Financial Secretary John Tsang Chun-wah.

Financial chief John Tsang sees bumpy year for markets and exports

Economic problems in US, Europe and Japanto bring challenges to HK, says John Tsang

Hong Kong has a challenging year ahead as the investment market and exports would be affected by economic problems in the United States, Europe and Japan, the city's finance chief warned yesterday.

Speaking at a Chinese General Chamber of Commerce Forum, Financial Secretary John Tsang Chun-wah said the global economy and markets would continue to be volatile this year. "The US will bring its monetary easing policy to an end, which will cut liquidity in investment markets worldwide. Europe is still undergoing reforms and its economy is yet to recover fully. Japan would need to increase its sales tax over the next few years while the yen continues to fall," he said.

But Tsang said Hong Kong would benefit from the development of mainland China and Asia in general.

The International Monetary Fund predicts Asia will see an economic growth rate of 6.5 per cent this year while that of China will be 7.5 per cent, compared with about 2 per cent for developed countries.

Mainland China's growing middle class and wealth are also expected to provide financial firms in Hong Kong with new opportunities, allowing them to serve mainland clients as capital market reforms across the border allow more mainlanders to invest overseas.

Free trade zones would offer more … opportunities for Hong Kong businesses

"In November, [mainland] China had deposits of 103 trillion yuan (HK$131.8 trillion), 15 times that of Hong Kong. The Hong Kong government is keen to work with the mainland authorities to help the city's players capture the opportunities arising from the internationalisation of the yuan and capital market reforms there," Tsang said.


He said the government was lobbying Beijing to relax the daily foreign exchange cap of 20,000 yuan per day for Hong Kong residents.

Hong Kong and the mainland are also working on a mutual recognition scheme to allow Hong Kong-domiciled mutual funds to be sold on the mainland, and to let mainland funds sell here.

The Shanghai free trade zone and other proposed special economic zones on the mainland would benefit the city, Tsang said. "Hong Kong is the largest investor in the mainland. The free trade zones would offer more expansion opportunities for Hong Kong businesses."

This article appeared in the South China Morning Post print edition as: Financial chief sees bumps for markets, exports