Hong Kong Bankruptcy Filings Fall to Lowest in Year

"Hong Kong Bankruptcy Filings Fall to Lowest in Year | AboutHK.Com - More Information About HK"

Bloomberg Hong Kong’s personal bankruptcy filings fell in October to a one-year low as the city emerges from its worst slump since the 1997-98 Asian financial crisis. Petitions declined to 992 from 1,142 in September, the Official Receiver’s Office said today. Compulsory business winding-up petitions dropped to 60 from 61 in September. The city’s rebound from a yearlong recession prompted employers to start hiring again, with the city’s jobless rate falling to 5.2 percent in the three months ended Oct. 31. The drop in bankruptcies and unemployment follows a decline in residential mortgage loans in negative equity in October. “Clearly an economic recovery is under way, as the falling bankruptcy number is in line with rising domestic consumption and the improving jobless rate,” Kelvin Lau, Hong Kong-based economist at Standard Chartered Bank (Hong Kong) Ltd., said by telephone today. “The recent asset price gain is a double-edged sword, while it helps to drive economic growth due to the wealth effect, it poses the risk of asset bubbles.” Money spilling into Hong Kong from unprecedented lending under China’s stimulus program has flowed into property and stocks and boosted consumer sentiment. The International Monetary Fund said this month that the city may face “a sharp run-up” in prices for property and financial assets, underscoring the risk that asset bubbles could derail a recovery. Luxury Homes Henderson Land Development Co., a company controlled by billionaire Lee Shau-kee, last month sold a duplex apartment for HK$439 million ($57 million), calling the price a record per square foot. The government has tightened down-payment requirements for luxury homes. While the Hang Seng Index has also nearly doubled from this year’s low in March, the IMF says that the city’s recovery remains fragile and the government should maintain fiscal stimulus measures into next year. The economy expanded a seasonally adjusted 0.4 percent in the third quarter from three months earlier, less than economists forecast as exports slid. While consumption and investment improved, merchandise exports fell 13.2 percent in the third quarter from a year earlier, after dropping 12.4 percent in the previous three months, the government said. Gross domestic product will shrink by 3.3 percent this year, the government says. That compares with an August estimate of a 3.5 percent to 4.5 percent decline. Hong Kong climbed out of its yearlong recession in the second quarter. Chief executive Donald Tsang said in Singapore last week he was “scared” that money flowing into Asia because of low interest rates in the U.S. could lead to another crisis in the region. He added that asset prices don’t match “fundamentals” in Hong Kong, South Korea, Singapore and Taiwan. To contact the reporters on this story: Nipa Piboontanasawat at npiboontanas@bloomberg.net This e-mail address is being protected from spambots. You need JavaScript enabled to view it ; Sophie Leung in Hong Kong at sleung59@bloomberg.net This e-mail address is being protected from spambots. You need JavaScript enabled to view it .