Famed investor keeps the faith

Business | Kevin Xu and Stella Zhai 17 Jan 2020

Legendary investor Jim Rogers said some investors may no longer regard Hong Kong as the first choice in Asia for investment due to months of social unrest, though he has not seen a huge flight of capital from Hong Kong and the local economy is gradually rebounding.

Rogers said Hong Kong remains appealing as the market in Shanghai is not completely open.

However, Kyle Bass, the hedge fund manager who's been shorting Hong Kong's currency, said the SAR faces a banking crisis in 2020, mirroring the struggles of Iceland and Ireland a decade ago. "It takes about a year for a full-fledged banking crisis to hit, and you'll see a full-fledged banking crisis in Hong Kong now," Bass, founder of Hayman Capital, said on Bloomberg TV.

HSBC (0005) expects Hong Kong's GDP to contract by 0.7 percent this year, compared to its previous forecast of a 1.5 percent growth, while Gary Wan, economist at Dah Sing Bank, estimates the local economy will drop 1.7 percent this year.

Hong Kong's retail sector continues to take a beating, with Luk Fook (0590) recording a 27 percent year-on-year decrease in the same-store sales growth of its Hong Kong and Macau market for the three months ended December 31.

In terms of the city's public finance, Ernst & Young estimates the government will record a fiscal deficit of HK$70 billion for the year 2019-2020, equivalent to 2.5 percent of Hong Kong's estimated GDP last year and the first budget deficit in 15 years.

The deficit would reduce fiscal reserves to HK$1.1 trillion by March 31, the firm said.

However, former chief secretary Henry Tang Ying-yen said the budget shortfall can be handled properly, but if Hong Kong's internal friction continues, Hong Kong's image will suffer.

As for trade, the volume of Hong Kong's total exports of goods decreased by 1.3 percent year-on-year in November last year.

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