Following months of both political and economic upheaval, Hong Kong’s government announced on Thursday it’s plan to implement an economic support package. The package, valued at $2.44 billion ((HK$ 19.1 billion), is aimed at ameliorating the economic problems brought on by the protests as well as the U.S.-China trade war. It will include funding for businesses and the underprivileged. Also on Thursday, Financial Secretary Paul Chan announced that the government will likely slash its 2019 GDP growth forecast, from 2-3 percent to 0-1 percent. The protests have had direct impacts on the country’s businesses and tourism, and have analysts questioning whether a technical recession will hit Hong Kong as a result.
Specific deals of the stimulus include an extra payment to social security recipients, school subsidies and rent subsidies for low-income tenants. On the business side, stimulus measures include loan guarantees for small businesses, reduced rent on government land, and retraining opportunities for workers impacted by the economic downturn, among other measures.
This is not the first time that Hong Kong has implemented a drastic stimulus plan. The government did so in 2011 and in 2014.
Market Losses Spread to Cryptos
Global stock markets aren’t the only assets suffering from global political and economic tensions. Bitcoin prices fell steeply on Thursday after Wednesday saw the cryptocurrency’s worst trading day in a month, with analysts crediting market concerns for the decline. Bitcoin prices slumped 5.5 percent in early trade after falling 7.7 percent on Wednesday, when the price fell below the $10,000 mark. Bitcoin rebounded slightly to trade at $10,103.18 as of 12:15 p.m. GMT on Thursday. Just last week, bitcoin prices rose, and traders questioned whether this cryptocurrency (and possibly others) could act as a safe-haven asset during these volatile times. This week’s movements question this theory and highlight that perhaps no assets are truly safe these days.
Even gold, the traditional safe-haven asset, has failed to find significant gains this week. Though the precious metal gained slightly on recession fears, gold futures were trading up only 0.10 percent in the early afternoon in London, to $1,529.40, after falling earlier in the session as traders sold to lock in higher prices following earlier gains.