Date
24 April 2019
Hong Kong's equity market took a beating this year amid concerns over the potential economic impact of the Sino-US trade war. Photo: Bloomberg
Hong Kong's equity market took a beating this year amid concerns over the potential economic impact of the Sino-US trade war. Photo: Bloomberg

A gloomy Christmas song: ‘Recession is coming to town’

You’d better watch out
You’d better not cry
You’d better keep cash
I’m telling you why:
Recession is coming to town

It’s hitting you once,
It’s hitting you twice
It doesn’t care if you’ve been careful and wise
Recession is coming to town

It’s worthless if you’ve got shares
It’s worthless if you’ve got bonds
It’s safe when you’ve got cash in hand
So keep cash for goodness sake, HEY

What better ditty to convey the feelings of anxiety among the public about the state of the financial markets and the global economic risks than this revised and widely circulated Christmas song?

It may not have taken the form of a tsunami or crisis yet, but there is no doubt that the ongoing rout on financial markets and the trade war between the world’s two biggest economies have put investors on edge everywhere.

As 2018 draws to a close, we can say that the power games of Washington and Beijing, under the unpredictable ‘America First’ Donald Trump and the mighty Xi Jinping who wants more world dominance, have affected most people one way or the other, directly or indirectly. 

Hong Kong, meanwhile, was caught between the two powers. For the first time, home prices dropped after a nine-year bull run. On the stock market, even the almighty Tencent had a poor year with a slide of near 40 percent from its peak.

I cannot recall a grimmer mood in the equity markets in a long time, a reality that appears to be prompting Trump to step up criticism of the Fed over the central bank’s interest rate hikes.

China’s state media have been telling us, Hongkongers, that we have no reason to worry, as the influx of mainland tourists will bring a lot of cash that will save the Hong Kong economy.

Well it might, but perhaps not enough to save Hong Kong from the economic uncertainties ahead.

To make things worse, even if Hong Kong is alright, it does not mean that we as a people are ok.

Despite a record budget surplus that was the envy of the world for the past financial year, Hong Kong’s finance minister Paul Chan Mo-po hinted that there would be fewer sweeteners for cash-strapped locals in his next budget as “public resources are not unlimited”.

Perhaps it is time we prepare ourselves for recession in the same religious way we prepare for a Merry Christmas.

But it’s not the end of the world yet, so let’s celebrate as much as we can. Have a peaceful Christmas and a wonderful year ahead!

– Contact us at [email protected]

RC

EJ Insight writer

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