Big lenders Standard Chartered and HSBC expect Hong Kong and China’s economies to recover, even as Beijing further steps up its Covid measures and Hong Kong’s economy posts its worst quarter in more than two years.
Her comments come as China imposed new lockdowns in Guangzhou, Wuhan and Xining last week.
“Hong Kong business is stronger than ever,” said StanChart CEO Bill Winters. “We had record results in Hong Kong in the third quarter of this year, which appears inconsistent with ongoing Covid-type restrictions and challenges in China.”
Both banking giants also recently released their earnings.
I firmly believe that Hong Kong will recover strongly in the next year.
People walk through Exchange Square in Hong Kong on October 28, 2022. Major lenders Standard Chartered and HSBC expressed confidence in Hong Kong and China’s economies recovering, even as China steps up its Covid measures and Hong Kong’s economy posted its worst quarter in more than two years.
Isaac Lawrence | AFP | Getty Images
“I think only about half of the growth that we’ve had… came from interest rates. The other half comes from the fact that the markets we operate in are getting back to full swing, including Hong Kong and, interestingly, China as well,” he told Health & Fitness Journal.
HSBC CEO Noel Quinn expressed similar optimism about Hong Kong.
“I think Hong Kong is going to have a strong post-Covid recovery… I strongly believe Hong Kong will have a strong recovery over the next year,” Quinn said, adding it was understandable that the economy would slow down due to the lockdowns.
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HSBC’s third-quarter earnings fell 42% on rising credit losses on top of charges from the sale of its French business.
China and Hong Kong stocks rose on Tuesday following rumors based on a unconfirmed social media post said Beijing is forming a committee to consider lifting border controls. Chinese Foreign Ministry spokesman Zhao Lijian told Reuters he was not aware of such a committee.
“Covid will pass. Eventually, China will open up and the economy will recover strongly,” Quinn told Health & Fitness Journal.
“We are patient. We continue to invest in China. We see strong growth prospects as the market evolves into a much stronger consumer market over the next decade.”
China recently reported that third-quarter GDP grew 3.9% yoy, beating expectations.
However, both banks acknowledged that the slowdown in China’s real estate sector is still a sticking point.
The total liabilities disclosed by major developers Evergrande, Kaisa and Shimao exceeded 2.6 trillion yuan (equivalent to the current value of 357.21 billion US dollars) as of mid-2021, after which the financial problems of the three developers worsened. They make up only a fraction of the entire real estate sector.
“It’s a problem we’ll just have to work for ourselves,” Winters said.