Hong Kong’s Economy ‘should fare better for rest of the year’

The recovery started in the first quarter but with a weak momentum as exports remain challenging, Chan said at the forum. The passenger capacity of the aviation industry has recovered to about 60 percent and visitor arrivals in April and May have exceeded half of pre-pandemic levels, he said.

Consumption has shown a strong rebound and will help support the economy in the second half of the year if more “good quality” visitors come, Chan noted. Hong Kong has seen overall economic improvement since February when the borders with the mainland were fully reopened, but investment takes time to grow, he added.

Additionally, the property market last year underwent an orderly adjustment in prices and transaction volume amid a high interest-rate environment, without triggering systemic risks or market panic, he said. However, he warned that the rate may be raised one or two times later this year and stay at a high level for some time and that companies and investors should get used to it.

Chan emphasized the need to manage risks as geopolitical challenges may persist, and the SAR faces its own problems, including a shortage of labor, talent, and a relatively tight land supply. He said Hong Kong should aim to pursue high-value-added development driven by the two main engines of finance: innovation and technology.

He reiterated the government’s support for the development of Web3 despite the problems on a few virtual asset platforms in the past two years. The underlying technology, blockchain, is very important to financial innovation, and it is necessary to be tolerant of the related risks and to support the orderly development of Web3 under good risk management, Chan said.

Secretary for Financial Services and the Treasury Christopher Hui Ching-yu said that Hong Kong should focus on three key areas for future development: fostering connectivity between the capital markets of the West and the mainland, facilitating private capital in addressing diverse challenges, and promoting technological innovation.

To cope with global changes, Hong Kong needs to strengthen its role in connecting China and the world and pay attention to regional needs and promote the development of the financial industry, Hui said.