measures to assist small and medium enterprises in the catering and retail sectors in their digital transformation