Taipei, Taiwan – Like many Hong Kongers, accountant Edelweiss Lam spent the last week watching the city’s stock market wipe out 14 months of gains as the Hang Seng Index fell below the psychological threshold of 15,000 points.
It was not the first time Lam, who has been investing on and off in Hong Kong stocks since the late 1990s, had seen it happen.
The index dropped below 15,000 points during SARS in 2003, the Global Financial Crisis in 2008, and zero-COVID lockdowns in 2022.
But while ebbs and flows are part of the investment game, Lam said watching the key measure of Hong Kong’s stock market tumble “back to square one” felt different this time.
“It seems I cannot see the future,” Lam told Al Jazeera by phone from Hong Kong.
The reason, Lam said, is China.
As Beijing increases its control over all aspects of life in Hong Kong, including the economy, and gloom persists about the state of China’s post-pandemic recovery, investors have been voting with their money and looking to other markets.
More than a quarter-century after Hong Kong’s return to China, the Hang Seng is more or less back to where it was during its final days as a British colony.
On Friday, the index hovered below 16,100 points – lower than it was on July 1, 1997, the day of the handover.
Over the same period, stocks in the United States, Japan and other popular markets have flourished.
Investors in the SP500, the most popular measure of the performance of the US market, have seen their money grow nearly 10-fold since 1997.
Hong Kong’s stock market has seen big losses over the last year [Al Jazeera]
“If there’s any new announcement from the Chinese government about regulations or the control of some industry, then the market can fluctuate very seriously,” said Lam, whose investment portfolio includes blue chip stocks, fixed-term deposits and property.
“The relationship between Hong Kong and China is closer and closer, the control is tighter, so we cannot ignore what they are doing in China.”
Hong Kong has had a front-row seat to China’s crackdowns in recent years, from the imposition of a draconian national security law on the city to tightening regulation of corporate giants such as Alibaba and Tencent and raids on foreign companies on the Chinese mainland.
Many of China’s biggest companies are dual-listed in Hong Kong and China and make up a large portion of the Hang Seng Index along with Chinese banks and other tech companies.
At the same time, China’s economy has struggled to recover from the impact of COVID-19 and Beijing’s harsh pandemic restrictions, amid nagging structural issues including a shrinking population, high local government debt, and a slow-moving real estate crisis.
Gross domestic product officially grew 5.2 percent in 2023 – the weakest performance in decades, excluding the pandemic.
Despite Beijing’s insistence that China is open for business, foreign investors’ confidence is waning.
Last year, China recorded the first drop in foreign direct investment in 12 years, with inflows declining 8 percent to $157.1bn.
“When we look at broader business sentiment both for the financial sector and for the general economy – first and foremost, economic fundamentals both in Hong Kong and in China are not doing very well at the moment,” Chim Lee, a China analyst at the Economist Intelligence Unit, told Al Jazeera.
Lee said China hitting its economic growth target last year was “not particularly impressive” as Beijing set a relatively weak target.
Analysts estimate that some $6 trillion – the equivalent of over one-quarter of the entire output of the US economy – has been wiped off stock markets in China and Hong Kong since early 2021.
China’s CSI 300 Index, which measures the top 300 companies on the Shanghai and Shenzhen stock exchanges, has fallen more than 40 percent over the past three years, while the Hang Seng has fallen 50 percent over the same period, according to Bloomberg data.
Investors are instead flocking to other markets like Japan and the US where analysts predict a bullish 2024.
The Nikkei 255 Index, an index of the Tokyo Stock Exchange’s top companies, posted highs not seen in over 30 years last week, while the S&P 500 in New York closed at an all-time high for the sixth day in a row on Thursday.
Investor confidence in Hong Kong has taken a hit amid China’s crackdowns [File: Anthony Kwan/Getty Images]
“[Hong Kong’s] economy may now be no more than a large rounding error on China’s GDP but it still plays an important role in finance and capital market transactions for and with the Mainland. So it’s self-evident that bearish sentiment and beaten up stock price valuations in China proper wash over into [Hong Kong] too,” George Magnus, an associate at Oxford University’s China Centre and Research Associate at SOAS, London, told Al Jazeera.
Hong Kong’s declining rights and freedoms – which are supposed to be guaranteed until 2047 under an agreement known as “one country, two systems” – have added fuel to the crisis of confidence.
Since the passage of the national security law in 2020, the city’s political opposition and independent media have been all but wiped out and hundreds of people have been arrested for non-violent offences related to activism and speech.
Hundreds of thousands of Hong Kongers have left the city amid Beijing’s tightening control along with their money.
Lam said she decided last year to move her pension fund overseas and she plans to sell her remaining stock investments in Hong Kong at a loss.
“They say they want to do something, but we don’t see real action,” Lam said of the government’s policy on the economy.
In October, Hong Kong slashed stamp duty on property sales and stock transfers, but consumption and tourism have yet to recover to pre-pandemic levels.
The US stock market has seen big gains as Hong Kong’s bourse has stagnated [Al Jazeera]
Analysts say that reviving both Hong Kong and China’s economy will take much bolder action.
Beijing is considering a potential $278bn rescue plan for the stock market, Bloomberg reported this week, citing sources close to the matter, but many analysts argue broader structural reforms are needed to restore investor confidence.
A similar rescue plan deployed after a tumble in China’s stock market in 2015 produced mixed results – even though the government moved quickly and the overall economy was on a stronger footing.
Memories of that rescue plan and concerns that Beijing will not make difficult but necessary reforms are one reason why the rescue plan has been met with a lukewarm response, said Alicia Garcia Herrero, chief economist for Asia Pacific at Natixis.
“Here it’s really the market saying, I’m sorry you’re not growing. I don’t trust your numbers; your future looks gloomy – which wasn’t the case in 2015. It was perceived to be a temporary shock, so I think this is, to start, the difference,” Garcia Herrero told Al Jazeera.
Beijing arguably also has less room to manoeuvre this time thanks to its high levels of debt and limited scope of monetary easing.
“They’ve used so many bullets, the credibility of the next bullet is lower,” she said.
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
