Green shoots in Hong Kong economy as financial, trade sectors lift

November 17, 2020

HONG KONG -- Hong Kong's economy remains in the doldrums, but there are some green shoots in Q3 data and, even more so, October data, Natixis says in a market update, reflecting that prospects for the economy is likely to become brighter if the government can better bring COVID-19 under control and gradually reopen the border with mainland China.

Natixis says Hong Kong's financial sector has been helping the economy, with a flurry of bond issuance and IPOs from Mainland companies, although  renewed uncertainties due to Ant Financial have not helped.

"The near future of Hong Kong also depends on the global environment," Natixis says. "The new US President could suggest a more flexible approach towards Hong Kong, although strategic competition with China would remain unabated."

On the external front, Hong Kong's exports and imports gained momentum in September, heading back to significant positive year-on-year growth thanks to rapid recovery in mainland China. "Although the overall external trade balance remained in deficit, the rise in overall trade is good news for the city's transport and logistics sector," Natixis says. 

"Given the improvement in the domestic and external environments and apparent green-shoots in most recent data, we are revising our Hong Kong GDP forecast upward to -5.6% for 2020 from -7% previously." (ATI).