Hong Kong's inventory hike partly offset weakness in 2Q GDP growth

Inventory investment stood out in 2Q report.

Amid the shock brought about by news of Hong Kong GDP growth slowing to 1.8% in 2Q14, an increase in inventories was noted to have partly offset the weakness.

According to a research report from Hang Seng Bank, as it had flagged, inventory investment was a standout in the second-quarter report.

Inventory accumulation alone added 2.6 percentage points to headline growth, the biggest growth contributor last quarter.

However, it noted that it is still too early to make a definitive judgment on business sentiment, as it was mainly a reflection of the favourable base effect due to massive stock liquidation over the second quarter of 2013.

Here's more from Hang Seng Bank:

External trade: Not all the news was downbeat. Following a weak start to 2014, trade activity has shown signs of revival.

Exports of goods rose from 0.5% to 2.3%, with exports to most of the advanced economies delivering positive growth.

That suggests that the improvement is unlikely to have been a one-off occurrence. However, falling travel-related services exports kept a lid on total exports.

Total imports rose by 1.5%, also strengthening from the 1.0% gain in the previous quarter. With a more significant acceleration of imports versus exports, net trade delivered a slight drag.

Net trade shaved 0.3 percentage points off headline GDP growth after adding 0.2 percentage points in the first quarter.