Economic downturn far from over: CPA
Updated: 2008-10-10 06:59
By Joey Kwok(HK Edition)
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CPA Australia, an international accounting body, said business professionals in Hong Kong expect the current global financial crisis to continue for the next nine to 12 months.
The accounting body conducted a survey of its members in late September, after the bankruptcy of Lehman Brothers. Around 58 percent of the respondents predicted the financial turmoil will last until May or September of next year.
Concerning the territory's future economic prospects, around 45 percent in the survey said they do not expect strong economic growth in 2009, while almost 41 percent held a neutral view on the issue.
Richard Ho, president of CPA Australia's Hong Kong and mainland division, said the high percentage of neutral answers indicates that respondents may find it difficult to predict what may happen.
"What is clear from our survey is that there is a sentiment of uncertainty as people are still going through the shock period," Ho said.
CPA Australia also said the global credit crisis will have the greatest impact on the financial sector, while the accounting, legal, retail and property industries will also be dragged down.
Meanwhile, around 35 percent revealed that the collapse of multinational companies is the biggest external factor reducing their companies' profit margins in 2008, followed by the impact of fluctuating oil prices and the US subprime crisis.
Regarding the internal factors influencing their companies' profit margins, respondents said the cost of sales, inflation, office rent and salaries are ranked as the top four.
Ho said 72 percent of the participants believe the consumer price inflation will continue to increase, of which almost 65 percent predict the inflation rate will be around 6.5 to 7 percent.
Deputy President and Taxation Committee Chairperson Loretta Shuen recommended Hong Kong businesses adopt a more diversified economic approach amid the global financial crisis.
"Companies in Hong Kong should do more to attract listings from other international markets, instead of being over-reliant on singular markets, such as the US and the mainland," Shuen said.
According to the survey, Hong Kong businesses also prefer that companies from Dubai, India and Australia place listings in Hong Kong.
Financial Reporting and Corporate Governance Committee Chairman Patrick Yeung said companies in Dubai and other Middle-Eastern countries have an adequate amount of assets, making them attractive to businesses in Hong Kong.
"If more international companies place listings in Hong Kong, it will be more possible for overseas investors to buy shares in our stock market," Yeung said.
(HK Edition 10/10/2008 page3)