Chen Maobo believes that large-scale exhibitions such as book fairs will stimulate additional consumer demand and create short-term employment opportunities

The epidemic in Hong Kong has rebounded, and the number of confirmed cases has exceeded 4,000 for three consecutive days.

Financial Secretary Chen Maobo said in a blog today (24th) that under the principle of epidemic prevention, most social and economic activities are still carried out in a cautious and orderly manner.

He believes that large-scale exhibitions such as book fairs can stimulate additional consumer demand and bring short-term employment opportunities.

The upcoming second phase of consumer coupons is believed to play a role in stimulating the market and revitalizing the economy.

In addition, the job market in Hong Kong has improved slightly recently. The unemployment rate in April-June was 4.7%, 0.7 percentage points lower than this year's high in February-April.

Headline inflation remained broadly benign, with underlying composite consumer price inflation at 1.8% in June.

However, looking forward to the second half of the year, challenges remain in the pace and strength of economic recovery.

▼July 22, 2022 Hong Kong Book Fair on the third day▼

+11

Chen Maobo pointed out in his blog that the book fair attracted many citizens, and he also specially attended two new book sharing sessions and bought books at the book fair stall.

Some participating booksellers told him that the overall flow of people at this year's book fair is still good, and they are cautiously optimistic about the business volume.

Chen Maobo said that the job market in Hong Kong has improved slightly recently, while the overall inflation situation is still generally moderate.

(Photo by Liang Pengwei)

He also mentioned that although the job market in Hong Kong has improved slightly recently, the overall inflation situation is still generally moderate.

However, the global and even the mainland economy is weak, and the latest export figures for Hong Kong to be announced this week are not optimistic.

In terms of the overall economy, affected by the epidemic at the beginning of the year, the economy grew by a negative 4% year-on-year in the first quarter.

The second-quarter GDP forecasts released early next month are far from ideal, even if they are expected to improve slightly.

Frankly speaking, there are still challenges in the pace of economic recovery in the second half of the year

Looking forward to the second half of the year, the pace and intensity of economic recovery will still face considerable challenges.

One of the main negative factors is the expectation that the U.S. Federal Reserve and many major central banks will raise interest rates sharply, worrying about its impact on the global economy and capital flows.

Taking the United States as an example, inflation has continued to intensify this year. The consumer price index (CPI) in June rose by 9.1% year-on-year, hitting a 41-year high.

In order to suppress inflation, the Federal Reserve has raised interest rates three times this year, with a cumulative rate of 1.5%. The market currently generally expects that the interest rate meeting this week will raise interest rates by 0.75%.

Further interest rate hikes in the United States will inevitably affect the capital flow and asset price changes in the Hong Kong market.

The most obvious is the carry activity triggered by rising US interest rates and still relatively low Hong Kong interest rates under the linked exchange rate mechanism, coupled with the weak demand for Hong Kong dollars in the local market in recent months, the Hong Kong exchange rate has repeatedly triggered the weak side since May. Exchange Guarantee.

The HKMA buys Hong Kong dollars and sells US dollars according to the mechanism.

The United States has raised interest rates successively this year, and once again, fund holders “sell Hong Kong dollars and buy US dollars” to earn higher interest rates for holding US dollars.

As of July 22, the HKMA had undertaken more than HK$170 billion in selling orders and released the equivalent of US dollars, and the balance of the banking system dropped to about HK$165 billion accordingly.

The Federal Reserve decided to raise interest rates.

(Getty Images)

According to the relevant operations of the linked exchange system, as the weak-side convertibility guarantee is triggered and funds flow out of the Hong Kong dollar system, the automatic interest rate adjustment mechanism will play a role, and the Hong Kong dollar interest rate will gradually increase, which will offset the incentives for carry trades and reduce the outflow of funds from the Hong Kong dollar market. The so-called "capital outflow" situation will ease after the Hong Kong dollar stabilizes in the range of 7.75 to 7.85.

As for the property market, although there has been a slight correction in property prices in Hong Kong over the past few months, they have remained largely stable.

Although more than half of the private residential properties in Hong Kong have no mortgage loans, when Hong Kong enters the interest rate hike cycle with the United States, the mortgage repayment burden of property owners will inevitably increase. When purchasing a property or making other investment decisions, the public should still adopt a prudent strategy.

The property market is blowing wind. The three-bedroom luxury house in Kowloon Tong bucked the market and made 3.5 million in three years. Unemployment rate for government-assisted return to the workplace fell to 4.7% Knight Frank: Small and medium-sized unit rental decline is expected to narrow Hong Kong’s unemployment rate fell to 4.7% in April-June