China’s economy is headed for an L-shaped future, property boss Ronnie Chan says

Hang Lung Properties chairman Ronnie Chan Chichung says China is heading for L-shaped economic growth and it will take some time to recover but it should have little impact on sound financial firms.

L-shaped economic growth represents a decline followed by stability.

“We don’t worry because Hang Lung remains in strong financial health,” he told a media briefing to launch his book ‘25 Years In Retrospect’.

The book comprises a collection of the Chairman’s Letters to shareholders penned by Chan after he took up the chairmanship in 1991.

He said the mainland government will come up with new measures to stimulate domestic consumption but gave no further details.

Since assuming the role of chairman, Chan has written a total of 102 letters to shareholders with a word count of over 198,000 words. The letters have been translated into over 340,000 Chinese characters.

Writing in his early years, Chan focused on reporting the achievements and strategies of his companies. In later years, he dedicated more attention to analysing the state of Hong Kong, the mainland and global markets. He offered insights that have been of keen interest both at home and abroad.

Chan rejected suggestions that Hang Lung could generate better returns if it expanded overseas instead of focusing on China.

“Only a few markets in the world will have economic growth of six to seven per cent. China is a market with great potential for development,” he said.

All markets go up and down, he said.

Faced with economic challenges ahead, he said: “During rainy days, we just stay home and wait for the sun to shine again and continue to seize opportunities to go forward.”

Since Hang Lung bought it first piece of land on the mainland 25 years ago, its shopping mall portfolio has grown to eight in six cities. They are in Shanghai, Shenyang, Jinan, Wuxi, Tianjin and Dalian.

Last year, its mainland shopping malls generated HK$3.28 billion in rental income, up 6 per cent from 2014. Revenue from those malls accounted for 78 per cent of total revenue from the mainland.
Commenting on Hong Kong, he said residential property prices are unlikely to fall significantly. Some analysts predict a decline of 30 per cent.

“Hong Kong’s residential market should remain healthy over the next two to three years,” he said.

Every year, there are 40,000 couples getting married. They will create housing demand, he said.
“I do not expect prices to fall significantly. Hong Kong home prices could fluctuate 10 to 15 per cent either way,’ he said.