A record number of Hong Kong firms closed down last year as economic growth in China fell to its slowest in a quarter of a century and spending by visitors from the mainland dried up.
Altogether, 122,479 companies were dissolved, Reuters reported, citing data from the city’s Companies Registry compiled by financial research platform Webb-site.com.
The net number of new firms incorporated in Hong Kong slid 17 percent to a new low since the outbreak of severe acute respiratory syndrome (SARS) in 2003 slammed the city’s economy.
The figures show how tightly Hong Kong’s business prospects remain tied to mainland China, despite the city’s aspirations as a global financial center.
Bleak as last year was, the problem for Hong Kong’s entrepreneurs — and their lenders — is that China’s growth may keep slowing, with an even more painful sting in the tail down the line.
“We haven’t seen the worst yet,” Kevin Lai, chief economist for Asia Ex-Japan at Daiwa Capital Markets in Hong Kong was quoted as saying.
“We’re not too sure what may happen to the currency, we’re not sure whether this slowdown in China will spill into some kind of a bigger trouble or financial crisis. We’re still at the very beginning of the whole process.”
Hong Kong’s experience with SARS showed the city’s resilience — while thousands more firms were closed in 2003 than were started, the city was back in business with a net 21,605 new firms just a year later.
But China’s lingering economic health problems may leave a deeper scar this time around.
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