
Hong Kong's exports predicted to surge 8.8% in October
Imports to rise by 5.1%.
According to DBS, Hong Kong's October trade data are due this week. Exports and imports are projected to grow 8.8% YoY and 5.1% respectively (vs. 1.5% and 0.4% in September), resulting in a trade deficit of USD 33.6bn (vs. USD 42.0bn in September).
Hong Kong’s trade performance has strong correlation with China historically. Given China’s exports markedly improved in October, this may indicate better trade figures in Hong Kong.
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That said, we have identified worrying export trends in many product categories. Re-exports of consumer goods have been falling consistently over the past two years and growth of re-exports of capital goods and raw materials has decelerated since the beginning of the year.
Foodstuff accelerated since May but only against a very low base.
These facts suggest global manufacturing activities have continued to weaken and that consumer demand is still sluggish. Geographically, exports to Japan have been the worst performing and have fallen for eight consecutive months.
Exports to the US have also fallen for six months straight on a 3mma basis. Those to Asia are growing, but at a decelerating rate since 4Q12.
The only bright spot is exports to Europe, which finally turned positive since July. Right now it looks as though current trends will continue. While October numbers may improve to mirror those in China, it is only one month’s data and trade figures are volatile in nature. We remain cautious about the trade outlook.