Hong Kong faces risks from QE exit, Shanghai zone
Business leaders say twin challenges in the new year may lead to fund outflow, higher interest rates and the city losing lead as financial centre
Hong Kong is facing twin challenges next year, with increased market risks due to the expected ending of monetary easing in the United States and keener competition from regional rivals such as Singapore and Shanghai's free-trade zone, the city's central bank chief and business leaders said yesterday.
At a General Chamber of Commerce business summit, Hong Kong Monetary Authority chief executive Norman Chan Tak-lam warned local businesses and investors to beware of the risks of an outflow of funds and a sharp rise in interest rates if, as expected, US monetary policy changes next year.
Another challenge is competition from rivals, with a chamber survey released at the summit showing 73 per cent of members considered Singapore a better financial centre than Hong Kong.
The survey, to which 319 member companies responded, also showed 60.2 per cent thought Hong Kong's competitiveness had deteriorated in the past year, against 31.7 per cent who said it was unchanged and just 8.1 per cent who thought it had improved.
It also found that 53 per cent of companies plan to give pay rises of up to 5 per cent next year, with about 20 per cent of firms planning rises of between 5 and 10 per cent, but 23 per cent not planning any rise at all.
Chan warned Hongkongers to beware of the risks related to the impending US exit from the quantitative easing programme - the monetary easing policies adopted by the Federal Reserve since the global financial crisis in 2008.