| Actual | Previous | |
|---|---|---|
| Balance | HK$3.6B | HK$-59.9B |
| Imports - Y/Y | 21.7% | 11.6% |
| Exports - Y/Y | 33.6% | 11.0% |
Highlights
Hong Kong's merchandise trade balance shifted from a deficit of HK$59.8 billion in December to a surplus of HK$3.6 billion in January. This is the first surplus since January 2022. Exports rose 33.6 percent on the year in January after advancing 11.0 percent in December, while imports rose 21.7 percent after a previous increase of 11.6 percent.
This move into surplus and large year-over-year growth in exports and imports largely reflects the timing of lunar new year holidays, which occurred in January last year but in February this year. This means the number of working days - and, as a result, the volume of trade flows - were somewhat lower than they otherwise would have been in January 2023 but were at more normal levels in January 2024. Similarly, working days and trade volumes were at more normal levels in February 2023 but lower than they otherwise would have been in February 2024.
This, in turn, means that year-over-year growth in trade volumes is somewhat stronger than it would otherwise be in January 2024 and will likely be somewhat weaker in February 2024. Because of this factor, officials noted that it will be more meaningful to examine January and February data combined, when available, to assess the strength of trade flows at the start of the year.
The large increase in headline exports in January was broad-based across major trading partners, with exports to mainland China, the United States, and Taiwan advancing 54.2 percent, 11.5 percent, and 46.8 percent respectively. Officials continue to expect external factors will weigh heavily on export performance in coming months.
This move into surplus and large year-over-year growth in exports and imports largely reflects the timing of lunar new year holidays, which occurred in January last year but in February this year. This means the number of working days - and, as a result, the volume of trade flows - were somewhat lower than they otherwise would have been in January 2023 but were at more normal levels in January 2024. Similarly, working days and trade volumes were at more normal levels in February 2023 but lower than they otherwise would have been in February 2024.
This, in turn, means that year-over-year growth in trade volumes is somewhat stronger than it would otherwise be in January 2024 and will likely be somewhat weaker in February 2024. Because of this factor, officials noted that it will be more meaningful to examine January and February data combined, when available, to assess the strength of trade flows at the start of the year.
The large increase in headline exports in January was broad-based across major trading partners, with exports to mainland China, the United States, and Taiwan advancing 54.2 percent, 11.5 percent, and 46.8 percent respectively. Officials continue to expect external factors will weigh heavily on export performance in coming months.
Definition
Hong Kong's external merchandise trade statistics are compiled based on information contained in import/export declarations. The Hong Kong Special Administrative Region is a separate customs territory, as stated in"The Basic Law of the Hong Kong Special Administrative Region of the People's Republic of China". Import/export declaration is also required of Hong Kong's merchandise trade with the mainland of China, and statistics relating to this are included in Hong Kong's external merchandise trade statistics.
Total merchandise trade refers to all the movements of merchandise between Hong Kong and her trading partners, by land, air, water and by post. It comprises imports, domestic exports and re-exports of goods. Imports of goods refer to goods which have been produced or manufactured in places outside the jurisdiction of Hong Kong and brought into Hong Kong for domestic use or for subsequent re-export as well as products of Hong Kong which are re-imported. Domestic exports of goods refer to the natural produce of Hong Kong or the products of a manufacturing process in Hong Kong which has changed permanently the shape, nature, form or utility of the basic materials used in manufacture. Re-exports of goods refer to products which have previously been imported into Hong Kong and which are re-exported without having undergone in Hong Kong a manufacturing process which has changed permanently the shape, nature, form or utility of the product.
Total merchandise trade refers to all the movements of merchandise between Hong Kong and her trading partners, by land, air, water and by post. It comprises imports, domestic exports and re-exports of goods. Imports of goods refer to goods which have been produced or manufactured in places outside the jurisdiction of Hong Kong and brought into Hong Kong for domestic use or for subsequent re-export as well as products of Hong Kong which are re-imported. Domestic exports of goods refer to the natural produce of Hong Kong or the products of a manufacturing process in Hong Kong which has changed permanently the shape, nature, form or utility of the basic materials used in manufacture. Re-exports of goods refer to products which have previously been imported into Hong Kong and which are re-exported without having undergone in Hong Kong a manufacturing process which has changed permanently the shape, nature, form or utility of the product.
Description
Changes in the level of imports and exports, along with the difference between the two (the trade balance) are a valuable gauge of economic trends here and abroad. While these trade figures can directly impact all financial markets, they also affect currency values in foreign exchange markets. However, the foreign exchange impact is muted here given that Hong Kong’s currency is pegged to the United States dollar.
Imports indicate demand for foreign goods and services in the local economy. Exports show the demand for local goods in countries overseas. Movements in the trade balance directly affect GDP growth because of the Hong Kong's dependence on trade. Stronger exports are bullish for corporate earnings and the stock market. The bond market is also sensitive to the risk of importing inflation.
This report also gives a breakdown of trade with major countries as well, so it can be instructive for investors who are interested in diversifying globally. For example, a trend of accelerating exports to a particular country might signal economic strength and investment opportunities in that country.
Imports indicate demand for foreign goods and services in the local economy. Exports show the demand for local goods in countries overseas. Movements in the trade balance directly affect GDP growth because of the Hong Kong's dependence on trade. Stronger exports are bullish for corporate earnings and the stock market. The bond market is also sensitive to the risk of importing inflation.
This report also gives a breakdown of trade with major countries as well, so it can be instructive for investors who are interested in diversifying globally. For example, a trend of accelerating exports to a particular country might signal economic strength and investment opportunities in that country.
