HONG KONG: Hot money from the US will likely stay in Hong Kong for some time, according to market experts speaking in a business seminar hosted by Bank of East Asia yesterday.

"With the unemployment rate and Consumer Price Index continuing to rise in the US, international hot money - particularly that from the US, will not leave Hong Kong in the short term, at least not in the next six months," said Jason Kwok, chief executive from TeamOne Economist Ltd.

"When hot money is ready to leave, it means the world economy is reviving, especially the US, whose economy is recovering and the mainland, whose exports are back on track again. At that time, Hong Kong will not face too many difficulties even if the hot money is leaving, as the international economic environment thrives again," said Kwok.

Kwok said that six months ago, most analysts did not believe that it was "the beginning of the end" of the recession. Now, six months later, most of them have agreed the world economic downturn appears to be nearing its end, although uncertainties are still there.

"In 2010, GDP growth rates for Hong Kong and the mainland are expected to be around 4.5 percent and 10 percent, respectively. The real concern right now should not be about withdrawal of hot money; rather, it should be about when the world economy will fully recover, which would bring real development opportunities for Hong Kong, as well as the mainland," said Kwok.

It has been reported that over HK$600 billion in hot money flowed into Hong Kong after the global financial meltdown in late 2008, of which a significant amount was injected in the stock and real estate markets.

(HK Edition 01/07/2010 page4)