Hong Kong Q3: Growth slightly weakened with still positive outlook

• The Hong Kong economy continued to grow vibrantly in the third quarter of 2017 as real GDP expanded by 3.6%YoY. Robust private consumption helped to lift the economy, which grew 6.7%YoY. Retail sales increased by a 5.6%YoY in September amid improving tourism and robust domestic demand. On the external front, exports recorded notable growth over a year earlier (5.5%YoY for goods and 3.7%YoY for services), benefitting from a global economic upturn and contributing 1.2% to total GDP growth.
• The Hang Seng Index has climbed to its highest close in nearly ten years and become one of the best-performing Asian stock benchmark so far. Noticeably, the Chinese regulators will start to convert the currently non-tradable H shares (held by mainland-based major shareholders including state entities) to ordinary shares available to public investors. The programme will significantly increase supply of Chinese shares in Hong Kong and bolster liquidity.
• At the same time, though, resident property market moderated in the third quarter with price growth decelerating and trading activities cooling. However, housing prices have already soared to sky-high levels (460% of 2001’s price level) and the housing affordability ratio has further worsened to 68% in the third quarter.
• All in all, the Hong Kong economy was largely on the rise in the third quarter alongside the Mainland economy that sustained medium-high speed growth and global recovery. Looking ahead, the outlook for the Hong Kong economy remains positive as the Chinese economy will likely stay supportive in the medium term.

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