Tom,
I don't have the knowledge about HK that most of the posters do on this thread. My response is JMHO.
"Exports fell by 13% in July (retained imports fell 36% so the domestic economy doesn't look too hot either)"
Adjusted for price imports show a different picture. Costs of raw material and more competitive price structures have lowered unit costs, but the overall export picture appears to be showing growth. I look at the reports on revs/costs of various exporters. They're showing lower, flat, or slightly higher revs, but earnings are staying strong. In some labor intensive sectors that compete with the rest of Asian there is an actual decline, but most are showing growth if adjusted for unit pricing shipped. Also, those that relied on Asian markets are down, but the US/Europe exports have shown large growth.
"- Retail sales fell by 16% in July because....."
Of lower prices and a decline in consumer demand. If you weigh against consumer prices, the fall off is greatly reduced.
"- Visitor arrivals fell by over 20% in May"
And an article I just read indicates it has been increasing. Tourism from the mainland is substantially up.
I'm not saying that HK is in great shape, but when one looks closer at the numbers, it's not near as bad as it seems. A 5.5% decline in the economy is less than others in the region and very much due to the property markets and lower pricing. With the property weakness, the 5.5% indicates decent strength in the rest of the economy. The unemployment is 4.8% according to the last number I saw, most the increase due tourism and property. When I see a 9% GDP reduction in a country that has devalued currency, I consider that a major falloff because prices have increased.
"High property prices are fine when things are booming but must fall when times are hard. And times haven't been this hard for more then 20 years."
I agree. But I still don't see the reasoning of "devaluing the $HK because property values are down". If anything, it would increase property costs. Property prices are important for the developers and the wealthy, but also important for the working class that bought at the higher prices and very important for the banks. If the banks were to fail, the economy fails. Protecting the economy means protecting the assets as well as the GDP growth.
"This isn't a problem of hedge funds and nasty speculators attacking an innocent country. It is a question of the HK government protecting the wealth of a small, well connected minority at the expense of the population in general. Their actions are despicable."
The speculators have been trying to use the system to drive down the market and profit from short positions. I'm sure that the wealthy will benefit from the HKMA actions (don't they benefit from most any action by any country's politicians?), but I don't believe that to be the reason the HKMA is doing what they are doing. IMO, they BELIEVE in the free market, but could not tolerate the speculators using the system to profit when it could potentially destroy the HK economy. When the economy has improved, I'm sure the HKMA will return the equities purchased to the float (probably at a profit).
A HK native told me that the people of HK have one thing in common. Some discuss sports, some music and the arts, some have other interests, but they ALL talk business. I feel a year from now we will see a vibrant HK going into the 21st century and it will be the primary conduit for China's expanded industrial exports. (Shanghai for commodities and heavy industrial, but finance and lighter industries thru HK)
China has huge problems but is coping better than most and will continue growth. In five years we will see a much stronger China, perhaps replacing Japan as the economic Asian force sometime in the future. The largest potential consumer market in the world.
I could be wrong on all of this, but it's where I'm placing my bets.
Thanks for the response,
Ron |
