The Zhitong Finance App learned that CICC released a research report saying that in the first quarter of 2024, Hong Kong, China's economy grew moderately, with GDP rising 2.7% year on year and 2.3% month on month. In terms of domestic demand, consumption is resilient, and investment growth is slowing down. In terms of external demand, trade in goods has further improved, and trade in services has maintained a high growth rate. After the “withdrawal” of the Hong Kong government, residential sales in Hong Kong rebounded markedly in the first quarter (with a higher month-on-month increase of 54%), and the decline in property prices also began to stabilize (-3% month-on-month for both small and medium-sized units). The short-term stimulus effect of the policy on the demand side is gradually showing, but it is still difficult to say the inflection point of the big cycle.

Economic aspects: The economy of Hong Kong, China grew moderately in the first quarter of 2024. GDP rose 2.7% year on year and 2.3% month on month. In terms of domestic demand, consumption is resilient, and investment growth is slowing down. Looking at the three-year compound growth rate, in the first quarter of 2024, private consumption expenditure increased 2.0% year-on-year, up 0.1 percentage points from the two-year compound growth rate in the fourth quarter of 2023. The three-year compound growth rate of investment in the first quarter of 2024 was 0.6%, down 3.1 percentage points from the two-year compound growth rate in the fourth quarter of 2023. In terms of external demand, trade in goods has further improved, and trade in services has maintained a high growth rate. Overall exports of goods increased 6.8% year-on-year in the first quarter of 2024, up 4.0 percentage points from 2.8% in the fourth quarter of 2023. Service exports rose 8.4% year on year in the first quarter, down 12.8 percentage points from the fourth quarter of 2023. In terms of employment, the labour market remains healthy. In the first quarter of 2024, the seasonally adjusted unemployment rate in Hong Kong, China was 3.0%, and the underemployment rate was 1.1%. The overall performance was stable. Inflation is at a moderate level. In the first quarter of 2024, the overall consumer price index in Hong Kong, China increased 1.9% year on year, down 0.7 percentage points from the fourth quarter of 2023.

Interest rates continue to remain high. In terms of exchange rates, the US dollar index rebounded in the first quarter, the Hong Kong dollar exchange rate weakened, and the nominal Hong Kong exchange index and the real Hong Kong foreign exchange index rose. On the stock market side, Hong Kong stocks were generally under pressure in the first quarter and rebounded in the second quarter; trading activity improved marginally in the first quarter. In terms of capital flows, in the first quarter of 2024, there was a net inflow of capital to the north, a net inflow of capital to the south, and a net outflow of overseas capital.

Real estate: After the HKSAR government's “withdrawal” on February 28, residential sales rebounded markedly in the first quarter (with a higher month-on-month increase of 54% for new homes), and the decline in property prices also began to stabilize (-3% month-on-month for both small and medium-sized units). CICC believes that the short-term stimulus effect of the policy on the demand side is gradually showing, but it is still difficult to say the inflection point of the big cycle. On the supply side, the number of new residential homes started in the first quarter continued to decline, and the Hong Kong Special Administrative Region Government has not publicly auctioned residential land since 2024; however, the completion plan for the year increased by about 60% compared to 2023, and the pressure on new housing inventories still needs to be observed. On the policy side, in June 2024, the Hong Kong Monetary Authority continued to improve the property mortgage loan policy to reduce the burden on buyers.

Banking sector: Demand for loans in Hong Kong was still affected by the high interest rate environment in the first quarter, while deposits continued to grow well. At the end of 1Q24, loans decreased by 5.4% year on year, and deposits increased 4.4% year on year. The trend of deposit regularization in Hong Kong slowed in the first quarter. At the end of 1Q24, CASA deposits accounted for 40.3%, down 1.7ppt from month to month. The HIBOR average for the month of 1Q24 fell 55 bps from quarter to quarter. CICC believes that bank net interest spreads in the first quarter may be squeezed. In terms of asset quality, Hong Kong's enterprises and residents continued to feel the impact of high interest rates. At the end of 1q24, the non-performing rate in the banking sector rose 23 bp month-on-month to 1.91%.