Hong Kong Business Forecast Q1 2007

Content

• Executive Summary
  • Politics To The Fore In 2007
• Chapter 1: Political Outlook
  • SWOT Analysis
  • BMI Political Risk Ratings
  • Domestic Political Outlook
  • A Small Step Towards Democracy
  • While full democracy remains a somewhat distant prospect in Hong Kong, the likelihood that the March 2007
  • chief executive elections will be contested by the pro-democracy camp is a positive step in the right direction
  • Table: The Executive Council Official Members (As Of December 06)
• Chapter 2: Economic Outlook
  • SWOT Analysis
  • BMI Economic Risk Ratings
  • Introduction
  • Economic Activity
  • Expansion Continues
  • Hong Kong's economic growth momentum remains intact, with real GDP rising by 68% y-o-y in Q306,
  • accelerating from an upwardly revised 55% in Q206 The continued strength of Hong Kong's domestic demand,
  • along with a resilient external sector, will support healthy full-year growth, and we see upside risks to our
  • forecast for 62% expansion of real GDP in 2006
  • Table: Population And Output
  • Fiscal Policy
  • GST Proposal Dropped
  • The Hong Kong government has abandoned plans to introduce a general sales tax amid widespread public opposition
  • While healthy economic growth will continue to support fiscal improvements, Hong Kong's public finances
  • remain vulnerable to economic downturns, and the authorities will need to take measures to ensure
  • long-term financial sustainability
  • Table: National Government Finance - Fiscal Years* (HKDBN)
  • Exchange Rate Policy
  • HKD, CNY Parity At Hand
  • The Hong Kong dollar's close proximity to parity with the Chinese yuan has raised speculation that the authorities
  • may drop the currency board arrangement with the US$ and replace it with one linking the HKD to the CNY However,
  • while this has been mooted as a potential long-term policy move, we do not expect any significant change in
  • Hong Kong's currency regime in the near future
  • Table: Exchange Rate
  • Investment Climate
  • A Good Run For Equities
  • Our bullish view on Hong Kong equities continues to play out, with both the Hang Seng and H-Shares indices
  • showing strong gains in recent weeks While we do not discount the possibility of a short-term correction after
  • such a strong recent run, the longer-term picture remains undeniably positive
• Chapter 3: Special Report
  • BMI Sovereign Risk Ratings
  • What And Where Are The Risks?
  • Table: BMI Sovereign RIsk Ratings
  • Table: Asia Sovereign Ratings - Evolution of Ability to Pay
  • Table: Asia Sovereign Ratings - Evolution of Willingness to Pay
  • BMI Sovereign Ratings Index Methodology
• Chapter 4: Business Environment
  • SWOT Analysis
  • BMI Business Environment Risk Ratings
  • Legal Framework
  • Introduction
  • Labour Force
  • Size
  • Table: Demographic Indicators (2005)
  • Table: Employment Indicators
  • Foreign Investment Policy
  • Overview
  • Table: Asia, Annual FDI Inflows
  • Table: Hong Kong, Annual FDI Inflows
  • Foreign Trade Regime
  • Overview
  • Table: Value of exports by category
  • Tax Regime
  • Overview
• Chapter 5: Key Sectors
  • Infrastructure
  • Overview
  • Table: Hong Kong Infrastructure & Macroeconomic Historic Data & Forecasts