Hong Kong ETF Faces Pressures Head On

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Hong Kong recently stepped out of its recession, but there’s caution in the air, since the economy and related ETF rely on global economies to a large extent.

Hong Kong’s economy grew a seasonally adjusted 3.3% in the second quarter from the first quarter, underscoring the fact that a recovery in the Asian region is coming around, reports Bettina Wassener for The New York Times.

Large stimulus measures have been bolstering mainland China’s growth and Hong Kong has benefited from the growth there. Goldman Sachs’ (NYSE:GS) economists believe Hong Kong’s economy may contract 3% this year, followed by 5% growth in 2010. The government, however, projects a 3.5% to 4.5% contraction, lower than its earlier forecast of a 5.5% to 6.5% decline.

Seasonally adjusted joblessness stands at 5.4% in the May-to-July period and economists expect it to increase slightly to 5.5%, according to RTTNews. Secretary for Labor and Welfare Matthew Cheung Kin-chung stated that unemployment could face upward pressure as businesses remain cautious and employers remain conservative in hiring.

Officials remain skeptical about an economic recovery, citing the fact that the “rather bumpy” process heavily depends on development in the global economy.

  • iShares MSCI Hong Kong Index (NYSEARCA:EWH): up 47% year-to-date


Max Chen contributed to this article.