New World Development Company Limited
EXECUTIVE VICE-CHAIRMAN’S REPORT
12
Various emerging markets experienced suppressed economic performance, and their contribution to the global
economic growth decreased for the fifth consecutive year. Market concerns over the prospects of growth of emerging
markets have resulted in waves of fluctuations in the financial market and triggered tightened external financial
conditions, diminished capital flow and depreciation of currency, which contributed to the deterioration of capital outflow
in parallel with the eventual kicking off of interest rate rise in the United States in 2015. Measures to introduce negative
interest rate have been adopted recently in Japan to stimulate its weak economy.
China economic growth was up to market expectations, albeit a faster-than-expected slowdown of its import and export
under dampened investment and manufacturing activities. The Central Government of China had previously warned
of a new norm of transformation under which its economy would progress while maintaining stability, as opposed to
the rapid growth in the past, pursuant to the structural adjustment of the nation’s economy. Nevertheless, the risk of
China’s economic correction has been augmented, given the Central Government’s forthcoming enforcement of its goal
of eliminating excessive capacity and lowering leverage, which will imply the suspension of the initiative of speeding up
investment spending or the expansion of the balance sheets of local governments in the coming years, and in light of
the heightened downward pressure of the Renminbi and the impending reform of exchange rate of the Renminbi.
The International Monetary Fund (“IMF”) is of the view that the transformation of Mainland China’s economy from
investment and manufacturing to consumption and service industries, together with the strengthened United States
Dollar, plummeting oil price and political turmoil, may likely bring forth more tremendous impact on those economies in
struggle, including Russia, Brazil and Middle East countries, posing challenges to the recovery of the global economy in
2016. The forecast for global economic growth has been downward-adjusted by the IMF to 3.4% in 2016 and 3.6% in
2017.
As a small and open economy, Hong Kong is facing multiple challenges, including economic slowdown in Mainland
China, the trend of rising interest rate in the United States, as well as development deceleration of different sectors
internally. Fortunately, moderate growth was still recorded for Hong Kong in the third quarter of 2015, with a year-on-
year growth of 2.3%, which compared to 2.8% in the second quarter of the year. The labour market remained stable
in general. The seasonally-adjusted unemployment rate stayed at 3.3%, close to the lowest level in 17 years. Private
spending maintained its robust growth, benefiting from the fairly stable employment and income in the past few
quarters.
The expected slower and uneven economic growth around the world will represent the major challenges to all industries
in 2016. For the property market in Hong Kong, the kicking off of interest rate rise in December 2015 in the United
States has already relieved the property market from a major hindrance. It is generally expected that the pace of further
rate rise in the United States in 2016 will be fine-tuned depending on the actual market development on the whole.
Regarding customer demand, product quality and geographic advantages of particular projects are the primary factors
to consider for home upgraders who have adequate monetary resources, following the low-interest environment and
appreciation of fixed assets over the years. In fact, excess demand still remained for first-hand residential dwellings,
especially for competitive products. That shall add to the sustainably-rising household income and population as well
as the reasonable level of mortgage-to-income ratios to support the healthy and stable development of the residential
property market of Hong Kong.
The endless pursuit of idealities, the continual development amidst challenges, the tackling of obstacles and difficulties
upon flexible mindsets, the harmonious reconciliation of contradictions and the eventual accomplishments, are the sole
gateway to the continuation of the human spirits in the contemporary world.
