Last Updated on November 2, 2022 by Bitfinsider
Standard Chartered and HSBC believe Hong Kong and China’s economies to recover, despite Beijing’s continued implementation of Covid policies and Hong Kong’s weakest quarter in more than a year.
Their remarks come a week after China imposed new lockdowns in Guangzhou, Wuhan, and Xining.
“Business in Hong Kong is as robust as it has ever been,” said Bill Winters, CEO of StanChart. “During the third quarter of this year, we achieved record results in Hong Kong, which seems inconsistent given the continuous, persistent Covid type restrictions and the difficulties in China.”
Both financial titans have lately reported their results.
The Gross Domestic Product of Hong Kong for the third quarter decreased by 4.5% compared to the same period last year.
In the three months leading up to September, StanChart’s quarterly profit increased by 40 percent, exceeding expectations. It also raised its projections for income growth from 10% to 13%.
Winters attributed the outstanding performance to rising interest rates and improving market conditions.
“I believe that just approximately half of the growth we’ve had was due to interest rates. The remainder is attributable to the fact that the markets in which we operate, notably Hong Kong and China, are returning to full strength.
The CEO of HSBC, Noel Quinn, shared a similar outlook on Hong Kong.
“I believe Hong Kong would recover significantly after Covid… I am confident that Hong Kong’s economy would recover significantly the next year,” Quinn said, adding that the slowdown was understandable given the lockdowns.
Profits for the third quarter of HSBC decreased 42% due to rising loan losses and expenses from the sale of its French division.
On Tuesday, China and Hong Kong markets rose on claims based on an unverified social media post that Beijing was forming a committee to evaluate whether or not to ease border controls. Zhao Lijian, a spokesperson for the Chinese Ministry of Foreign Affairs, told Reuters he was unaware of such a committee.
“Covid will die out. China will eventually begin to open up, and the economy will recover strongly,” Quinn told Bitfinsider.
“We’re patient. We continue investing in China. In the coming decade, we anticipate the sector to become a significantly stronger consumer market, which bodes well for growth.”
China’s GDP for the third quarter expanded by 3.9% year-over-year, exceeding expectations.
However, both banks noted that the slump in China’s real estate market remains an obstacle.
After big developers Evergrande, Kaisa, and Shimao announced total liabilities of more than 2.6 trillion yuan (equivalent to $357.21 billion at the time) at mid-year 2021, their financial woes intensified. They represent a small portion of the overall real estate industry.
Winters stated, “It’s a problem that will have to resolve itself.”
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