Burdened by over five months of civil unrest, Hong Kong has fallen into a recession, the city's financial secretary said Sunday.
"The economy has entered a technical recession, and the negative growth rate has significantly expanded," Secretary Paul Chan wrote in a blog post. "The blow to our economy is comprehensive."
Chan added that official quarterly GDP figures would be released Thursday, but that preliminary analysis shows consecutive economic contractions. It will be "extremely difficult," he wrote, for Hong Kong to reach its previously forecasted growth rate.
The bleak report coincided with chaotic demonstrations over the weekend that saw shops set ablaze and petrol bombs thrown at police, who responded heavily with water cannons and tear gas. In a statement Monday, police said that protesters overstepped the "bottom line of any civilized society." Unrest in Hong Kong, which first broke in June in opposition to a proposed extradition bill, has escalated significantly in recent months as residents continue to protest China's growing influence over the city and call for more democratic rights.
Chan on Sunday called on demonstrators to keep order and allow industry and commerce to operate freely. "Our society and the economy need to take a breather and need to get back on the road," he wrote.
<i>Police and protesters in Hong Kong on Sunday. Photo Credit: JEROME FAVRE/EPA-EFE/Shutterstock</i>
As a Chinese special administrative region since 1997, Hong Kong has enjoyed relative autonomy from Beijing in recent decades and has grown into one of the world's most significant financial and commercial hubs. In 2018, Hong Kong was home to the highest number of ultrawealthy ($30 million or more net worth) residents of any city in the world, according to Wealth-X's annual report. New York surpassed Hong Kong just slightly in 2019.
Earlier this month, Hong Kong's richest resident, Li Ka-shing, donated 1 billion Hong Kong dollars ($128 million) to support local business affected by the city's "unprecedented challenges."
"I hope that HK$1 billion donation will spark more support for the embattled [Small and Medium Enterprises]," Li said in a statement. "All suggestions are welcome and let's work together during these difficult times."
The Hong Kong government has also implemented a series of measures to help alleviate financial pains. Secretary Chan announced earlier this month a 19 billion Hong Kong dollar ($2.4 billion) relief package, which included significant rent reductions.
In announcing the recession Sunday, Chan cited plummeting tourism and retail sales figures. The number of visitors to Hong Kong fell by 37 percent in August and September, and by 50 percent in the first half of October. Tourism's decline constitutes an "emergency," Chan wrote. The decline of retail sales volume fell by 13.1 percent in July to 25.3 percent in August.
"We will continue to closely monitor the external economic situation and the political and economic situation in Hong Kong and try our best to further study the relief measures," Chan added in his Sunday blog post.
Investors, however, seem to be sticking with Hong Kong. The Hong Kong Stock Exchange's Hang Seng Index remains up more than 4 percent year-to-date.
Stocks closed near session lows Wednesday as investors showed concerns about rising oil prices, supply shortages, and renewed risk of inflation. While investors began the week on a confident note, today's jump in oil prices has them once again worried that inflation will not go away any time soon. John Traynor, Chief Investment Officer at People's United Advisors, joins Closing Bell to discuss today's market close, the Federal Reserve's comments and actions taken to combat inflation, and more.
John Logan, Director of Labor and Employment Studies at San Francisco State University, joined Cheddar News to discuss the growing unionization push by employees at Starbucks and Amazon, and the wider implications of employee organization at these big companies.
Adidas is now the first major sports brand to create a program for paying college athletes. The new "name, image and likeness" network will allow more than 50,000 students across NCAA Division 1 schools to become paid spokespeople for the brand. Thilo Kunkel, Associate Professor and Director of Sport Industry Research Center at Temple University, tells us why this new program is only the beginning of an exciting time for student athletes.
The U.S. is bracing for a potential cyberattack as both the FBI and President Biden warn that Russia is 'exploring' a hack. This comes amid a recent rise in hacks on U.S. companies including Microsoft, Okta, and Nestle. Chris Pierson, founder & CEO, BlackCloak joined Cheddar's Opening Bell to discuss.
The co-owner and managing partner at Key Advisors Group Eddie Ghabour joined Cheddar News to break down the many factors impacting the market today, including the war in Ukraine, Fed rate hikes, inflation, and job numbers. Ghabour explained that he sees a bear market bounce currently leading to a downturn as the Federal Reserve is forced to be hawkish — even hinting at a recession. "I can't stress enough, you have a Fed that's telling us they're going to raise rates by 50 basis points in May during this type of environment," he said. "That's gonna be the knockout punch for this market and this economy in the short term and worst case for the consumer, unfortunately, in our opinion."
Michele Schneider, Partner and Director of Trading Research & Education at MarketGauge, talks about the challenges the Fed has in avoiding rising inflation and how the commodity shock is impacting long-term growth.
Craig Erlam, Senior Market Analyst at OANDA, breaks down the geopolitical risks impacting U.S. investors and how one can position their portfolio in a down-trending market.
Catching you up on what you need to know Mar 24, 2022, with NATO meeting updates, Ukraine retaking suburbs around Kyiv, the spread of omicron subvariant BA.2 in China, Google Pay launching a third-party billing option, and a 16-year-old is suspected of being the Lapsus$ mastermind behind hacks of Microsoft and others.
With ongoing supply chain issues and war in Ukraine, inflation is likely here to stay. This is the first time many younger people will experience consistent inflation as working adults, so this video breaks it down using candy (for fun!).
