October 21, 2024 Edition

Welcome to this week’s newsletter, where we highlight significant economic developments in China and Hong Kong. Key themes include China's economic growth amid deflationary pressures and Hong Kong's new policy initiatives aimed at attracting foreign talent and revitalizing its property market.

China's Q3 Economic Growth Slows to Its Weakest Rate Since Early 2023, Prompting Demand for More Stimulus

(Source: Reuters ; Reuters) China’s economy grew by 4.6% year-on-year in Q3 2024, slightly exceeding the 4.5% forecast but reflecting a slowdown from the 4.7% growth seen in Q2. Economists are increasingly concerned about deepening deflationary pressures due to excess supply and weak demand. Despite these challenges, the government remains confident in meeting its full-year growth target of around 5%, bolstered by further policy measures.

To support this, the seven-day reverse repurchase rate was lowered by 20 basis points, and the medium-term lending facility (MLF) rate was cut by 30 basis points. Looking ahead, we anticipate that stimulus measures will continue. The Chinese government seems poised to implement additional easing policies to further stimulate the market and support economic growth.

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Hong Kong's Leader Highlights Initiatives to Transform Traditional Sectors and Draw Talent in Policy Outline

(Source: SCMP; hongkongbusiness) In his recent policy address, Chief Executive John Lee outlined initiatives aimed at transforming traditional sectors while attracting foreign talent and investment. The government plans to increase the loan-to-value ratio for homes to 70%, a level not seen since before 2009, which is expected to provide crucial support to the luxury property market.

Additionally, a New Capital Investment Entrant Scheme will allow foreign investors to invest up to HK$10 million in residential property. Starting March 1, 2025, investments made through wholly-owned private companies will also qualify for the scheme, potentially accompanied by tax concessions for funds and single-family offices. While these policies are supportive of the private wealth market, the address did not address the government’s fiscal deficit, raising questions about how future fiscal challenges will be managed.

As we navigate these evolving economic landscapes in China and Hong Kong, it’s essential for investors and stakeholders to stay informed and adapt to these changes. The proactive measures taken by both governments highlight their commitment to fostering growth and attracting investment. We encourage our readers to reach out to our team at https://www.altive.com/en?for further discussion or support regarding these developments.

Disclaimer

This newsletter contains information from public sources, and any investment decisions made based on its contents are at the reader's own risk. Investing involves risks and might result in loss of capital invested. Past performance is not a guarantee of future results.

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