Hong Kong Set to Rise above Its Problems
T IS now more than five years since the end of British sovereignty in Hong Kong. A lot has happened in those five years in Hong Kong, China and the rest of Asia. In Hong Kong property prices and rents have fallen by around 70pc from their 1997 peak and the consumer has retrenched considerably. Consumer confidence is very much influenced by property prices and, given the fall, the Hong Kong consumer is suffering a much worse version of the 1990s negative equity trap in the UK. This has resulted in a significant fall in discretionary spending particularly in the bars and restaurants and even at the racecourse.
The main factors which contributed to the property boom over the previous 40 years were an excess of demand over supply, buoyant incomes and an abundant availability of credit.
While these factors are unlikely to be so favourable in the years ahead, Hong Kong's location on the seaboard of the fastest growing manufacturing centre in the world will continue to be positive.
Hong Kong has four main areas of competitive advantage: 8 Hong Kong has great expertise in retailing and trading and should benefit from the migration of the population towards major conurbations and improving standards of living. …