Hong Kong and Macau

RGE's Q1 2010 Hong Kong and Macau Outlook

Unlike the mainland, China’s two Special Administrative Regions (SARs) contracted in 2009. Their small size and openness to investment leaves them vulnerable to large swings in their economic cycles, and in 2010 they are both expected to bounce back sharply. Macau will continue to benefit from the recovery in tourism inflows and gambling revenues that resulted from the ultra-loose monetary conditions and regulatory changes in mainland China, though this effect will weaken toward the end of the year. Hong Kong’s economy is also supported by its ties to the mainland, and will receive a boost from the gradual recovery in global trade, but it will benefit most from the ample liquidity provided by massive fund inflows. Although this poses risks, such as asset bubbles or a sudden reversal, Hong Kong will ride a wave of liquidity in 2010 as the Fed remains on hold.

Read the Q1 2010 Hong Kong and Macau Outlook.