Hong Kong crawls out of recession
Hong Kong's exports dropped 12.4 percent during the second quarter. While not good, that's a whole lot better than the 23 percent drop the territory experienced in the first quarter. According to billionaire Li Ka-shing, Hong Kong's richest man, "The worst is over for the global economy." His companies, Cheung Kong (Holdings) Ltd. and Hutchison Whampoa Ltd., closed at HK$96.45 and HK$57.3, respectively, posting better-than-estimated first half earnings. However, he cautioned that, while the speed of decline may have slowed, it would be too optimistic to declare that the global economy has reached a turning point.
All this, however, doesn't mean that the territory will be making money any time soon. Original predictions of 5.5 percent to 6.5 percent shrinkage have been re-set to a more modest 3.5 percent to 4.5 percent. Of course, this will still be painful for a region that is accustomed to earning money around the clock due to a seemingly unending supply of cheap labor. Loads of companies have cut their workforces, leaving many unemployed. However, true to its reputation as a shopping mecca, private consumption rose four percent from the previous quarter, a drop of only one percent from the same period last year when everything was a bit more rosy and the full extent of the credit crunch hadn't yet reared its ugly head.
The Hang Seng closed at 20,893.33, a rise of 0.2 percent. The index had been down as much as 1.1 percent, but reversed this in the final minutes of trading. To date, the Hang Seng has shot up 84 percent from its low in March. Today's winning stocks were led by Esprit, which surged 8.1 percent to HK$61.70 and Li & Fung Ltd, (Wal-Mart Stores' largest supplier of clothes and toys), which rallied 9.2 percent to HK$27.80 after a better-than-estimated profit report.