Hong Kong finance minister vows to even out economic recovery across sectors

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“In the medium term, the economy must add momentum to create greater and faster growth space. It is the basis for building confidence.”

Financial Secretary Paul Chan says some business areas have lagged behind the property sector in their emergence from the economic doldrums. Photo: Eugene Lee

Chan said the benchmark Hang Seng Index had jumped by more than 3,300 points over the past four weeks and rebounded by more than 30 per cent from the low recorded at the start of the year.

“Transactions have increased significantly,” he added. “Last week, a single-day transaction volume exceeded HK$200 billion [US$25.6 billion].”

Chan highlighted that property prices had reversed 10 consecutive months of decline and transactions increased to more than 8,500 last month.

“Overall, Hong Kong’s macroeconomic situation is improving and its financial situation is stable,” he said.

The government reported last month that 5,013 flat sales were registered in March.

Chan attributed the increased economic momentum to the removal of the property market cooling measures, in force for about a decade.

The Special Stamp Duty, Buyers Stamp Duty and New Residential Stamp Duty were scrapped in February’s budget in the wake of a nine-month house price slump and mounting pressure from property developers and real estate agencies for help to stimulate the market.

Chan said at the time the measures were no longer needed because of the economic and market conditions.

Real estate agency Colliers said last month that since the duty charges were axed, the volume of new flat sales surged 308.4 per cent month on month.

That represented a 67.2 per cent growth to 3,971 in new-build and second-hand properties over the same period.

Hannah Jeong, the valuation and advisory services head at Colliers Hong Kong, said last month that developers had adopted prices that were “close to, or below, market prices”.

She explained that had triggered increased activity in the market by property investors and individual homebuyers.

Colliers said it also expected sales volumes to increase by 43 per cent year on year in 2024.

Simon Lee Siu-po, an economist and honorary fellow at the Asia-Pacific Institute of Business at the Chinese University of Hong Kong, sounded a note of caution over stock market recovery.

He said it was “too early” to say whether the market had revived.

Lee attributed the recent rise in the Hang Seng to moves by banking giant HSBC and international insurance firm AIA to buy back their own shares.

“I would not be so optimistic,” he said. “It already took a longer-than-expected time [for the Hong Kong stock market] to recover from Covid-19 – much slower than other places.”

Lee added that higher interest rates had affected the retail and catering sectors and suggested three more months were needed before firm conclusions could be drawn.

Chan said the government would focus on the creation of more favourable market conditions and boost consumer confidence to tackle the uneven nature of the recovery.

He said the government would announce details of more mega events in the second half of the year.

“These mega events will add vitality and spending impetus to the market, providing residents and tourists with more attractive options and consumption choices,” he said.

Major events already lined up for next month include the S2O Hong Kong Songkran Music Festival from June 8 to 9, the FIVB Volleyball Women’s Nations League between June 11 and 16, and the International Dragon Boat Regatta on June 15 and 16.

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