Hong Kong Private Sector Health In Worst Shape Since May 2009

Tyler Durden's picture

Our recent discussion on the four potential catalysts for a 'crash landing' in China seems to have been quite prescient as Markit Economics reports tonight that HSBC Hong Kong's PMI experience another month of deteriorating operating conditions as demand contracted further and the consensus outlook became increasingly downbeat. On the heals of JPMorgan's earlier downgrade of global growth to only 1.7% annualized for the next three quarters and HSBC's cutting of Asia Ex-Japan GDP growth expectations, citing Europe's financial stress as already taking a toll on growth and the US economy remaining 'decidely lackluster', things appear to be weakening rapidly (as output fell at the fastest rate in just under 2.5 years).

Most notably we highlight the fact (from the Markit report) that:

"New order growth from Mainland China was insufficient to overcome declines in domestic and foreign demand for Hong Kong’s goods and services. New business from the Mainland grew at the slowest rate for a year."

With the key points from the report:

  • Operating conditions deteriorate for second successive month
  • Output contracts at quickest rate in just under two-and-a-half years
  • Cost pressures remain strong despite weaker market conditions


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chump666's picture

HK is the bellweather of China.

Markets will begin to adjust to the China meltdown now.

DoChenRollingBearing's picture

Yes, I would think so, but the futures, last I saw, were not showing it.  All this bad news, but nobody cares.

Maybe I'll change my mind.  Bullish!

flacon's picture

It's nothing. It's just a flesh wound. 

sitenine's picture

You're kidding of course, but check this shit out. Fucking banks are abandoning rumors altogether and are now just straight up calling us stupid.


glenn17's picture

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chump666's picture

I am bullish on buying minis (shorts) on topped out indexes.  We will NOT make new highs.   A major doomsday trade is looming nothing to do with Europe (which is doomed anyway).

Meltdown into the new year.  Gonna be brutal.

Bobbyrib's picture

I wouldn't even get involved in shorting, you never know what the people who manipulate our markets will do next.

BandGap's picture

People care, they always do.  Look beyond the simple explanation.  China is much better able to manipulate situations than anything we have going over here.  Hell, the rural population sees nothing beyond food inflation.

slewie the pi-rat's picture

hong kong phooey, BiCheZ!

reader2010's picture

The smart money has been out of HK before last summer. Let's see what's happening now. 

paul_Liu's picture

Actually smart money are shorting HK shares since they can not diretly short China shares.

chump666's picture

thats right and o/s investors have been dumping Taiwan and Korean/Japan stocks.

jonjon831983's picture

dumb money popping Hang Seng up +700, +4%ish.  I'm dizzy.  When it gonna head back to 5,000's? a la 1997 :P

slewie the pi-rat's picture

the pilot bailed out @ 20,000 feet!

strong updraft, tho! 

TGR's picture

The HK SAR government is currently in the midst of handing out HKD6,000 to every single HK identity-card holder. Not sure why it hasn't been reported on here, but this latest stimulus is akin to the stimulus packages of US, Australia and other countries back in '08 and '09.

Too early to say where the approximate HKD40,000,000,000 being dished out is going exactly, but stocks wouldn't surprise me as being one benefactor.

champan250's picture

The HKD$6k is not giving out as "stimulus", but rather because the pathetic hk gov't had a recorded surplus last year (USD$14B) and had zero clues on how to utilize that

TGR's picture

They wanted to inject into retirement accounts initially, in other words a stimulus to prop up MPF aka stocks. Anyway it's just semantics, I think the figure may be closer to HKD25 billion, but whichever way you look at it something is going to be stimulated from free cash.

Quentin Daniels's picture

So they took too much tax and then decided to GIVE IT BACK?

How in gods name did the cleptocrats allow that to happen?

savagegoose's picture

ehhj the right aussie gov has pulled that little trick for years. to much good effect, with cashback to desperate voters every election.


Quentin Daniels's picture

But that is just a straight purchase of votes by handing out taxpayer dollars to vocal interest groups in marginal seats to ensure that whomever TPTB deem to be the correct party is duely inserted into the orifice of power.  Nothing unusual there.

This, on the face of it, look more like "Whoops, we took too much, here's your money back".  The cash is being spread too thin to be an effective electoral bribe.

dr.charlemagne's picture

maybe germany will bail out Hong Kong with our freshly printed dollars. just the rumor is worth a 1,000pt rally

Schmuck Raker's picture

I thought Germany was bailing out Singapore?

I need a faster news service, dammit!

CvlDobd's picture

I'm with everyone else above. This is bullish fo sho!

walcott's picture

war is just around the corner.

chump666's picture

HK property market will be like a A-bomb going off...then China.


Yen Cross's picture

I think " Jim Rogers" should stick to "real estate", and leave the currency trading to the professionals!

  The ecb will run a qu-e ( under-valued light), and BoE will re-iterate their dovish stance. it will be like the dead cat bounce in the Aud numbers yesterday. There will be a sell off into Friday. Via the short covering mantra! very orderly...

chump666's picture

I hear ya Yen. 

ECB won't cut 'offical rates'  EUR is under pressure now...it is a dead cat bounce (stocks)

 i am outta here...see you all in 10hrs or so

champan250's picture

Hong Kong is a financial and service sector city, and this PMI is not a service sector PMI.

Yen Cross's picture

I understand what you are saying. The news has nothing to do with PMI. It's soverign debt policy, via the BoE and the ECB over the short term. Thanks for your input though.

Coldfire's picture

A crash in Hong Kong? Yes, please. I'm getting sick of being accosted by real estate agents (scum of the earth) here when I step out to take a latte. And that latte (and every other non-core essential) is getting damn pricey because of said rentiers, whom I know are only cogs transmitting the printing press machinations of China aping the fraudulations of Ben Bermonkey, who is channeling Keynes (hopefully in the 10th (new and improved) circle of Hell). So hurry up Hong Kong and crash already, my lease is coming up.

lewy14's picture

^HSI up 5% as I write this. 

achmachat's picture

Breaking News from Luxembourg:

The Luxembourg "branch" of the Dexia group (Dexia-BIL) just decided to split off from Dexia with the help of a secret international investor AND the state.


SoNH80's picture

Hey hey!  I went to Hong Kong, bought shiny green suit!

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