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The Economy
Raising flat supply through increasing land supply is the government's top policy priority in ensuring the healthy and stable development of the property market. Reflecting the government's sustained efforts, projected total flat supply for the coming three to four years increased from 67,000 units at end-2012 to 71,000 units at end-2013.
The local stock market remained volatile in 2013 and finished the year slightly higher. Spooked by the US Federal Reserve's asset purchase tapering discussion and the attendant stock and foreign exchange market gyrations in some emerging market economies, the local stock market came under sharp sell-off pressure during May and June. The Hang Seng Index (HSI) hit a low of 19,814 on 24 June. The stock market recovered ground in the ensuing months. following the Federal Reserve's indications of its continued accommodative stance, faster Mainland growth in the third quarter, and improved economic sentiment in Europe and the US. The HSI closed the year at 23,306, up 2.9 per cent from end-2012. The average daily turnover also rebounded modestly to $62.6 billion in 2013. Fund-raising activity picked up in 2013, particularly in the fourth quarter. For the year as a whole, total IPO funds raised amounted to $169 billion in 2013, up from $90 billion in 2012, making Hong Kong the world's second largest IPO centre in 2013.
Inflation was largely contained in 2013, as domestic cost pressures tended to stabilise and import prices remained benign. In 2013, underlying inflation averaged 4 per cent, down from 4.7 per cent in 2012.
Structure and Development of the Economy
Hong Kong is a global centre for world trade, finance, business and telecommunications, strategically located at the doorstep of the Mainland's huge and vibrant economy. Hong Kong is currently the world's eighth largest trading entity. It operates one of the world's busiest container ports in terms of container throughput, as well as one of the world's busiest airports in terms of number of international passengers and volume of international air cargo handled. Hong Kong is also the world's eighth largest banking centre in terms of gross external positions. of banks, and the fifth largest foreign exchange trading centre. Its stock market is the second largest in Asia in terms of market capitalisation.
As an international business hub, Hong Kong has a business-friendly environment with the rule of law, free trade and free flow of information, open and fair competition, a well-established and comprehensive financial network, superb transport and communications infrastructure, sophisticated support services, and a flexible labour market with a well-educated workforce and a pool of efficient and innovative entrepreneurs. Moreover, it has a sizeable amount of foreign exchange reserves, a fully convertible and stable currency, prudent fiscal management and a simple tax system with low tax rates. In view of these virtues, Hong Kong has been ranked by the US Heritage Foundation as the freest economy in the world for 20 consecutive years. Similarly, the Fraser Institute of Canada has also consistently ranked Hong Kong Number 1 in the world in terms of economic freedom. In 2013, Hong Kong was ranked the world's third most competitive economy by the International Institute for Management Development and the first in Asia, and remained the second easiest place to do business in the world according to
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