HK faces pressure amid bleak global economy

0 Comment(s)Print E-mail Xinhua, December 6, 2011
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Hong Kong business is expected to face increased pressure due to the pessimistic outlook of the global economy but will not be badly influenced as the time of SARS in 2003 and global financial crisis in 2008, a survey conduced by Deloitte China revealed Monday.

The survey was conducted by over 200 participants from Hong Kong's banking sector, clients of Deloitte and some members of professional accounting body CPA Australia, over a two-month period from August to September this year.

According to the result, 54 percent of respondents forecast the US economy will weaken in the next 12 months while 68 percent believed the economic situation of Portugal, Italy, Ireland, Greece and Spain will further deteriorate over the same period.

As for Hong Kong, most respondents believed the local economy will be affected by the global uncertainty. Almost 78 percent of respondents anticipated the net profit of their business will drop by up to 10 percent in the next 12 months. Under the current environment, the appreciation of RMB, the depreciation of the US dollar and the tightening of credit terms of banks and lenders are the top three challenges for Hong Kong companies.

Respondents were mixed about the near future performance of the Hang Seng Index as 47 percent forecast it would close between 20,000 and 25,000 points at the end of February 2012 while 44 percent said it would reach between 15,000 and 20,000 points. The Index closed at 19,180 points on Monday.

The city's banking industry recorded a lower degree of pessimism with 58 percent forecasting the industry to experience an annual revenue growth of 11 percent in 2011. According to the survey, integration with the Mainland market to expand the client base as well as competition in investment products and traditional banking products are the major challenges for the industry.

Despite the bleak outlook, respondents did not believe the economic fallout would be as bad as the outbreak of SARS in 2003 or the financial crisis in 2008.

"This resilient attitude reflects the respondents' confidence towards the financial structure and regulatory framework already in place in Hong Kong's banking sector," said Darach Haughey, restructuring director of Deloitte China.

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