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Overarching planning, steady progression
The local economy showed signs of gradual improvement. Following a 7.6% economic growth in the second quarter and the upward revision of the overall economic growth forecast for the year to 5.5%-6.5%, the latest unemployment rate released last week also fell to 5%, down by a cumulative 2.2 percentage points as compared to 7.2% early this year. The latest underemployment rate likewise dropped to 2.4%, from 4% early this year.
The employment situation also saw improvement across various sectors. The unemployment rate of the consumption- and tourism-related sectors combined (viz. retail, accommodation and food services sectors) fell from the peak of 11% early this year to the current 7.6%. Among these sectors, the unemployment rate of food and beverage service activities fell by 1.4 percentage points to 8.6%, far below the high of 14.7% early this year. Meanwhile, the unemployment rates of the construction sector and the arts, entertainment and recreation sector also recorded notable declines.
It is worthy to note that, even though the employment situation across sectors has gradually improved, it has yet to revert to the pre-pandemic level of early last year. Taking the retail, accommodation and food services sector as an example, its current unemployment rate was still over 2 percentage points higher than the pre-pandemic level of 5.2%. We expect that, as the effect of the Consumption Voucher Scheme begins to be seen in August, the boost to private consumption will lead to further improvement in the employment situation in relevant sectors.
Nonetheless, whether the current improving trend in the economy and the labour market can be sustained hinges on the development of the pandemic and the effectiveness of anti-epidemic efforts. Getting vaccinated not only gives better protection to yourself, your family and friends, but also helps provide a more solid foundation for Hong Kong's economic recovery.
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The sustained high-quality development of our country's economy provides the most powerful backing for Hong Kong to prosper and develop. The enormous size of our country's economy, the persistent efforts on innovation and technological development, coupled with continuous reform and opening up, have provided new markets for enterprises and new demands for products, created more opportunities for business development and brand-building, and hence facilitating Hong Kong to diversify and enrich its direction of economic development. However, this does not mean we will slow down the development of the financial industry. The financial services sector is the strongest segment of the Hong Kong economy. We have to remain at the forefront, constantly make breakthroughs, go beyond ourselves and consolidate Hong Kong's status as an international financial centre. In this way, we are developing according to the strategy of "overarching planning, steady progression".
Hong Kong's advantages as an international financial centre lie in its huge market demand, coupled with the comprehensive and complete package offered by our financial services industry. From capital, projects, products to talents, the whole industry chain is highly efficient and professional, which drives a virtuous cycle in further attracting capital, talents and enterprises to converge in Hong Kong.
When talking about the strengths and efficiency of Hong Kong, figures speak for themselves. In the first half of this year, total deposits in the Hong Kong banking system exceeded HK$15 trillion, representing an increase of around 5% over the end of last year. The rate of increase would even be close to 8% if we only consider deposits in Hong Kong dollar alone. The size of assets under management in Hong Kong has also increased. As at the end of last year, the Hong Kong asset and wealth management industry managed nearly HK$35 trillion of assets, representing a year-on-year increase of 21%. Hong Kong is the largest hedge fund base in Asia and the second largest private equity fund base, following the Mainland. As to the Hong Kong stock market, notwithstanding some fluctuations alongside changes in the external environment, IPO activities have remained buoyant.
Overarching planning, steady progression
The financial sector has its own pattern for development, but being the core of a modern economy, it is of utmost importance to ensure that financial development could serve the real economy. We should not only focus on equities and asset management, but also review the overall development blueprint of the whole chain and the whole industry, so as to undertake overarching planning and adopt a step-by-step approach to achieve steady progression.
For financial institutions to deploy and allocate funds, the most crucial aspect is accurate investment and risk management, with a view to seeking the most efficient use of capital and leveraged returns while controlling costs. One of the major directions in the development of our financial industry is to expand Hong Kong's offshore Renminbi (RMB) pool and related investment products, so that enterprises and institutions holding offshore RMB funds can deposit, manage, deploy and invest their RMB funds in Hong Kong in a "one-stop shop" manner.
The A-share index futures contract recently announced by HKEX is the first offshore A-share index futures product formally approved by the Mainland authorities. It could serve as a useful risk management tool for offshore investors participating in the A-share market, while broadening the offering of financial products in Hong Kong. The "Guangdong-Hong Kong-Macao Greater Bay Area Cross-Boundary Wealth Management Connect" and the "Bond Connect" Southbound Link, which are highly anticipated by the market, are also ready to be rolled out. They would help further widen and deepen the mutual interconnection of the financial markets in the two places.
Hong Kong's social and economic developments have always been closely connected with the Mainland's development and needs. The 14th Five-Year Plan clearly supports the strengthening of Hong Kong's development as a global offshore Renminbi (RMB) business hub, an international asset management centre and a risk management centre, which provides us with a blueprint for overall development planning and a market with unlimited potential and opportunities. The Outline of the 14th Five-Year Plan sets out the direction for national development in the next five years, outlining a clear path for Hong Kong's future development in innovation and technology, finance, and legal and other professional services. A deeper understanding of the state and strategy of national development will help Hong Kong more accurately position itself, better grasp opportunities from the Mainland's development, and improve the quality of its own development. The Central Government has arranged for a delegation to visit Hong Kong to introduce the Outline of the 14th Five-Year Plan to different sectors through various meetings this week. In the future, the HKSAR Government will continue to enhance external publicity and explain to our society the importance of the Outline to the development of Hong Kong, so that the whole society will join hands to build a better future for Hong Kong.
August 22, 2021
