Year of the Snake: ANZ expects Hong Kong’s economy to benefit from capital flow, rate cut

Beijing’s recent measures will lead to more capital flows into Hong Kong equities, becoming a key driver of the city’s growth in the Year of the Snake, according to the regional chief economist at ANZ Banking Group.

Further interest-rate cuts would increase property transactions, while an influx of tourists would also benefit the city’s economy, Raymond Yeung said.

“In the Year of the Snake, Hong Kong’s economy is expected to grow between 2.5 and 3 per cent,” Yeung said in a briefing on the outlook for the Lunar New Year starting on January 29. “The city will see more tailwinds than headwinds in the coming year.”

A raft of measures could boost Hong Kong’s capital markets and its economy. At the Asian Financial Forum earlier this month, the People’s Bank of China (PBOC) governor Pan Gongsheng said Beijing would increase the “asset allocation operation in Hong Kong” from the nation’s US$3.2 trillion foreign exchange reserves.

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Pan also said regulators would encourage “more high-quality enterprises to list and issue bonds in Hong Kong”, while plans were afoot to expand the cross-border Bond Connect scheme.