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Pearl of the Orient needs a revival plan
Damon Ho
20th January 2024
So far this year, the stock market has been tumbling endlessly, and this prolonged decline is not common. As the market decline is deep and long, the public will also be affected by the negative wealth effect of the declining stock market. Hong Kong people, who are always generous with money, also go to Shenzhen shopping for less expensive groceries and enjoy the personal services at a low price.
The stock market is not only a matter for investors, but in fact, the participants of stock inv estment in Hong Kong have a wide range of residents, not only the public but also the senior citizens. In the past four years, the stock market has been falling significantly, causing the public to lose half of their capital. The poorer the public has no choice but to spend less, resulting in the local food & beverage industries and retail sector having a significant decrease in turnover.
The average middle-class family owns a residential unit of Hk$ 7million, plus 3 million working capital, but in the past few years, the market value of the residential unit decreased by 20% to 5.6 million. If their working capital is fully invested in Hong Kong stocks, their losses amounted to a half of the investment. It is a straightforward calculation, a middle-class family with assets of HK$ 10 million has been reducing to approximately 7.1 million, and the net worth has declined by 29%.
In the event of the stock market falling for a long period, there is no significant effort by the Hong Kong exchange to prevent the market from falling. Hong Kong's three major industries, such as the stock market, the property market, and the tourism, are all in trouble, which eventually will lead to the government's fiscal deficit being out of control.
The exhaustion of the stock market damages the investment sentiment and directly leads to the weak and powerless rebound of the property market. In this vicious circle, the insignificant economic activities will not contribute to the real growth of the economy.
At the end of February, the government will announce a new budget, and if there is no effective rescue plan in this budget, and the stock market continues to fall, then the status of financial center will be ruined forever. Finally, it is not worth visiting this fading of the Pearl of the Orient again.
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1. housing estates valuation being stabilized 2024-01-20 14:07:47
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Some major housing estates in Hong Kong saw falls in valuations narrowing and even rebounding in recent weeks, a sign the local property market is being stabilized on supportive policies and expected interest rate cuts. Among 20 bluechip housing estates, the valuations of 14 projects declined by 0.45 percent to 4.72 percent in December -- almost half of November's falls -- data from a property valuation platform of Hang Seng Bank shows. Located in Lai Chi Kok, a 1,000-square-foot unit in Mei Foo Sun Chuen saw its valuation shrank by 4.72 percent monthly to HK$11.5 million, the most among all tracked targets. But the fall had been narrowed down compared to the 8.1 percent slide from January.
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2. Relative surplus in HK hse market between 24-27 2024-01-21 14:23:24
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Based on the annual average sales of new homes of 16,400 from 2002 to 2023, JLL believes that there will be a “relative surplus” in Hong Kong’s housing market between 2024-2027, Given the expected relative supply surplus, JLL said home prices in the region will face prolonged adjustment. JLL explained that due to the long cycle of residential development projects, the housing supply always lags behind price fluctuations. “When property prices are high, commencements of construction increase, and when prices are low, commencements of construction decrease. Hence, the residential completion figure exhibits a cycle that can last around a decade,” JLL said.
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3. Home price being stabilized 2024-01-22 11:32:16
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Some major housing estates in Hong Kong saw falls in valuations narrowing and even rebounding in recent weeks, a sign the local property market is being stabilized on supportive policies and expected interest rate cuts. Among 20 bluechip housing estates, the valuations of 14 projects declined by 0.45 percent to 4.72 percent in December -- almost half of November's falls -- data from a property valuation platform of Hang Seng Bank shows. Located in Lai Chi Kok, a 1,000-square-foot unit in Mei Foo Sun Chuen saw its valuation shrank by 4.72 percent monthly to HK$11.5 million, the most among all tracked targets. But the fall had been narrowed down compared to the 8.1
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4. S&P 500 index rose to record high 2024-01-22 20:03:33
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Shares in the US rose to record highs on Friday, fuelled by tech stocks and rising hopes about the economy. The S&P 500 index, which tracks shares of America's biggest companies, ended the day up 1.2% to close at 4,839.8, topping the previous record set in January 2022. The new high means it has recovered from the tumble it took two years ago. Then, markets were worried over inflation and how the economy would respond. Now, as inflation eases and threats of economic downturn recede, investors have piled back into stocks. The Dow Jones Industrial Average, which tracks firms meant to be representative of the economy, rebounded to hit its own record late last year, as optimistic investors bought up shares.
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5. China's property market drop at a slower pace 2024-01-23 20:57:55
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China's property market drop may happen at a slower pace this year, said Lian Ping, chair of the China Chief Economists Forum. In an article in China Real Estate Newspaper, economists led by Lian said big cities such as Shanghai and Hangzhou might take the lead in stabilizing prices for new homes ahead of the rest of the country. They expect that the annual property sales may fall by around 5 percent due to price cuts and promotions by real estate developers while significantly narrowing from the end of last year. In the secondary market, a V-shaped reversal may occur as prices are expected to fall the most in the second quarter, they noted, adding that the annual decline will come in around 2 percent, narrowing by
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6. Shop rents seeing significant declines 2024-01-25 12:06:03
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Amid an economic downturn, shop rents in core areas of Hong Kong are seeing significant declines and creating opportunities for an increase of eyecatching lease deals in the retail market. International giants and top brands are staking out strategic locations in Hong Kong's premier districts such as Central, Tsim Sha Tsui and Causeway Bay, snapping up large retail spaces. That allows them not only to set themselves apart with a possible statement on the grandeur of luxury but also gives them a chance to possibly pioneer innovative retail approaches. Chanel is one such brand, setting itself up on the ground and first floors at Causeway Bay's Capitol Centre in June by committing to a three-year lease at a monthly rent of more than HK$3 million - which, despite the money involved, is actually much lower than the HK$13.8 million the space fetched at its peak.
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7. The draft rules no longer on NPPA website 2024-01-25 21:19:11
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China seems to have backtracked on strict rules to combat what the regulator deemed "obsessive" gaming. The National Press and Publication Administration (NPPA) had proposed regulations limiting the amount of money and time people spent playing video games. However, on Tuesday the draft rules were no longer on the NPPA website. China is the world's biggest online gaming market, but the industry has had frequent run-ins with the authorities. The new rules would have limited in-game purchases. Incentives such as daily log-in rewards for gamers would also have come under fire, while the introduction of a pop-up warning players of "irrational" behaviour was proposed.
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8. London luxury residential market remains red hot 2024-02-01 11:35:06
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London's 5 million (HK$49.57 million) plus residential market segment saw 5.7 billion in turnover last year, down slightly from 2022 yet still surpassing the pre-pandemic average, according to service provider Savills. Despite the 2023 environment of rising interest rates and super-inflation, the London luxury real estate market remains red hot.
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9. Gov ok on Stamp Duty Amendment 2024-02-02 11:58:27
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The government greenlighted the Stamp Duty (Amendment) (Residential Properties) Bill 2023, which implements adjustments to the demand-side management measures for residential properties. The adjustments include shortening the applicable period of the Special Stamp Duty from three years to two years; reducing the respective rates of the Buyer’s Stamp Duty (BSD) and the New Residential Stamp Duty (NRSD) from 15% to 7.5%; and providing a mechanism to suspend the payment of the BSD and NRSD for income talent acquisition of residential properties in Hong Kong. Secretary for Housing Winnie Ho said the adjustments to the demand-side management measures under the bill were made concerning the overall residential property market situation
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