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Hong Kong. Flexible Middleman in Uncertain Times. Big Trends in HK. De-industrialization Economic reintegration with China Externally Oriented Economy. Big Picture. Basic Law says Capitalist way of life persist for another 40 years Basic Law Text

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Hong kong

Hong Kong

Flexible Middleman in Uncertain Times


Big trends in hk
Big Trends in HK

  • De-industrialization

  • Economic reintegration with China

  • Externally Oriented Economy


Big picture
Big Picture

  • Basic Law says Capitalist way of life persist for another 40 years Basic Law Text

  • Government pursues policy of ‘positive non-intervention’ (Tsang, S, A Modern History of Hong Kong - Google ??).

    • Support the economy with infrastructure if cost-benefit is positive

    • Let market pick economic winners


Government policy and investment environment
Government Policy and Investment Environment

  • Common law system with a generally independent judiciary Judicial Independence and the Rule of Law in Hong Kong

  • Overcome a history of public corruption Hong Kong Experience

  • Only tarriffs on alcohol and cigarettes

  • No capital controls

  • Corporate Tax Rates 16.5% EIU.com, OECD average 26.25% OECD Tax Database


Human capital resources
Human Capital Resources

  • Well educated population

  • Barro-Lee Database Harvard CIID

    http://www.cid.harvard.edu/ciddata/ciddata.html


Pegged exchange rate
Pegged Exchange Rate

  • HK$ stable vs. US$ but against a trade weighted basket it is fairly volatile.

IMF International

Financial

Statistics


Exchange rate
Exchange Rate

  • Standard Deviation of growth rate vs. various currencies. (95% of months, up and down movements will be within + or – 2 standard deviations)






Hong kong services industries
Hong Kong Services Industries

Finance and International Trade are the most important industries and growing more so.

% of GDP




Direct vs indirect finance asia 2004
Direct vs. Indirect FinanceAsia 2004

Source: Eichengreen & Luengnaruemitchai


Market dominance
Market Dominance

  • More than 2/3’s of deposits are held at top 4 banks including HSBC, Hang Seng, Bank of China and StanChart.


Hong kong exchange red chips and h shares
Hong Kong ExchangeRed Chips and H -shares

  • Growing importance of Red Chips (Chinese companies incorporated outside PRC) & H-share (PRC incorporated shares traded in HK).


Re export industry
Re-Export Industry

  • China re-exports by far the biggest element of trade



Market dominance1
Market Dominance

  • More than 2/3’s of deposits are held at top 4 banks including HSBC, Hang Seng, Bank of China and StanChart.






Good average performance this decade but volatile
Good Average Performance, this decade, But Volatile




Hong kong future
Hong Kong Future

  • Long term Prospects are good but economy is reliant on China growth.

  • Free market enabled HK to fairly smoothly adjust to changing economic environment .. And should again.


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