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Hong Kong recession to continue as protests hit economy - business live Hong Kong recession to continue as protests hit economy - business live
(about 1 hour later)
Rolling coverage of the latest economic and financial newsRolling coverage of the latest economic and financial news
One US-listed stock is bucking the trend, though.
Nio, the Chinese electric car company, has surged 40% after posting better-than-expected results.
The firm dubbed China’s answer to Tesla reported a smaller loss than expected, thanks to a pick-up in revenues and higher vehicle deliveries.
Marketwatch has more details:
Nice timing by Nio, with Tesla making its first Chinese deliveries today.
Wall Street appears to have a post-Christmas hangover (and it’s not alone, eh?!).Wall Street appears to have a post-Christmas hangover (and it’s not alone, eh?!).
Stocks are down in early trading, knocking 182 points off the Dow to 28,463.Stocks are down in early trading, knocking 182 points off the Dow to 28,463.
2019 has still been a vintage year for the US market, with equities up over 20%. But the fabled Santa Rally has taken a wrong turn....2019 has still been a vintage year for the US market, with equities up over 20%. But the fabled Santa Rally has taken a wrong turn....
Time for a quick summary (on a quiet day).Time for a quick summary (on a quiet day).
Hong Kong is expected to slump further into recession this quarter. GDP is forecast to have shrank in October-December, for the third quarter running, due to the pro-democracy protests that have been raging for months.Hong Kong is expected to slump further into recession this quarter. GDP is forecast to have shrank in October-December, for the third quarter running, due to the pro-democracy protests that have been raging for months.
Hong Kong’s finance secretary Paul Chan warned that:Hong Kong’s finance secretary Paul Chan warned that:
Chan is now pledging growth-friendly measures in the City’s next budget, due in February.Chan is now pledging growth-friendly measures in the City’s next budget, due in February.
Financial workers’ bonuses are expected to be hit hard by the downturn, hitting their lowest levels since the financial crisis.Financial workers’ bonuses are expected to be hit hard by the downturn, hitting their lowest levels since the financial crisis.
Hong Kong’s protest movement is expected to intensify its efforts this week, with demonstrations expected to disrupt shopping around the New Year celebrations.Hong Kong’s protest movement is expected to intensify its efforts this week, with demonstrations expected to disrupt shopping around the New Year celebrations.
In other news:In other news:
Japan’s stock market has closed for the year, up 18%.Japan’s stock market has closed for the year, up 18%.
UK mortgage approvals have unexpectedly risen. They were up 6.8% year-on-year in November, to a seasonally-adjusted three-year high.UK mortgage approvals have unexpectedly risen. They were up 6.8% year-on-year in November, to a seasonally-adjusted three-year high.
Tesla has delivered its first Chinese-manufactured carsTesla has delivered its first Chinese-manufactured cars
The US trade deficit has narrowedThe US trade deficit has narrowed
Bank of England governor Mark Carney has warned pension funds and other investors to cut fossil fuel assets, as some will become worthless as the climate emergency continues.Bank of England governor Mark Carney has warned pension funds and other investors to cut fossil fuel assets, as some will become worthless as the climate emergency continues.
Just in: The US trade deficit has unexpectedly shrunk.Just in: The US trade deficit has unexpectedly shrunk.
Imports into America fell by 1.3% in November, while exports rose by 0.7%, according to the Census Bureau.Imports into America fell by 1.3% in November, while exports rose by 0.7%, according to the Census Bureau.
That narrows the trade deficit to $63.2bn, down from $66.5bn a month ago, and much less than the $68.7 billion expected:That narrows the trade deficit to $63.2bn, down from $66.5bn a month ago, and much less than the $68.7 billion expected:
That will cheer the White House, given president Trump’s attempts to cut the trade gap (with mixed results).That will cheer the White House, given president Trump’s attempts to cut the trade gap (with mixed results).
Some 1,200 kilometres north east of Hong Kong, Tesla has been delivering its fist Chinese-manufactured cars -- to some of its own staff.Some 1,200 kilometres north east of Hong Kong, Tesla has been delivering its fist Chinese-manufactured cars -- to some of its own staff.
It’s a major major milestone in the electric carmaker’s global expansion efforts, says my colleague Jasper Jolly:It’s a major major milestone in the electric carmaker’s global expansion efforts, says my colleague Jasper Jolly:
More here:More here:
European stock markets are not following Asia’s rally today.European stock markets are not following Asia’s rally today.
Instead, the main indices are down on the City’s final full trading day of 2019 (tomorrow is a half-day).Instead, the main indices are down on the City’s final full trading day of 2019 (tomorrow is a half-day).
The FTSE 100 is now down 30 points, or 0.4%, in very thin trading. That breaks an 11-day run of daily gains.The FTSE 100 is now down 30 points, or 0.4%, in very thin trading. That breaks an 11-day run of daily gains.
Just 90 million trades have taken place across the FTSE 100 so far today, compared to perhaps 800m on a typical day. That suggests many investors have sloped off until the new year, preserving profits after seeing the Footsie jump by 13% this year.Just 90 million trades have taken place across the FTSE 100 so far today, compared to perhaps 800m on a typical day. That suggests many investors have sloped off until the new year, preserving profits after seeing the Footsie jump by 13% this year.
Stocks are suffering because the euro and the pound are both gaining ground against the US dollar, to €1.118 and $1.313 respectively.Stocks are suffering because the euro and the pound are both gaining ground against the US dollar, to €1.118 and $1.313 respectively.
Edward Moya of trading firm OANDA reckons investors are expecting that American interest rates will remain on hold for some time (following three rate cuts since the summer).Edward Moya of trading firm OANDA reckons investors are expecting that American interest rates will remain on hold for some time (following three rate cuts since the summer).
Recession warnings aren’t deterring demonstrators from organising major protests later this week.Recession warnings aren’t deterring demonstrators from organising major protests later this week.
Multiple protests are planned for New Year’s Eve and New Year’s Day, which are designed to disrupt festivities and shopping in the City.Multiple protests are planned for New Year’s Eve and New Year’s Day, which are designed to disrupt festivities and shopping in the City.
Reuters has more details:Reuters has more details:
The pick-up in UK mortgage approvals in November is a “significant surprise”, says Howard Archer of the EY Item Club.The pick-up in UK mortgage approvals in November is a “significant surprise”, says Howard Archer of the EY Item Club.
He suspects that some home owners may have been keen to move before the general election, as a hung parliament could have created more economic uncertainty in 2020.He suspects that some home owners may have been keen to move before the general election, as a hung parliament could have created more economic uncertainty in 2020.
Archer had also dug into the seasonally-adjusted data, which shows November was a particularly strong month (once you adjust for seasonal factors).Archer had also dug into the seasonally-adjusted data, which shows November was a particularly strong month (once you adjust for seasonal factors).
Here’s his take:Here’s his take:
A significant upward surprise as UK Finance reported mortgage approvals for house purchases spiked to 43,700 [seasonally adjusted] in November, which was the highest level since January 2017. Mortgage approvals had previously fallen back over the previous three months to be at a 7-month low in OctoberA significant upward surprise as UK Finance reported mortgage approvals for house purchases spiked to 43,700 [seasonally adjusted] in November, which was the highest level since January 2017. Mortgage approvals had previously fallen back over the previous three months to be at a 7-month low in October
November’s jump in mortgage approvals was all the more surprising as the expectation had been that housing market activity would be hampered by heightened political uncertainties. This was certainly indicated by November surveys, notably from the RICSNovember’s jump in mortgage approvals was all the more surprising as the expectation had been that housing market activity would be hampered by heightened political uncertainties. This was certainly indicated by November surveys, notably from the RICS
Indeed, the housing market had clearly been pressurized over the previous three months by a potent cocktail of Brexit, economic and domestic political uncertainties. It is also notable that while consumers have benefited from markedly improved earnings growth and rising employment over much of 2019, these fundamentals reached a peak around June/July in terms of employment and earnings growth.Indeed, the housing market had clearly been pressurized over the previous three months by a potent cocktail of Brexit, economic and domestic political uncertainties. It is also notable that while consumers have benefited from markedly improved earnings growth and rising employment over much of 2019, these fundamentals reached a peak around June/July in terms of employment and earnings growth.
It is possible that mortgage approvals were lifted in November by some house buyers looking to move before the General Election amid concerns over a potential change of governmentIt is possible that mortgage approvals were lifted in November by some house buyers looking to move before the General Election amid concerns over a potential change of government
Those gains in Hong Kong and China today have lifted Asian stock markets to their highest levels in 18 months today.Those gains in Hong Kong and China today have lifted Asian stock markets to their highest levels in 18 months today.
MSCI’s index of Asia-Pacific stocks nudged its highest level since June 2018, as investors push shares higher in thin trading.MSCI’s index of Asia-Pacific stocks nudged its highest level since June 2018, as investors push shares higher in thin trading.
Japan’s Nikkei dipped slightly on its final trading session of the year, but still ended 2019 up a sizzling 18%.Japan’s Nikkei dipped slightly on its final trading session of the year, but still ended 2019 up a sizzling 18%.
Of course, the Nikkei is still way below its all-time highs, hit three decades ago:Of course, the Nikkei is still way below its all-time highs, hit three decades ago:
But overall, 2019 has been a very strong year for stock markets. Many indices are up over 20%, lifted by loose monetary policy, easing recession fears, and hopes of a permanent ceasefire in the US-China trade war.But overall, 2019 has been a very strong year for stock markets. Many indices are up over 20%, lifted by loose monetary policy, easing recession fears, and hopes of a permanent ceasefire in the US-China trade war.
Back in the UK, the number of mortgages approved by banks has jumped, despite Brexit uncertainty and this month’s general election.Back in the UK, the number of mortgages approved by banks has jumped, despite Brexit uncertainty and this month’s general election.
Mortgage approvals for home purchases by the main high street banks in November 2019 were 6.8% higher than a year ago, while remortgage approvals were 12.7% higher.Mortgage approvals for home purchases by the main high street banks in November 2019 were 6.8% higher than a year ago, while remortgage approvals were 12.7% higher.
UK Finance, the industry trade body, also reports that credit card spending fell by 3.3% year-on-year last month to £10.9bn.UK Finance, the industry trade body, also reports that credit card spending fell by 3.3% year-on-year last month to £10.9bn.
Andrew Montlake, managing director of UK mortgage broker, Coreco, reckons some households decided to nail down their mortgage before Britons went to the polling stations:Andrew Montlake, managing director of UK mortgage broker, Coreco, reckons some households decided to nail down their mortgage before Britons went to the polling stations:
Despite these recession warnings, Hong Kong’s stock market has closed at a five-month high today.Despite these recession warnings, Hong Kong’s stock market has closed at a five-month high today.
The Hang Seng index gained 93 points, or 0.33%, to 28,319.The Hang Seng index gained 93 points, or 0.33%, to 28,319.
China’s market also had a good day, gaining more than 1%.China’s market also had a good day, gaining more than 1%.
Stocks rallied after Beijing announced plans to reform its interest rate system. Commercial banks are being asked to use fresh benchmark rates for new loans, which are more closely aligned to market rates. Analysts think this will lead to lower borrowing costs, stimulating the economy.Stocks rallied after Beijing announced plans to reform its interest rate system. Commercial banks are being asked to use fresh benchmark rates for new loans, which are more closely aligned to market rates. Analysts think this will lead to lower borrowing costs, stimulating the economy.
Thousands of protesters have taken to the streets in Hong Kong in recent days, as the pro-democracy action enter their seventh month.Thousands of protesters have taken to the streets in Hong Kong in recent days, as the pro-democracy action enter their seventh month.
These latest demonstrations will have deterred some consumers from hitting the shops, hurting retail spending and helping to keep the economy in recession.These latest demonstrations will have deterred some consumers from hitting the shops, hurting retail spending and helping to keep the economy in recession.
The Financial Times has a piece about how Hong Kong retailers have suffered a bad Christmas period:The Financial Times has a piece about how Hong Kong retailers have suffered a bad Christmas period:
Just in: Hong Kong’s imports and exports have both fallen, as its recession dampens demand for goods and services.Just in: Hong Kong’s imports and exports have both fallen, as its recession dampens demand for goods and services.
The Census and Statistics Department has reported that imports slumped by 5.8% year-on-year in November, while exports declined by 1.4%.The Census and Statistics Department has reported that imports slumped by 5.8% year-on-year in November, while exports declined by 1.4%.
Hong Kong’s recession is hitting its financial sector workers hard.Hong Kong’s recession is hitting its financial sector workers hard.
The city’s bankers and stockbrokers are expecting to receive their smallest bonuses and pay rises since the financial crisis.The city’s bankers and stockbrokers are expecting to receive their smallest bonuses and pay rises since the financial crisis.
This is due to the impact of the pro-democracy protests and the knock-on effect of the trade war between the US and China.This is due to the impact of the pro-democracy protests and the knock-on effect of the trade war between the US and China.
The South China Post reports that bonus pots could be the shallowest in 10 years.The South China Post reports that bonus pots could be the shallowest in 10 years.
Hong Kong’s administration is expected to take fresh measures to support growth in 2020.Hong Kong’s administration is expected to take fresh measures to support growth in 2020.
Alongside his recession warning, Paul Chan says that his budget, due in February, will include measures for:Alongside his recession warning, Paul Chan says that his budget, due in February, will include measures for:
Hong Kong’s chief secretary, Matthew Cheung, has also warned that the City faces “tough tests and challenges in 2020”.Hong Kong’s chief secretary, Matthew Cheung, has also warned that the City faces “tough tests and challenges in 2020”.
In his own blogpost, Cheung wrote:In his own blogpost, Cheung wrote:
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
The final week of the year is a time for taking stock, and looking ahead. But for Hong Kong, that means bracing for a longer downturn.The final week of the year is a time for taking stock, and looking ahead. But for Hong Kong, that means bracing for a longer downturn.
The city’s finance chief has warned that the economy has contracted in the last quarter of 2019, dragging it even deeper into recession.The city’s finance chief has warned that the economy has contracted in the last quarter of 2019, dragging it even deeper into recession.
Finance Secretary Paul Chan said the protests that have gripped Hong Kong for months – and become increasingly violent – has hurt its economy badly.Finance Secretary Paul Chan said the protests that have gripped Hong Kong for months – and become increasingly violent – has hurt its economy badly.
In a blog post, Chan warned:In a blog post, Chan warned:
Hong Kong officially slumped into recession in the third quarter of this year, with GDP contracting by an alarming 3.2% in July-September. Retail spending has suffered a major contraction, as the sight of demonstrators clashing with riot police has deterred tourists from visiting.Hong Kong officially slumped into recession in the third quarter of this year, with GDP contracting by an alarming 3.2% in July-September. Retail spending has suffered a major contraction, as the sight of demonstrators clashing with riot police has deterred tourists from visiting.
This has had a knock-on impact on companies across the world, from airlines such as Cathay Pacific to Europe’s luxury goods producers.This has had a knock-on impact on companies across the world, from airlines such as Cathay Pacific to Europe’s luxury goods producers.
Visitor arrivals from China fell a record 46% in October to slightly more than 2.5 million, less than half of the record set in January. The most recent data for retail sales in Hong Kong showed a 24.3% plunge, the biggest ever, according to Gulf News.Visitor arrivals from China fell a record 46% in October to slightly more than 2.5 million, less than half of the record set in January. The most recent data for retail sales in Hong Kong showed a 24.3% plunge, the biggest ever, according to Gulf News.
Chan says this downturn has a serious impact on the government’s finances:Chan says this downturn has a serious impact on the government’s finances:
The protests have dropped out of the headlines recently, after the authorities ended a siege at Hong Kong Polytechnic University. But the pro-democracy movement hasn’t gone away; thousands took part in a protest yesterday.The protests have dropped out of the headlines recently, after the authorities ended a siege at Hong Kong Polytechnic University. But the pro-democracy movement hasn’t gone away; thousands took part in a protest yesterday.
The movement plans to begin the new year with a large demonstration on Wednesday, renewing their demands for an amnesty for arrested protesters, an independent inquiry into alleged police brutality, and complete universal suffrage for the City.The movement plans to begin the new year with a large demonstration on Wednesday, renewing their demands for an amnesty for arrested protesters, an independent inquiry into alleged police brutality, and complete universal suffrage for the City.
Also coming up todayAlso coming up today
The economic calendar is pretty bare, beyond some UK mortgage approvals figures and US trade data.The economic calendar is pretty bare, beyond some UK mortgage approvals figures and US trade data.
European stock markets are expected to dip a little this morning, with the FTSE 100 dipping by 13 points or 0.2% in early trading.European stock markets are expected to dip a little this morning, with the FTSE 100 dipping by 13 points or 0.2% in early trading.
The agendaThe agenda
9.30am GMT: UK home loan approvals data for November: expected to dip to 41200, from 412199.30am GMT: UK home loan approvals data for November: expected to dip to 41200, from 41219
1.30pm GMT: US trade balance for November; expected to widen to -$68.8bn, from -$66.5bn1.30pm GMT: US trade balance for November; expected to widen to -$68.8bn, from -$66.5bn