ENG-2009 — Page 84

40 The Economy

return of business confidence, private sector expenditure on machinery and equipment showed a notable improvement in the latter part of the year.

The local labour market showed much resilience during the global crisis. After a marked rise in the early part of 2009, the seasonally adjusted unemployment rate stabilised by around mid-year and came down successively to 4.9 per cent in the fourth quarter. The total number of job loss was 43 000 at the worst time of the crisis, only one-third of the total job loss during the Asian financial crisis in 1997-1998. Towards the end of the year, there were signs that companies had turned more positive in hiring workers. Likewise, the downward pressure on labour earnings abated in the latter part of the year.

The residential property market put up a strong performance through 2009, underpinned by the gradually improving economic situation and low interest rate environment. Transactions rebounded sharply due to a low base of comparison and the release of pent-up demand. Residential property prices on average rose by 28 per cent between December 2008 and December 2009, largely representing a bounce-back from the sharp correction in late 2008 when the market was hard hit by the global financial crisis. Flat rentals likewise rebounded starting in April 2009, and rose by a total of 12 per cent during the year.

Numerous indicators, including the number of transactions as a percentage of the housing stock, the level of speculative activities, and in particular the home purchase affordability ratio, suggested that the market was largely end-user led and reasonably healthy.

In the financial market, the local stock market was under much selling pressure in early 2009, with the Hang Seng Index (HSI) reaching the post-crisis low of 11 345 on March 9. It then staged a strong rebound alongside other Asian markets, reaching a high of 22 944 in mid-November. The abundance of liquidity amidst the substantial monetary easing by central banks around the world, coupled with the relatively brighter prospects of the Asian region, led to a strong influx of funds into Hong Kong and other Asian economies. The HSI closed the year at 21 873, 52 per cent higher than at end-2008. Activities in the local stock market also revived over the course of the year, with the average daily turnover averaging $62.3 billion in 2009, compared to $50.8 billion in the fourth quarter of 2008. Fund-raising activities also showed a strong comeback in the second half of the year. For 2009 as a whole, altogether there were 73 Initial Public Offering (IPO) listings, raising a total capital of $248.2 billion, the largest among all stock exchanges in the world.

Inflationary pressures quickly subsided over the course of 2009 as the global recession led to spare capacity around the world. Underlying consumer price inflation, in terms of the year-on-year rate of change of the underlying Composite Consumer Price Index, came down steadily during the first half, turning slightly negative from July to November. Yet, with economic recovery gathering pace, inflation reverted to a slight positive level of 0.3 per cent in December.