Standard Chartered and HSBC bullish on Hong Kong and China economy

Main lenders Standard charter and HSBC expect Hong Kong and China’s economy to rebound, even as Beijing continues to step up its Covid measures and Hong Kong’s economy recorded its worst quarter in more than two years.

Their comments come as China imposed new lockdowns in Guangzhou, Wuhan and Xining last week.

“Hong Kong business is stronger than it has ever been,” said StanChart CEO Bill Winters. “We achieved record results in Hong Kong in the third quarter of this year, which seems incongruous with the ongoing Covid-like restrictions and challenges in China.”

The two banking powers also released their earnings recently.

I am confident that Hong Kong will rebound strongly next year.

People walk through Exchange Square in Hong Kong on October 28, 2022. Major lenders Standard Chartered and HSBC expressed confidence in the rebound of Hong Kong and China’s economy, even as China steps up its Covid measures and as Hong Kong’s economy recorded its worst quarter in more than two years.

isaac laurent | AFP | Getty Images

“I think only about half of the growth we’ve had…has come from interest rates. The other half is from the markets we operate in coming back to full swing, including Hong Kong and, interestingly, China as well,” he told CNBC.

HSBC CEO Noel Quinn echoed similar optimism about Hong Kong.

“I think Hong Kong will bounce back strongly from Covid…I have every confidence that Hong Kong will bounce back strongly next year,” Quinn said, adding that it was understandable that the economy was slowing down due to the lockdowns.

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HSBC’s third-quarter profits fell 42% due to higher loan losses on top of charges related to the sale of its French business.

Stocks in China and Hong Kong soared on Tuesday after rumors based on a unverified social media post said Beijing was forming a committee to assess whether to lift border controls. Chinese Foreign Ministry spokesman Zhao Lijian told Reuters he was unaware of the existence of such a committee.

“Covid will pass. Eventually China will start to open up and the economy will rebound strongly,” Quinn told CNBC.

“We are patient. We continue to invest in China. We see strong growth prospects as the market transforms into a much stronger consumer market over the next decade.”

We will keep watching

China recently announced third-quarter GDP rose 3.9% from a year ago, beating expectations.

However, both banks acknowledged that the slowdown in China’s property sector is still a sticking point.

The total liabilities disclosed by top developers Evergrande, Kaisa, and Shimao were over 2.6 trillion yuan (equivalent to the current value of $357.21 billion) in mid-2021, after which the financial problems of the three developers escalated. They represent only a fraction of the total real estate sector.

“It’s a problem that’s going to have to sort itself out,” Winters said.

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