Hong Kong is set to end the year in the midst of a full-blown recession, its finance chief said yesterday, as spiraling interest rates join strict COVID-19 controls in hammering the economy.
“There is a very high chance for Hong Kong to record a negative GDP growth for this year,” Hong Kong Financial Secretary Paul Chan (陳茂波) told reporters, adding that interest rates were being raised “at a pace that was never seen in the past three decades.”
Hong Kong’s monetary policy moves with the US Federal Reserve because its currency, one of the cornerstones of its business hub reputation, is pegged to the US dollar.
Photo: AFP
The Fed’s hawkish rate hikes, aimed at curbing soaring inflation, come at an especially difficult time for Hong Kong, dampening sentiment when the economy is struggling.
Hong Kong is currently in a technical recession — recording two consecutive quarters of negative growth this year.
The government has adhered to a version of China’s “zero COVID” policy for more than two-and-a-half years, enforcing strict controls and mandatory quarantine for international arrivals.
Chan signaled his support for making travel and business easier.
“The aspects related to the pandemic need to continue to improve in order for us to see larger investments, because people are more cautious in a high-interest-rates environment,” he said.
Business leaders have long been warning that the COVID-19 controls, combined with Beijing’s ongoing crackdown on dissent, have made it harder to attract talent and cut off Hong Kong internationally, especially as rivals reopen.
Hong Kong has seen a net outflow of more than 200,000 people in the past two years, a record population drop.
“Hong Kong should be ahead of other Asian cities, but now there’s a feeling that we’re falling behind and being left isolated,” Eden Woon (翁以登), the new head of the Hong Kong American Chamber of Commerce told the South China Morning Post in an article published yesterday.
“There are people leaving and the problems of retaining talent — all these things add up together and need to be addressed,” he added.
While the Hong Kong Monetary Authority has no choice but to follow the Fed, major banks such as Standard Chartered PLC and HSBC Holdings PLC had resisted that pressure.
However, HSBC yesterday raised its prime lending rate in Hong Kong by 12.5 basis points to 5.125 percent, the bank’s first rise in four years.
Others are likely to follow suit. That could affect the territory’s once hot property sector, with Goldman Sachs Group Inc estimating that prices could slide by about 20 percent over the next four years.
Hong Kong also experienced a recession in 2019 when months of huge and sometimes violent democracy protests rocked the business district.
Nvidia Corp’s demand for advanced packaging from Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) remains strong though the kind of technology it needs is changing, Nvidia CEO Jensen Huang (黃仁勳) said yesterday, after he was asked whether the company was cutting orders. Nvidia’s most advanced artificial intelligence (AI) chip, Blackwell, consists of multiple chips glued together using a complex chip-on-wafer-on-substrate (CoWoS) advanced packaging technology offered by TSMC, Nvidia’s main contract chipmaker. “As we move into Blackwell, we will use largely CoWoS-L. Of course, we’re still manufacturing Hopper, and Hopper will use CowoS-S. We will also transition the CoWoS-S capacity to CoWos-L,” Huang said
Nvidia Corp CEO Jensen Huang (黃仁勳) is expected to miss the inauguration of US president-elect Donald Trump on Monday, bucking a trend among high-profile US technology leaders. Huang is visiting East Asia this week, as he typically does around the time of the Lunar New Year, a person familiar with the situation said. He has never previously attended a US presidential inauguration, said the person, who asked not to be identified, because the plans have not been announced. That makes Nvidia an exception among the most valuable technology companies, most of which are sending cofounders or CEOs to the event. That includes
TARIFF TRADE-OFF: Machinery exports to China dropped after Beijing ended its tariff reductions in June, while potential new tariffs fueled ‘front-loaded’ orders to the US The nation’s machinery exports to the US amounted to US$7.19 billion last year, surpassing the US$6.86 billion to China to become the largest export destination for the local machinery industry, the Taiwan Association of Machinery Industry (TAMI, 台灣機械公會) said in a report on Jan. 10. It came as some manufacturers brought forward or “front-loaded” US-bound shipments as required by customers ahead of potential tariffs imposed by the new US administration, the association said. During his campaign, US president-elect Donald Trump threatened tariffs of as high as 60 percent on Chinese goods and 10 percent to 20 percent on imports from other countries.
INDUSTRY LEADER: TSMC aims to continue outperforming the industry’s growth and makes 2025 another strong growth year, chairman and CEO C.C. Wei says Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), a major chip supplier to Nvidia Corp and Apple Inc, yesterday said it aims to grow revenue by about 25 percent this year, driven by robust demand for artificial intelligence (AI) chips. That means TSMC would continue to outpace the foundry industry’s 10 percent annual growth this year based on the chipmaker’s estimate. The chipmaker expects revenue from AI-related chips to double this year, extending a three-fold increase last year. The growth would quicken over the next five years at a compound annual growth rate of 45 percent, fueled by strong demand for the high-performance computing
RSS