While this year’s global economy has started better than last year, concerns about the future remain due to uncertainties arising from the new US administration, Brexit and elections in Germany and France. Under these new circumstances, the future is still promising for Hong Kong if it makes use of its strengths in regional cooperation.
Paul Chan: Capturing opportunities arising from Asia’s development
Financial Secretary Paul Chan believes that Trump’s plan to cut taxes and increase infrastructure spending after taking office will help stimulate the US economy to accelerate growth. At the same time, the ensuing trade friction and normalization of interest rates may cause fluctuations in global financial markets. He also said that with France and Germany holding elections this year, coupled with factors such as the flow of refugees, the economic situation will even be more complex. The British Government’s plan to kick-start Brexit this March is also an issue of concern that trade barriers will get worse.
Chan pointed out that the Mainland economy maintained steady growth last year and reached the target of 6.7% for the year, which demonstrated that the Mainland’s ongoing economic restructuring had shown significant results. As this year is the year of deepening supply-side structural reforms, he is confident that the Mainland economy will continue to grow at medium to high speed this year.
On the economic front, Hong Kong’s economy significantly accelerated in the fourth quarter of last year, with export of goods growing on a year-on-year basis and continuing full employment. Nevertheless, Chan stressed the need to strengthen the development of new markets and support for new industries. In view of the huge demand for infrastructure development in Asia, the Infrastructure Financing Facilitation Office, which was set up last July, is driving Hong Kong to play a role as a bridge to fill the funding gap for infrastructure projects.
Huang Haizhou: Chinese and US economies to benefit Hong Kong stocks
Huang Haizhou, Managing Director of China International Capital Corporation, pointed out that the economies of China and the US have outperformed that of the eurozone and Japan. Last year, China’s economic growth was in line with expectations. In the US, deleveraging among financial institutions and families is basically over. Coupled with a shrinking fiscal deficit, the Trump administration is set to benefit.
In contrast, the eurozone is still plagued by debt issues, with fiscal expansion likely to continue while structural problems remain unresolved. In the meantime, the Bank of Japan has limited scope for further quantitative easing. Therefore, he expects that the two places will maintain low growth.
Under such circumstances, Huang is quite optimistic about the Hong Kong stock market. He believes that there is still a lot of room for Hong Kong stocks to rebound this year. In the first half of 2017, the Hong Kong stock market is poised to maintain a strong uptrend and could become the best performing market globally.
George Leung: Rise of middle class drives Asian economies
George Leung, Advisor (Asia Pacific) of Hong Kong and Shanghai Banking Corporation Limited, also believes that with the US withdrawing from the Trans-Pacific Partnership Agreement (TPP), Asia will gradually play a dominant role in regional economic cooperation. Leung said that Trump’s trade protectionist policy is bound to have a huge impact on the global economy, with sentiments against free trade likely to shift the US’s economic advantages away. While the US has withdrawn from the TPP, the China-led regional comprehensive economic partnership agreement (RCEP) will progress further in depth. As a result, the initiative in regional economic and trade cooperation will gradually shift to Asia.
Leung stressed that Asia’s economic development will be affected if infrastructure development lags behind. However, he is glad to see that China has the capabilities to export railway technology under the “Belt and Road” initiative, which will make the Asia-Pacific region become the focus of the global economy. He hopes that the new HKSAR Government would actively make preparations and maintain Hong Kong’s international and professional status on the economic front, capitalizing on the strengths of its legal system, talents and regulations to capture the huge opportunities arising from Asia’s economic development.
Newton: Paying attention to geopolitical risks’ impact on the economy
Alastair Newton, Director of Alavan Business Advisory, said that as the global growth engine shifts eastward, China and India will become the two major focal points. In the meantime, Sino-US relations will continue to play an important role in the international arena. He expects that the relationship between the two countries will remain stable in the short term.
Newton expects Trump will not be a reformer with far-reaching impact on the future. He believes that with the US’s withdrawal from the TPP under the new president’s administration, China can take the initiative in the international economic and trade order through the RCEP and Asian Infrastructure Investment Bank (AIIB). Meanwhile, we should pay attention to the US’s stance towards Russia. Will future sanctions against Russia be exacerbated or reduced? In addition, as the North Korean nuclear issue is a serious threat to the region, how the Chinese and US leaders respond to the issue will have a great impact on the future. Newton also believes that despite Brexit’s smaller-than-expected impact, this year’s elections in France and Germany, as well as Italy’s political situation, are uncertainties. Citing his native country Scotland as an example, Newton pointed out that support for independence following Brexit is strengthening; thus, investors should pay attention to geopolitical risks.
Newton advises investors to keep a close watch on Trump’s domestic economic policies. The world is fast-changing and the dramatic changes are unprecedented. Nonetheless, judging from the present circumstances, huge changes will not break out in 2017, so investors do not have to worry too much.
