WEBVTT - Fixing Hong Kong's Crisis of Confidence

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<v Speaker 1>You're listening to Asia Centric from Bloomberg Intelligence, the podcast

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<v Speaker 1>that pulls back the curtain on global business so you

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<v Speaker 1>can invest better across the Asia Pacific rim. I'm John

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<v Speaker 1>Lee in Hong Kong and.

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<v Speaker 2>I'm Katy Dmitriyeva. Hong Kong's economy still feels like it's

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<v Speaker 2>in recovery mode from the pandemic. The residential property market

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<v Speaker 2>is now down for a fifty year in a row.

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<v Speaker 2>The retail sector is still adjusting from changing consumer and

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<v Speaker 2>tourism patterns, and some business leaders question if it can

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<v Speaker 2>ever really return to the city that it was before.

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<v Speaker 1>Is Hong Kong's economic problem structural and what will it

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<v Speaker 1>take to revive the city's confidence.

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<v Speaker 2>Here to discuss all things Hong Kong is Gary, senior

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<v Speaker 2>economist at ne Texas CIB Gary. Welcome to Asia Centric.

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<v Speaker 3>Hello everyone, thanks for having me today. Gary.

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<v Speaker 1>Hong Kong's retail sales plummeted by almost fifteen percent in

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<v Speaker 1>April versus a year ago. Detail sales are likely to

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<v Speaker 1>be down for the whole of this year, and this

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<v Speaker 1>is despite the fact that mainland tourists seem to be

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<v Speaker 1>returning to the city. What's driving all the weakness.

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<v Speaker 3>Well, I would attribute this to a few factors, and

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<v Speaker 3>of course the most mentioned factor in the news is

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<v Speaker 3>probably this trend of a lot of Hong Kong residents

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<v Speaker 3>spanning overseas. It could be across the broader et engine

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<v Speaker 3>in the Greater Bay region, or it could be in

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<v Speaker 3>a somewhere a bit farer like Japan Thailand. I think

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<v Speaker 3>it's quite a clear trend. But of course, at the

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<v Speaker 3>same time, it's also about this changing consumer spending pattern

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<v Speaker 3>from a lot of Chinese tourists towards Hong Kong. And

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<v Speaker 3>it's not only about the recovery of quantity because right

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<v Speaker 3>now it's only around sixty percent of the twenty nineteen level,

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<v Speaker 3>but it's also about how they spend, because people do

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<v Speaker 3>not only look for a very shopping centric model nowadays.

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<v Speaker 3>So I think these two factors are definitely the one

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<v Speaker 3>that's basically hurting Hong Kong's retail sector at the moment.

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<v Speaker 2>So are they going to come back?

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<v Speaker 3>Well, I think it is indeed quite challenging because if

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<v Speaker 3>we look at the behavior of a lot of Chinese

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<v Speaker 3>tourists nowadays, first the currency is quite weak, and secondly,

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<v Speaker 3>if you look at global inflation it has been rising,

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<v Speaker 3>you know, probably more than fifteen percent since twenty nineteen.

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<v Speaker 3>So for Chinese tourists, a lot of expense overseas has

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<v Speaker 3>become way more expensive. So we do see a booming

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<v Speaker 3>domestic tourism, and in Hong Kong. I think it also

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<v Speaker 3>faced the same deniamer in because it's picked to the

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<v Speaker 3>usd things that's got more expensive here, So when they

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<v Speaker 3>actually come to Hong Kong, they will probably feel the

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<v Speaker 3>prices are also quite expensive compared to what they see locally.

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<v Speaker 3>So I think this is definitely very challenging. Actually, I

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<v Speaker 3>would say I do not expect the number to come

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<v Speaker 3>back to the pre bettermic level or even twenty eighteen level,

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<v Speaker 3>which was the golden age of all these tourists inflow

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<v Speaker 3>in probably the next five or maybe even ten years.

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<v Speaker 1>So Gary, just to clarify on a urine basis, there's

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<v Speaker 1>more mainland tourists coming into Hong Kong, but they're just

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<v Speaker 1>spending less.

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<v Speaker 3>I would say that the behavior has changed, and because

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<v Speaker 3>if you look at the income growth in China over

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<v Speaker 3>the past three years, it could be because of pandemic

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<v Speaker 3>or different regulative changes. Basically, people do not feel as

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<v Speaker 3>optimistic about the future for income growth, so that has

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<v Speaker 3>not only affected local consumption but also about how they

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<v Speaker 3>behave when they go to other places as well. And second,

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<v Speaker 3>of course, is also about what kind of tourists that

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<v Speaker 3>Hong Kong is able to attract because of the rise

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<v Speaker 3>of a lot of Chinese social media and also the

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<v Speaker 3>changes of how people travel and what they do nowadays,

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<v Speaker 3>and a lot of time they don't only come and shop,

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<v Speaker 3>they actually try to spend in a very minimum way,

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<v Speaker 3>try to with a different part of the city, which

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<v Speaker 3>is not a bad thing, but when you look at

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<v Speaker 3>it from the economic perspective, if people do not spend,

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<v Speaker 3>then of course the real impact on the over growth

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<v Speaker 3>will be lower.

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<v Speaker 2>I guess that's why all the luxury stores are still

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<v Speaker 2>kind of looking empty these days.

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<v Speaker 3>Yes, I mean it's very interesting if you look good

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<v Speaker 3>maybe times great in Couseway Bay, or if you look

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<v Speaker 3>at Harber City Insult. In the past, you would often

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<v Speaker 3>see a very long qute of many Chinese students lining

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<v Speaker 3>up to get what they want, especially in the luxury sectors.

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<v Speaker 3>But nowadays I would say this a phenomenon has become

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<v Speaker 3>quite rare. Even if there is a line I do

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<v Speaker 3>expect that the per capital spending will be less than before.

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<v Speaker 1>Gary, what about your first point? You mentioned that a

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<v Speaker 1>lot of Hong Kong residents are traveling to mainland China.

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<v Speaker 1>Is this over the weekend? Can you elaborate on this phenomenon.

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<v Speaker 3>Actually, I would say it's too voted. If you look

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<v Speaker 3>at the estimate of how much Hong Kong is being

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<v Speaker 3>changing or even for longer trip, we are talking about

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<v Speaker 3>somewhere close to sixty seven billion Hong Kong dollars, which

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<v Speaker 3>is around fifteen percent of Hong Kong retail salves in

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<v Speaker 3>twenty twenty three. Definitely, it is a huge number. It's

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<v Speaker 3>probably not fully a new trend. But the problem here

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<v Speaker 3>is that, well, there has always been a residence spending

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<v Speaker 3>across the border because it's cheaper and et cetera. But

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<v Speaker 3>I think Hong Kong also loses the middle class that

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<v Speaker 3>supposedly to be the stabilized to the economy because right now,

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<v Speaker 3>even though there could be a different source of talent

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<v Speaker 3>program attracting another type of population into Hong Kong, their

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<v Speaker 3>behavior will be different. They may be a bit more

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<v Speaker 3>willing to go across the border. The Shenghen or spend

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<v Speaker 3>the weekend in the Greater Bay. So I do feel

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<v Speaker 3>that there's a structural change in the middle class in

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<v Speaker 3>Hong Kong, which also contributed to that problem. But beyond that,

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<v Speaker 3>of course, there are more people traveling across the border

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<v Speaker 3>to spend I would say that right now it's probably

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<v Speaker 3>more about the weekend trips, but increasingly when people get

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<v Speaker 3>bored of all this activity, that wouldn't be surprised that

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<v Speaker 3>there could be trips in a longer duration, which basically

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<v Speaker 3>means that Hong Kong will need to fight harder to

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<v Speaker 3>retain this sort of consumption.

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<v Speaker 2>So we talked about tourism, We talked about travel. What

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<v Speaker 2>about other parts of the economy. The housing sector has

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<v Speaker 2>always been a big one here, very expensive. Can we

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<v Speaker 2>talk a bit about that. I know the sector has

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<v Speaker 2>been down now for a fifth year in a row.

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<v Speaker 2>It seems like things aren't picking up well.

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<v Speaker 3>I'm a little bit more optimistic on the residential side

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<v Speaker 3>more than the commercial real estate, and of course, unless

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<v Speaker 3>we see interest rate coming down or further relaxation of

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<v Speaker 3>different stamp duties and policies, and I think it's a

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<v Speaker 3>bit hard to really see a rebound in home pricess

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<v Speaker 3>for now, and especially when we start to see more

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<v Speaker 3>new supply from all these developers that they're all dying

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<v Speaker 3>for cash, that they need to offload the unit for

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<v Speaker 3>the cash flow. So basically it means that we will

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<v Speaker 3>probably see more transaction, there will be some demand, but

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<v Speaker 3>that will not be enough to actually revert the downward

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<v Speaker 3>trend that we see so far. So as long as

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<v Speaker 3>there are people in the city them that someone will

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<v Speaker 3>eventually buy some homes. But on the commercial side, it's

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<v Speaker 3>a bit checkier simply because again that's a very huge

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<v Speaker 3>amount of supply coming and Hong Kong is also affected

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<v Speaker 3>by a lot of work from home arrangement or basically

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<v Speaker 3>companies trying to cut course moving to other non prime location.

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<v Speaker 3>I think all of this means that there could be

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<v Speaker 3>ongoing stocklishness in the commercial rare states, especially in the

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<v Speaker 3>officers space. So for that, I'm not too optimistic and

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<v Speaker 3>I think it will at least take another five years

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<v Speaker 3>to see the recovery.

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<v Speaker 1>Of the cycle. Gary, I'm just going to throw out

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<v Speaker 1>some numbers based on CBRE data. The city has a

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<v Speaker 1>seventeen percent vacancy rate and this is for office property. Now,

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<v Speaker 1>there's two buildings in central Hong Kong that have just

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<v Speaker 1>about to be completed. That's a Chum Kong Center too,

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<v Speaker 1>and there was a news report saying that it's only

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<v Speaker 1>going to have ten percent occupancy. Now, this is a

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<v Speaker 1>brand new waterfront building. Next to that, there's the Henderson

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<v Speaker 1>and that has a forty percent vacancy. These numbers are

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<v Speaker 1>pretty terrible. Is it due to the weakness in the

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<v Speaker 1>financial sector.

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<v Speaker 3>Yes, I would say so. And I think one of

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<v Speaker 3>the key challenge that Hong Kong loses nowadays is really

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<v Speaker 3>about the loss of animal spirit. And when I say

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<v Speaker 3>animal spirit, it means that it may not be totally

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<v Speaker 3>tied to the real economic data that people see. Ba's

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<v Speaker 3>really about a lot of investors or household They make

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<v Speaker 3>the decision based on what they expect. So if they

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<v Speaker 3>expect that the income will not be that optimistic. If

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<v Speaker 3>corporate expected well, maybe they will be affected by your

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<v Speaker 3>politics in terms of recent et cetera. Then they make

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<v Speaker 3>the decision based on what they think about the future,

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<v Speaker 3>not really about you know that there could be some

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<v Speaker 3>spotlight in the Hong Kong economy, but that it's not

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<v Speaker 3>enough to revert that sentiment. So with that in place,

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<v Speaker 3>I think it's really reflect the loss of confidence broadly

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<v Speaker 3>in this sector in the corporate world that in the

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<v Speaker 3>past may be Hong Kong is able to capture more

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<v Speaker 3>of the foreign direct investment coming into Asia, but now

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<v Speaker 3>they need to share with other leading cities around the

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<v Speaker 3>Asia Pacific region. It could be Sydney, Singapore, Tokyo and

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<v Speaker 3>even in the Middle East. So definitely, I think this

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<v Speaker 3>is one of the core challenge that Hong Kong is facing,

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<v Speaker 3>and I feel that unless there is stronger growth momentum

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<v Speaker 3>that corporates feel optimistic that they can make more money

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<v Speaker 3>in the city. I feel it's very hard to see

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<v Speaker 3>the vacancy rate declining in the short run.

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<v Speaker 2>What do you think are the main things that are

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<v Speaker 2>keeping people from moving here? You know, if you want

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<v Speaker 2>to fill up these office buildings, you need to have people.

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<v Speaker 2>You need to have companies moving here. If you want

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<v Speaker 2>more residential transactions, you need to have people moving here.

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<v Speaker 2>So what are the kinds of things that executives may

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<v Speaker 2>be thinking about when choosing whether to relocate here or

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<v Speaker 2>to another place.

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<v Speaker 3>Well, with that, I would start with the positive side first,

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<v Speaker 3>and of course I think in Asia it's very hard

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<v Speaker 3>to find a place with a very low Texas free

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<v Speaker 3>capital flows. I think all of these are still advantages

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<v Speaker 3>that Hong Kong has. But at the same time, especially

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<v Speaker 3>after the last i would say four years of COVID

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<v Speaker 3>and also geopolitical tensions, for a lot of senior executives

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<v Speaker 3>or for decision makers in different sort of companies, they

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<v Speaker 3>will have the risk management in mind. So Hong Kong

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<v Speaker 3>is definitely a market that they won't want to give

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<v Speaker 3>up because it's still the best gateway to China. But

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<v Speaker 3>if we start to see some of the global macro

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<v Speaker 3>trend changing, for example, if the Chinese economy continue to decelerate,

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<v Speaker 3>and if we start to see India or Asking growing quicker,

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<v Speaker 3>there is a natural economic momentum pushing this company to

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<v Speaker 3>actually focus more on the non China market. So I

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<v Speaker 3>think with that it really depends on how competitive Hong

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<v Speaker 3>Kong can be in the future. And beyond that, of course,

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<v Speaker 3>I do think geopolitical risks is also a major concern

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<v Speaker 3>as well, because I think the hardest part about is

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<v Speaker 3>it's very hard to really measure the downside scenario or

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<v Speaker 3>how worse can it be, And of course a lot

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<v Speaker 3>of time people would overestimate the worst scenario, but this

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<v Speaker 3>is what they look into right now. So I think

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<v Speaker 3>these two factors definitely holding back the recovery of the

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<v Speaker 3>Hong Kong corporate sector.

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<v Speaker 2>So these days executives are seeing Hong Kong as just

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<v Speaker 2>another Chinese city, another Beijing, another Shanghai. Is that fair

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<v Speaker 2>to say?

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<v Speaker 3>Well, I think for a lot of sectors, Hong Kong

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<v Speaker 3>is still the best location to be if they want

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<v Speaker 3>to assess the China market. But at the same time,

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<v Speaker 3>there is also a trend that some companies would prefer

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<v Speaker 3>to either have their office in Shanghai or Beijing just

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<v Speaker 3>to get a closer access to their customer or if

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<v Speaker 3>they want to allocate more resources to Usian and India

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<v Speaker 3>than of coursing appos the natural choice. So a lot

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<v Speaker 3>of analysts would compare Hong Kong and Singapore, which of

0:11:42.360 --> 0:11:45.280
<v Speaker 3>course is to city that pretty much are like. But

0:11:45.400 --> 0:11:48.040
<v Speaker 3>at the same time, Hong Kong's competitor is not only

0:11:48.080 --> 0:11:51.200
<v Speaker 3>about single bore, it's also about other Chinese cities as well.

0:11:51.400 --> 0:11:53.600
<v Speaker 3>But I would say that it still depends on the sectors.

0:11:53.640 --> 0:11:57.560
<v Speaker 3>For some of the sectors related to consumption, maybe they

0:11:57.600 --> 0:12:00.679
<v Speaker 3>would for closer on shore access, But for finance, I

0:12:00.720 --> 0:12:03.200
<v Speaker 3>still think that Hong Kong would have the advantage because

0:12:03.280 --> 0:12:06.440
<v Speaker 3>China still has the capital control, the taxes law in

0:12:06.520 --> 0:12:10.840
<v Speaker 3>Hong Kong is still have a more internationally aligned legal system.

0:12:11.160 --> 0:12:14.400
<v Speaker 3>So yes, they are challenges, but the challenges may be

0:12:14.480 --> 0:12:16.640
<v Speaker 3>a bit different in different sectors.

0:12:17.120 --> 0:12:19.840
<v Speaker 1>So Gary, you did touch upon some of the policy

0:12:19.880 --> 0:12:24.200
<v Speaker 1>measures going forward. What can the authorities do to revive

0:12:24.360 --> 0:12:27.040
<v Speaker 1>Hong Kong's retail sector its property market?

0:12:27.600 --> 0:12:31.280
<v Speaker 3>Well, I think for retail services indeed quite a challenging job,

0:12:31.320 --> 0:12:34.480
<v Speaker 3>and of course there's something that the Hongkong government cannot control.

0:12:34.600 --> 0:12:38.480
<v Speaker 3>For example, if the US interest remain elevated, then probably

0:12:38.559 --> 0:12:41.600
<v Speaker 3>Hong Kong will follow. Based on the monetary system, which

0:12:41.640 --> 0:12:44.040
<v Speaker 3>means the US dollar and Hong Kong dollar would be strong,

0:12:44.120 --> 0:12:46.760
<v Speaker 3>then everything will be expensive in Hong Kong, so that

0:12:46.800 --> 0:12:50.120
<v Speaker 3>would probably deter part of the tourists, especially it was

0:12:50.160 --> 0:12:53.280
<v Speaker 3>from China, because basically still eighty percent of Hong Kong

0:12:53.640 --> 0:12:56.320
<v Speaker 3>source of tourists. So I would say that a lot

0:12:56.320 --> 0:12:59.080
<v Speaker 3>of problem Hong Kong face nowadays in the retail sector

0:12:59.160 --> 0:13:02.600
<v Speaker 3>is structural and it's actually under like a period of

0:13:02.720 --> 0:13:06.880
<v Speaker 3>change that it will need to have some reform either

0:13:06.920 --> 0:13:09.520
<v Speaker 3>on an industry level or even from the government level

0:13:09.520 --> 0:13:12.680
<v Speaker 3>in terms of longer term planning in repositioning Hong Kong

0:13:12.920 --> 0:13:15.680
<v Speaker 3>in the region. It should no longer be only a

0:13:15.800 --> 0:13:18.640
<v Speaker 3>shopping centers in the past, because there's a change in

0:13:18.760 --> 0:13:22.120
<v Speaker 3>what tourists or different houses of want. It will need

0:13:22.160 --> 0:13:25.400
<v Speaker 3>to find the niche or anything that is unique to

0:13:25.440 --> 0:13:28.360
<v Speaker 3>actually attract people to come here that they cannot be

0:13:28.440 --> 0:13:31.079
<v Speaker 3>found elsewhere. But for now, I do feel that a

0:13:31.120 --> 0:13:33.120
<v Speaker 3>lot of policies that we see seems to be just

0:13:33.160 --> 0:13:35.920
<v Speaker 3>a revamp of what has happened in the past few years.

0:13:36.000 --> 0:13:38.600
<v Speaker 3>For example, when you see the firework that will be

0:13:38.640 --> 0:13:41.480
<v Speaker 3>shown in a very high frequency, this is not something

0:13:41.559 --> 0:13:43.679
<v Speaker 3>that is unique to me. I mean, there are many

0:13:43.679 --> 0:13:47.520
<v Speaker 3>examples that Hong Kong can look at Japan, Korea, even Singapore,

0:13:47.559 --> 0:13:49.120
<v Speaker 3>they all have their own niche.

0:13:49.840 --> 0:13:52.920
<v Speaker 1>In the gary. You are, of course an economist, what's

0:13:53.000 --> 0:13:55.440
<v Speaker 1>your economic forecast on Hong Kong.

0:13:56.400 --> 0:13:59.520
<v Speaker 3>Well, in twenty twenty four, Hong Kong will still be

0:13:59.600 --> 0:14:02.600
<v Speaker 3>able to achieve growth rate of around two point eight percent,

0:14:02.679 --> 0:14:05.520
<v Speaker 3>which is not too much a bad number. However, I

0:14:05.520 --> 0:14:08.400
<v Speaker 3>think the biggest problem nowadays is that even the growth

0:14:08.520 --> 0:14:11.000
<v Speaker 3>number may seem okay, which is mainly supported by the

0:14:11.040 --> 0:14:14.440
<v Speaker 3>psysical recovery of the global export sector. But if you

0:14:14.480 --> 0:14:17.360
<v Speaker 3>look at consumption, if you look at investment, those are

0:14:17.400 --> 0:14:20.720
<v Speaker 3>really not performing that well, which basically means that if

0:14:20.760 --> 0:14:24.880
<v Speaker 3>we step away from growth into income and wealth accumulation

0:14:25.160 --> 0:14:27.480
<v Speaker 3>or even you know, look at equity market, et cetera,

0:14:27.720 --> 0:14:30.640
<v Speaker 3>there could be a gap between growth versus and what

0:14:30.800 --> 0:14:34.160
<v Speaker 3>is really going on and what investors or household and

0:14:34.280 --> 0:14:37.800
<v Speaker 3>corporate actually feel. So I think that it will probably

0:14:37.800 --> 0:14:40.720
<v Speaker 3>take a while for their confidence to recover, and that

0:14:40.760 --> 0:14:42.440
<v Speaker 3>would probably not come this year.

0:14:43.040 --> 0:14:44.480
<v Speaker 2>How much longer do we have to wait?

0:14:45.280 --> 0:14:48.880
<v Speaker 3>It really depends on when Hong Kong would be able

0:14:49.120 --> 0:14:52.160
<v Speaker 3>to regain its niche in a lot of sectors. And

0:14:52.280 --> 0:14:55.000
<v Speaker 3>for example, which is also unfortunate that in the financial

0:14:55.040 --> 0:14:58.560
<v Speaker 3>sector well. Definitely, Hong Kong has performed quite well in

0:14:58.600 --> 0:15:00.920
<v Speaker 3>the past of attracting a lot of Chinese or even

0:15:01.080 --> 0:15:04.400
<v Speaker 3>foreign capitals into the city, but it has also been

0:15:04.480 --> 0:15:06.800
<v Speaker 3>hit by a lot of regulative changes in China would

0:15:06.800 --> 0:15:09.600
<v Speaker 3>happen to be in real estate and in internet platforms,

0:15:09.640 --> 0:15:12.560
<v Speaker 3>et cetera, and which happened to be the biggest sectors

0:15:12.800 --> 0:15:14.320
<v Speaker 3>or at least one of the biggest ones in the

0:15:14.360 --> 0:15:17.080
<v Speaker 3>Hong Kong financial market. So I feel that a lot

0:15:17.120 --> 0:15:19.760
<v Speaker 3>of changes has happened in the past few years, and

0:15:19.800 --> 0:15:22.320
<v Speaker 3>it will really take I would say another maybe two

0:15:22.400 --> 0:15:25.840
<v Speaker 3>years to actually see the gradual recovery that Hong Kong

0:15:25.880 --> 0:15:28.760
<v Speaker 3>would have, because if the old growth engine and model

0:15:29.000 --> 0:15:32.400
<v Speaker 3>is gone, then it will take time to actually diversify

0:15:32.520 --> 0:15:35.120
<v Speaker 3>and create a new one. So I think it's interesting

0:15:35.160 --> 0:15:37.240
<v Speaker 3>to see the Home government trying to push for the

0:15:37.280 --> 0:15:41.240
<v Speaker 3>diversification towards non China market. So I think this is

0:15:41.280 --> 0:15:43.800
<v Speaker 3>probably something that it would take time to be up.

0:15:43.920 --> 0:15:46.560
<v Speaker 3>And going back quickly to the real estate question, which

0:15:46.600 --> 0:15:50.280
<v Speaker 3>I've actually forgot to answer, I think for residential market,

0:15:50.480 --> 0:15:52.840
<v Speaker 3>I think we will begin to see some recovery probably

0:15:53.000 --> 0:15:56.360
<v Speaker 3>sometime early next year, simply because there would be more

0:15:56.360 --> 0:15:59.000
<v Speaker 3>people coming to Hong Kong, even though as we discuss,

0:15:59.080 --> 0:16:02.440
<v Speaker 3>the popular structure may change a bit. As long as

0:16:02.440 --> 0:16:04.840
<v Speaker 3>people are in the city, they will need the place

0:16:04.880 --> 0:16:07.600
<v Speaker 3>to live. But for commercial space, I really think that

0:16:07.640 --> 0:16:08.720
<v Speaker 3>it will take a long time.

0:16:09.480 --> 0:16:12.880
<v Speaker 2>Maybe a big picture question, should we be thinking about

0:16:12.880 --> 0:16:16.080
<v Speaker 2>Hong Kong as trying to get back up to what

0:16:16.120 --> 0:16:19.080
<v Speaker 2>it was before or is your sense as an economist

0:16:19.280 --> 0:16:22.480
<v Speaker 2>that this place is just going to change. It's going

0:16:22.520 --> 0:16:25.360
<v Speaker 2>to change, and it might be something in ten years time,

0:16:25.720 --> 0:16:28.440
<v Speaker 2>but won't necessarily go back to sort of the Hong

0:16:28.520 --> 0:16:30.560
<v Speaker 2>Kong of twenty eighteen, the peak Hong Kong.

0:16:30.600 --> 0:16:32.640
<v Speaker 3>As you said, Actually, if you look at the Hong

0:16:32.720 --> 0:16:35.400
<v Speaker 3>Kong economic history, there has been a few times that

0:16:35.520 --> 0:16:38.880
<v Speaker 3>it has undergone massive economic transformation. In the past, it

0:16:38.960 --> 0:16:42.480
<v Speaker 3>wasn't manufacturing hub, and then you know there's a gradual

0:16:42.560 --> 0:16:45.720
<v Speaker 3>development into finance and logistics and et cetera. So I

0:16:45.720 --> 0:16:49.760
<v Speaker 3>do think that Hong Kong is actually undergoing another economic transformation.

0:16:50.120 --> 0:16:52.880
<v Speaker 3>But how successful it will be what really depends on,

0:16:52.960 --> 0:16:56.040
<v Speaker 3>you know, how the government is able to provide supportive

0:16:56.120 --> 0:16:59.560
<v Speaker 3>policies to diversify the economy. And I still think that

0:16:59.560 --> 0:17:01.840
<v Speaker 3>the question advantage of Hong Kong is still on finance,

0:17:02.040 --> 0:17:04.760
<v Speaker 3>but whether you can find other source of growth under

0:17:04.800 --> 0:17:08.439
<v Speaker 3>the current environment to diversify from the old engine towards

0:17:08.520 --> 0:17:11.720
<v Speaker 3>the growth momentum. I think this is key. And even

0:17:11.760 --> 0:17:15.400
<v Speaker 3>if you look at other sectors like logistics and consumption,

0:17:15.480 --> 0:17:18.200
<v Speaker 3>they all feel different sort of challenges. That a bit

0:17:18.280 --> 0:17:20.520
<v Speaker 3>of discussion on tech, but I think there could be

0:17:20.640 --> 0:17:24.280
<v Speaker 3>closer collaboration with etcetera. But I still think that the

0:17:24.280 --> 0:17:26.840
<v Speaker 3>core advantage of Hong Kong is to use this road

0:17:27.080 --> 0:17:29.440
<v Speaker 3>not only to connect with the Chinese capital, but it's

0:17:29.480 --> 0:17:32.399
<v Speaker 3>really about the global capital. It may not necessarily be

0:17:32.480 --> 0:17:34.960
<v Speaker 3>from the West, but let's say RCN or Middle East

0:17:35.000 --> 0:17:37.040
<v Speaker 3>and etcetera. So I think where the Hong Kong will

0:17:37.080 --> 0:17:40.879
<v Speaker 3>retain its road as an international sector will depend on

0:17:41.359 --> 0:17:44.760
<v Speaker 3>how it can actually interact with global capital, not only

0:17:44.800 --> 0:17:45.280
<v Speaker 3>on China.

0:17:46.040 --> 0:17:48.560
<v Speaker 1>Gary, before I let you go, we did talk about

0:17:48.560 --> 0:17:51.040
<v Speaker 1>a lot of Hong Kong residents going over the border

0:17:51.080 --> 0:17:53.840
<v Speaker 1>to spend their money in the mainland. When was the

0:17:53.880 --> 0:17:56.199
<v Speaker 1>last time you went to the mainland and where did

0:17:56.240 --> 0:17:57.159
<v Speaker 1>you spend your money on?

0:17:58.040 --> 0:18:01.080
<v Speaker 3>Well, I was in Guangzhou. I feel ago. I think

0:18:01.160 --> 0:18:04.879
<v Speaker 3>the wipe there is really basically seeing a lot of

0:18:05.000 --> 0:18:07.480
<v Speaker 3>people in the shopping mall, which I haven't seen in

0:18:07.520 --> 0:18:09.439
<v Speaker 3>Hong Kong for a while. And of course if you

0:18:09.480 --> 0:18:12.359
<v Speaker 3>ask me, I think the accommodation course is quite cheap there.

0:18:12.600 --> 0:18:16.320
<v Speaker 3>And then also about the foot quality and the related surfaces,

0:18:16.480 --> 0:18:18.840
<v Speaker 3>so I think it's very hot for Hong Kong to

0:18:18.880 --> 0:18:21.440
<v Speaker 3>compete on prices. So if you ask me, I think

0:18:21.480 --> 0:18:24.480
<v Speaker 3>one key point that the Hong Kong retail industry should

0:18:24.560 --> 0:18:27.400
<v Speaker 3>really taken is really about improving the quality.

0:18:27.840 --> 0:18:30.240
<v Speaker 1>And a lot of our listeners are actually based outside

0:18:30.240 --> 0:18:32.239
<v Speaker 1>of Hong Kong. Can you give them some indication of

0:18:32.280 --> 0:18:36.040
<v Speaker 1>how much cheap Root is in terms of hotels restaurants

0:18:36.080 --> 0:18:36.960
<v Speaker 1>than it is in Hong Kong.

0:18:37.040 --> 0:18:39.919
<v Speaker 3>Okay. Of course, generally speaking, if you're talking about a

0:18:39.920 --> 0:18:42.560
<v Speaker 3>five style hotel in Hong Kong in the normal time,

0:18:42.640 --> 0:18:45.399
<v Speaker 3>you're talking about somewhere around three thousand Hong Kong dollars

0:18:45.440 --> 0:18:48.080
<v Speaker 3>per night, and it will probably be around one thousand

0:18:48.160 --> 0:18:51.320
<v Speaker 3>to one thousand, five hundred integrated bay. And in terms

0:18:51.320 --> 0:18:55.000
<v Speaker 3>of the foot or like generally decatering surfaces, then I

0:18:55.080 --> 0:18:58.520
<v Speaker 3>can basically cater a meal or for people with quite

0:18:58.560 --> 0:19:01.159
<v Speaker 3>nice food for around one and R and B and

0:19:01.200 --> 0:19:03.320
<v Speaker 3>for Hong Kong. I think that will only be the

0:19:03.359 --> 0:19:06.560
<v Speaker 3>cost for two people, which is only for our data. Okay,

0:19:06.680 --> 0:19:09.120
<v Speaker 3>But having said that, I do want to say that

0:19:09.200 --> 0:19:11.280
<v Speaker 3>one of their findish that I find is that Hong

0:19:11.359 --> 0:19:13.680
<v Speaker 3>Kong we tried to be in a different sort of hub,

0:19:13.720 --> 0:19:16.280
<v Speaker 3>but definitely the cocktail is still greater in Hong Kong

0:19:16.320 --> 0:19:18.879
<v Speaker 3>than other cities in China.

0:19:19.080 --> 0:19:22.040
<v Speaker 1>That's you've got and what's your favorite cocktail?

0:19:22.480 --> 0:19:24.040
<v Speaker 2>We need to talk after this recording.

0:19:27.240 --> 0:19:30.239
<v Speaker 1>It's been an interesting dive into Hong Kong's economy and

0:19:30.280 --> 0:19:33.959
<v Speaker 1>the structural challenges. Thank you Gary for joining asia Centric.

0:19:34.160 --> 0:19:34.920
<v Speaker 3>Thank you very much.

0:19:35.359 --> 0:19:37.440
<v Speaker 1>I'm John Lee calling in from Hong Kong.

0:19:37.480 --> 0:19:39.920
<v Speaker 2>And I'm Katadmitrieva here in Hong Kong.

0:19:40.560 --> 0:19:43.120
<v Speaker 1>This podcast was also produced by Clara Chen and you've

0:19:43.160 --> 0:19:45.280
<v Speaker 1>been listening to the asia Centric podcast