HK$3.9b injected into banking system (September 25, 2008)

The Monetary Authority has injected HK$3.9 billion into the banking system to halt the hike in interbank interest rates, its chief executive Joseph Yam says.
Speaking to reporters this morning Mr Yam said the surge was triggered by the massive deposit withdrawals at the Bank of East Asia.

To provide more capital to the banking system, the authority bought US dollars against HK dollars and the aggregate balance is projected, as a result, to rise to over HK$10 billion on September 29.

Noting the situation has stabilised Mr Yam said the authority will monitor the market closely and if necessary inject liquidity into it.

"The situation of the international market is difficult and Hong Kong will inevitably be affected. However, depositors and investors should maintain their confidence because our banking system is healthy," he said.

"The authority will keep a close watch on international markets and offer advice to investors and depositors to manage risk."

Commenting on the bank run rumours, Chief Executive Donald Tsang said there is nothing to worry about because the Government has a clear picture of the latest development of Hong Kong's financial market and banking system.

Reiterating the Bank of East Asia is financially stable and has sufficient capital Financial Secretary John Tsang said the Government will render full support to the bank when necessary.

He also said the Government is consulting the trade on the suggestion of increasing the coverage limit of the Deposit Protection Scheme.

Fresh milk inspection to be enhanced (September 25, 2008)
Recent tests have found infant milk powder sold in Hong Kong is safe, Secretary for Food & Health Dr York Chow says, adding inspection of fresh milk produced on the Mainland will be enhanced.

Speaking to reporters this morning, Dr Chow said although previous checks on Mainland fresh milk did not find any problem, the Government plans to conduct checks on the products before they are sold at retail markets.

He said the arrangement to assess children who have consumed suspicious milk products will run for at least six months, adding the Hospital Authority has enhanced its service to cater to demand.

"A task force will be formed to tackle the milk contamination issue and we will send staff to the Mainland to study the cases there and the proposed treatments," he said.

In response to South Korea's decision to ban imports of Chinese-made food products containing powdered milk following the discovery of biscuits tainted with melamine, Dr Chow said the Government will monitor the development and extend its checks to other food products such as soy milk and biscuits.

Meanwhile, the Centre for Food Safety today found all 105 product samples, including ice-cream and ice bars produced locally, and milk powder, condensed milk and evaporated milk from the Mainland and overseas, free from melamine. Click: http://www.cfs.gov.hk/english/whatsnew/whatsnew_fstr/whatsnew_fstr_Test_results_of_dairy_product_samples.html for the test results.

World Investment Report backs HK (September 25, 2008)
The newly released World Investment Report 2008 has reaffirmed Hong Kong's status as one of the world's leading destinations for foreign direct investment and sources of outward foreign direct investment.

The report, unveiled by the United Nations Conference on Trade & Development today, ranked Hong Kong first globally in terms of the Inward Foreign Direct Investment Performance Index, meaning it is the world's best performing economy.

Hong Kong was also the world's seventh and Asia's second largest foreign direct investment recipient, attracting US$59.9 billion inward investment in 2007. This amount was more than the combined total of the next three highest recipients in Asia - Singapore, India and Thailand.

Welcoming the report, Director-General of Investment Promotion Mike Rowse said the Mainland has become more significant in the city's foreign direct investment inflows with the rise of the Mainland economy and the increased outward expansion of privately owned enterprises.

Expecting the trend to continue Mr Rowse said Hong Kong will continue to be highly attractive to overseas and Mainland companies.


"The fundamentals of our investment environment are sound: rule of law, free flow of information, world-class infrastructure and clean government are all in place. However, we expect, in view of the recent economic downturn and financial turmoil, many companies may be more cautious in carrying out their outward investment plans," he said.

Globally, foreign direct investment inflows rose 30% last year reaching an all-time high of US$1.83 trillion due to the unprecedented levels of cross-border mergers and acquisitions activities, and sovereign wealth funds have become a significant source of global foreign direct investment.

The report showed the Mainland still ranked first in the Asia-Pacific in foreign direct investment inflows, reaching US$83.5 billion. Other advanced economies in the region also performed well, including Singapore (US$24.1 billion), India (US$23 billion) and Thailand (US$9.6 billion).

It attributed the strong results to general improvements in the investment environment in the region, including further liberalisation of foreign direct investment, strengthened regional economic integration, resilient economic growth and strong industrial development.

It forecast prospects for foreign direct investment inflows to the region remain promising as all these factors will continue to attract inflows in spite of global economic slowdown. Click: http://www.unctad.org/Templates/webflyer.asp?docid=10502&intItemID;=2068⟨=1
to view the report.

August total export value up 1.9% (September 25, 2008)
August saw the value of total exports of goods rise to HK$247.9 billion, up 1.9% on the same month last year, the Census & Statistics Department says.

Within this total the value of re-exports grew 2.7% to HK$239.8 billion while the value of domestic exports fell 17.1% to $8 billion.

The imports value of goods rose 1.5% over a year earlier to HK$260.8 billion in August. A visible trade deficit of HK$12.9 billion, equivalent to 4.9% of the value of imports of goods, was recorded.

For this year's first eight months as a whole the value of total exports of goods rose 8.3% over the same period last year. Within this total the value of re-exports grew 9.1%, whereas the value of domestic exports fell 10.4%.

The department said the export performance has shown considerable fluctuations over the past few months, reflecting a highly uncertain external environment.

The US financial turbulence has added further downside risks to the already weak global economy. The department will closely monitor its impacts on demand in conventional markets like the US and Europe.

The department expected there may be ensuing impact on the export-dependent Asia with second-round spillovers to Hong Kong's exports.

Jobless rate stable at 3.2% (September 18, 2008)
Employment remained stable for the quarter ending August with unemployment at 3.2% and underemployment at 1.9%, the Census & Statistics Department says.

Unemployment fell in the decoration and maintenance, communications, and manufacturing sectors, while increases were seen in the sanitary services, education services, and welfare and community services sectors.

Underemployment falls were mainly seen in the foundation and superstructure construction, and retail trade sectors, offsetting the rises in the decoration and maintenance, and miscellaneous personal services sectors.

Total employment rose by 13,100 to 3,546,300 in June-August while the labour force grew by 17,600 to an all-time high of 3,675,400.

The number of jobless people rose by 4,500 to 129,100 while the number of underemployed people fell by 900 to 69,000.

In August the Labour Department received 64,000 vacancies from the private sector, up 9.3% on the same period last year. On average the department received 3,000 vacancies per working day.

Secretary for Labour & Welfare Matthew Cheung said the unemployment rate has remained unchanged notwithstanding the expansion in labour supply. Nevertheless there is no ground for optimism in the face of the global financial turbulence.

"With the further downside risks to the already challenging external environment, the uncertainties clouding over the near term outlook for the local economy have increased," he said.

"The Government will closely monitor the impact on job creation and employment while continuing to enhance training, retraining and employment services."