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Following is the transcript of remarks by the Financial Secretary, Mr John C Tsang, at a media session on the third round of quantitative easing at the lobby of West Wing, Central Government Offices, Tamar, this evening (September 14):
There have been some recent developments in the US and Europe, so I'd like to share with you today Government's view and how these developments may affect Hong Kong, especially our property market, about which I am sure you are all rather concerned.
European Central Bank indicated last week that they would purchase an unlimited amount of sovereign bonds of the Eurozone states. The German constitutional court also ruled the day before yesterday that Germany's fund injection into the European Stability Mechanism, or the ESM, is constitutional. The US Federal Reserve announced early this morning another round of quantitative easing, the so-called QE3, which is more aggressive than we had expected.
These measures can, to some extent, help stabilise market sentiments and prevent the worsening of the Euro debt crisis in the near future. However, it will require much more work on the part of these countries concerned before the crisis can be completely resolved. Meanwhile, the recovery of the US economy is still slow. Unemployment rate remains high. The "fiscal cliff" also adds to the uncertainty. All in all, I am afraid I cannot say that the global economic outlook has turned optimistic as a result of all these actions taken so far.
For us in Hong Kong, our exports will remain rather gloomy for an extended period of time. Last year, we launched a series of fiscal measures to boost domestic consumption which has helped stabilise the economy and keep the unemployment rate at a low 3.2 per cent level. However, we note that the growth in the retail sector has slowed down to 1.3 per cent year-on-year, net of price adjustment in July. If this trend should persist, we may see negative growth again in the third quarter this year after a slight contraction of 0.1 per cent in the second quarter. This will amount to a technical recession. The risk that the employment situation would deteriorate in the coming quarters is also increasing. We shall not overlook this.
On the property market, the third round of quantitative easing of the US may lead the market to expect that property price would rise further. This deviates from the economic fundamentals and substantially increases the risk of a bubble forming.
We have been closely monitoring the property market and have ready a basket of different measures. The Monetary Authority has just announced new measures which tighten the approval criteria of mortgage applications by persons holding more than one mortgaged property and require the tenor of mortgage loans not to exceed 30 years. Applicants whose income comes mainly from outside of Hong Kong are also subject to more restrictive requirements.
These measures put together can help reduce the exposure of our banking system and also cool down the property market as well.
We shall continue to monitor the property market, and if conditions so warrant, I would not hesitate to implement further measures.
Reporter: If the measures announced today don't work, what else can we see coming out from the Government to stabilise the property market?
Financial Secretary: We have a whole basket of measures at hand, and as and when we feel that it's necessary we will push them out.
Reporter: When will it come out?
Financial Secretary: When it comes out, you will know.
(Please also refer to the Chinese portion of the transcript.)
Ends/Friday, September 14, 2012
Issued at HKT 23:05
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