Hong Kong economic growth likely to stabilise at 2% in 4Q12

September economic figures spur optimism.

According to Hang Seng Bank, a batch of better-than-expected economic reports in September suggests that Hong Kong’s economic growth is stabilising.

Here's more from Hang Seng Bank:

Foreign trade, which had been on a consistently weakening trend since the start of 2012, seems to have bottomed, with exports rebounding sharply to a 15.2% growth after posting a small gain of 0.6% in August. Supported by festive spending and renewed confidence, retail sales figures also indicate an improving outlook.

We estimate that the local economy expanded at a faster pace of 2.1% in the third quarter, from 1.2% in the second quarter. Growth in the final quarter is likely to stabilise at around 2%. These estimates imply a full year GDP growth of 1.5% in 2012.

Similar to 2008-09, monetary easing in the advanced economies led to fund flows to Asia, including Hong Kong, in search of higher returns.

The Hong Kong Monetary Authority was forced to intervene in the currency market for the first time since December 2009, and the Hong Kong government also acted to deter capital inflows and reduce the risk of an asset bubble by unveiling two measures to curb non-end-user demand in the housing market.

These measures will likely result in a slump in transactions, but room for price correction may be limited given strong holding power of homeowners.