CX Daily: Hong Kong Cuts GDP Growth Forecast, Announces Stimulus Amid Unrest
Hong Kong cuts GDP growth forecast, announces stimulus amid unrest
Hong Kong’s government slashed its 2019 growth forecast Thursday and announced a HK$19.1 billion ($2.44 billion) package of measures to support the economy as the special administrative region faces threats from the impact of a global slowdown, the U.S.-China trade war and mass protests.
Financial Secretary Paul Chan Mo-po said GDP expansion could slump to a range of 0% to 1% for the full year, down from a previous estimate of 2% to 3% and compared with a 3% pace in 2018. Speaking at a press conference in Hong Kong, Chan said the measures will include subsidies for the underprivileged and small and medium-sized businesses and higher salary tax rebates.
“Domestically, the recent social incidents have hit the retail trade, restaurants and tourism, adding a further blow to an already-weak economy, and also affected the international image of Hong Kong,” Chan said, making reference to protests that have gripped Hong Kong over the past 11 weeks. “Based on the latest developments and assessments on the outlook, the Hong Kong economy will continue to face an austere environment for the rest of the year.”
FINANCE & ECONOMICS
China loses position as the top U.S. trading partner in the first half of 2019
China’s massive export machine and its hunger for imported commodities like soybeans made it the top U.S. trading partner for goods from 2015 to 2018, data from the U.S. Census Bureau show. But the trade war has knocked China off its perch in the first half of 2019 as bilateral exports and imports slumped.
China cuts soybean import forecast as trade war rages
China's Ministry of Agriculture and Rural Affairs cut its soybean import forecast for the 2018-2019 crop year to 83.5 million tons, down by 1.5 million tons from July’s projection, according to a Monday statement, reflecting the impact of ongoing trade frictions with the U.S..
The U.S. Department of Agriculture (USDA) released a similar projection. “With the arrival of African Swine Fever in China in mid-2018 along with the ongoing trade dispute, a steady decline in China’s soybean import volume has been observed with imports currently forecast to reach 83 million tons in 2018/19,” it said in a report published earlier this month.
Imports / Australia
Trade war is making China more reliant on Australian energy, minerals
New figures released Wednesday show Australia supplied 46% of China's liquid natural gas imports in the year to June, more than any other country and up from the previous year, just as demand for Australian iron ore has spiked. China's increased reliance on Australian energy and mineral exports would limit its ability to penalize Canberra for its tougher stance on national security issues.
Australia supplied a record 74% of China's imported iron ore in June, according to trade figures, almost double the monthly average from 10 years ago. As the world's largest manufacturer and second-biggest economy, China is also reliant on Australian coal and uranium to keep the lights on and its factories running, as the country seeks to maintain two decades of rising prosperity.
HKEx counts on virtual banking to boost gold trading business
The Hong Kong stock exchange entered the virtual banking business partly to facilitate its gold trading operation, the head of the exchange operator said Wednesday. Hong Kong Exchanges and Clearing Ltd. (HKEx) is a shareholder of one of eight virtual banks that have obtained licenses from Hong Kong’s banking regulator.
HKEx’s investment in virtual banking could create synergies and bring a big boost for its gold business, HKEx Chief Executive Charles Li said Wednesday at a press conference. Li said the exchange values its gold business so much that it needs to leverage modern technology for future development.
Quick hits /
Yili takes the lead in Huishan’s long-stalled restructuring
Paul Chan: Tiding over difficult times together
China stocks follow U.S. down
Huang Yiping: China is no currency manipulator
BUSINESS & TECH
Wang Xiaochu, chairman of China Unicom. Photo: IC Photo
5G rollout /
Markets cheer Beijing’s call for carriers to team up on 5G
Shares of China’s three major wireless carriers rallied Thursday, with China Unicom shares up more than 11% in late afternoon trading Thursday in Hong Kong, after the company said the trio was in discussions to share resources and costs in the construction of expensive new 5G networks.
After taking a more cautious stance in previous generations of wireless network-building, Beijing has become far more aggressive in trying to make China a leader in the rollout of 5G services. Investors worried that carriers might sharply boost their spending to meet Beijing’s targets. But comments by Unicom President Wang Xiaochu at a Hong Kong event to discuss the company’s latest financial results eased those concerns.
Supply chains /
The world’s gadget-makers are splitting along trade war lines
A ceremony in July by Pegatron Corp. to launch a manufacturing outpost on the Indonesian island of Batam marked a critical first step into Southeast Asia for one of Apple Inc.’s most important suppliers. It also encapsulates a fundamental move of electronics production driven by the trade war that looks to be enriching Southeast Asia and beyond.
Trump’s flip-flops on trade are spurring an exodus from China of manufacturers. Some recognize that U.S.-Chinese tensions won’t fade soon, while others are just tired of the uncertainty. And so, the decades-old supply chain is starting to split in two: one beyond China’s borders that serves American concerns, and another within the world’s most populous country that caters to locals. It’s something Foxconn’s billionaire founder, Terry Gou, calls “G2” or two competing global standards.
Check out the feature.
Chinese internet sector grows 17.9% YOY: MIIT
Revenue of China’s internet sector grew by 17.9% YOY in the first half of 2019, the Ministry of Industry and Information Technology (MIIT) said, according to state news agency Xinhua.
“The internet has become the most active sector with the widest infiltration in China,” said Zhang Feng, chief engineer of MIIT, adding that China’s top internet companies have great momentum in increasing both revenue and profit this year and are accelerating their deployment in frontier areas including AI and the internet of things.
Coming up /
Mon. Aug 19: Sina and Weibo will announce their unaudited financial results for Q2 2019 before the U.S. markets open
Baidu and video platform iQiyi will report their Q2 2019 financial results after the U.S. markets close.
Wed. Aug 21: Online retailer Pinduoduo will report its unaudited financial results for Q2 2019 before U.S. markets open
Quick hits /
No investor love for Tencent, Lenovo and Luckin in latest reports
Tencent posts 35% profit rise on reviving game releases
Lenovo quarterly profits surge on improved margins
Starbucks challenger Luckin reports wider loss on soaring costs
Despite top planner’s order, it is ‘unrealistic’ for Beijing to drop new-energy car plate quota
Xiaomi receives licenses for second 5G phone
Chinese app-makers smell opportunities in strict
Macau casino operator Galaxy reports 7% profit drop
Coal industry looks to robots for increased safety
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