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     Further to the external merchandise trade statistics in value terms for December 2018 released earlier on, the Census and Statistics Department (C&SD) released today (February 19) the volume and price statistics of external merchandise trade for that month.

     In December 2018, the volume of Hong Kong’s total exports of goods decreased by 7.4% over December 2017. Concurrently, the volume of imports of goods decreased by 8.7%.

     Comparing 2018 with 2017, the volume of Hong Kong’s total exports of goods increased by 4.9%. Concurrently, the volume of imports of goods increased by 5.9%.

     Comparing the fourth quarter of 2018 with the preceding quarter on a seasonally adjusted basis, the volume of total exports of goods decreased by 3.9%. Concurrently, the volume of imports of goods decreased by 5.4%.

     Changes in volume of external merchandise trade are derived from changes in external merchandise trade value with the effect of price changes discounted.

     Comparing December 2018 with December 2017, the prices of total exports of goods increased by 2.0%. Concurrently, the prices of imports of goods increased by 2.0%.

     As regards price changes in 2018 over 2017, the prices of total exports of goods increased by 2.4%. Concurrently, the prices of imports of goods increased by 2.6%.

     Price changes in external merchandise trade are reflected by changes in unit value indices of external merchandise trade, which are compiled based on average unit values or, for certain commodities, specific price data.

     The terms of trade index is derived from the ratio of price index of total exports of goods to that of imports of goods. Compared with the same periods in 2017, the index remained virtually unchanged in December 2018, whereas it decreased by 0.1% in 2018 as a whole.

     Changes in the unit value and volume of total exports of goods by main destination are shown in Table 1.

     Comparing December 2018 with December 2017, double-digit decreases were recorded for the total export volume to India (-33.1%) and the mainland of China (the Mainland) (-11.0%). Concurrently, the total export volume to Japan and the USA decreased by 4.9% and 2.9% respectively. On the other hand, the total export volume to the Netherlands increased by 26.5%.

     Over the same period of comparison, the total export prices to the Netherlands, the Mainland, Japan and the USA increased by 3.9%, 2.7%, 2.5% and 2.0% respectively. On the other hand, the total export prices to India decreased by 4.4%.

     Changes in the unit value and volume of imports of goods by main supplier are shown in Table 2.

     Comparing December 2018 with December 2017, double-digit decreases were recorded for the import volume from Taiwan (-29.1%) and Japan (-15.1%). Concurrently, the import volume from the Mainland and Singapore decreased by 6.4% and 1.5% respectively. On the other hand, the import volume from the USA increased by 0.5%.

     Over the same period of comparison, the import prices from Japan, the Mainland, Singapore and the USA increased by 3.0%, 2.5%, 2.1% and 1.0% respectively. On the other hand, the import prices from Taiwan decreased by 0.9%.

Further information

     Details of the above statistics are published in the December 2018 issue of “Hong Kong Merchandise Trade Index Numbers”. Users can download the publication free of charge at the website of the C&SD (www.censtatd.gov.hk/hkstat/sub/sp230.jsp?productCode=B1020006).

     Enquiries on merchandise trade indices may be directed to the Trade Analysis Section (1) of the C&SD (Tel: 2582 4918). read more

The following is issued on behalf of the Commission of Inquiry (CoI) into the Diaphragm Wall and Platform Slab Construction Works at the Hung Hom Station Extension under the Shatin to Central Link Project:
 
     The terms of reference of the CoI have been expanded to also ascertain the relevant facts and recommend appropriate improvement measures relating to the irregularities that have recently surfaced in the construction of the North Approach Tunnels, the South Approach Tunnels and the Hung Hom Stabling Sidings under the MTR Corporation Limited’s Contract No. 1112, following the Chief Executive in Council’s decision today (February 19).
 
       The CoI has been retitled “Commission of Inquiry into the Construction Works at and near the Hung Hom Station Extension under the Shatin to Central Link Project” with immediate effect to reflect the expanded ambit.
 
       The CoI will endeavour to accomplish its tasks within the time frame given by the Chief Executive in Council. read more

The following is issued on behalf of the Hong Kong Monetary Authority:
 
     The Hong Kong Monetary Authority (HKMA) announced today (February 19) the composite interest rate at the end of January 2019.*
 
     The composite interest rate, which is a measure of the average cost of funds of banks, decreased by 6 basis points to 0.83 per cent at the end of January 2019, from 0.89 per cent at the end of December 2018 (see Chart 1 in the Annex). The decrease in composite interest rate reflected declines in the weighted funding cost for both deposits and interbank funds during the month (see Chart 2 in the Annex).
 
     The historical data of the composite interest rate from the end of the fourth quarter of 2003 to the end of January 2019 are available in the Monthly Statistical Bulletin on the HKMA website (www.hkma.gov.hk). The next data release is scheduled for March 19, 2019 and will provide the composite interest rate at the end of February 2019.
 
* The composite interest rate is a weighted average interest rate of all Hong Kong dollar interest bearing liabilities, which include deposits from customers, amounts due to banks, negotiable certificates of deposit and other debt instruments, and Hong Kong dollar non-interest bearing demand deposits on the books of banks. Data from retail banks, which account for about 90 per cent of the total customers’ deposits in the banking sector, are used in the calculation. It should be noted that the composite interest rate represents only average interest expenses. There are various other costs involved in the making of a loan, such as operating costs (e.g. staff and rental expenses), credit cost and hedging cost, which are not covered by the composite interest rate. read more

     The Transport and Housing Bureau and the Civil Aviation Administration of China (CAAC) signed a Memorandum of Understanding (MoU) in Beijing today (February 19) to expand the Air Services Arrangement between the Mainland and the Hong Kong Special Administrative Region (HKSAR).
      
     The MoU was signed by the Deputy Secretary for Transport and Housing, Mr Wallace Lau, and the Deputy Director General of the Department of Transport of the CAAC, Mr Yu Biao. The signing was witnessed by the Secretary for Transport and Housing, Mr Frank Chan Fan, and the Deputy Administrator of the CAAC, Mr Wang Zhiqing.
      
     The Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area promulgated by the Central People’s Government pointed out the need for further expansion of the domestic and international air services network of the Guangdong-Hong Kong-Macao Greater Bay Area, as well as the need for active expansion of intermodal code sharing service. In view of the commissioning of the Hong Kong Section of the Guangzhou-Shenzhen-Hong Kong Express Rail Link and the Hong Kong-Zhuhai-Macao Bridge last year, both sides agreed to expand the air-to-land intermodal arrangements between the Mainland and Hong Kong, which allow designated airlines of both sides to enter into code-sharing arrangements with operators of all types of land transport (including railway services, passenger vehicles and coaches) of all cities in the Mainland. The air-to-sea intermodal code-sharing arrangements were also opened up to sea transport between Hong Kong and the Pearl River Delta region.

     Under the intermodal arrangements, operators of land and sea transport may share the codes of flights operated by designated airlines of both sides as an extension of flights, enabling both services (air-to-sea or air-to-land) to be available in the Global Distribution System. The new code-sharing arrangements are expected to bring much convenience to travellers taking different means of land and sea transport between the Mainland and Hong Kong International Airport. For instance, travellers may take the Express Rail Link using the same air ticket to travel to Guangzhou or Shenzhen and connect to railway services to different cities on the Mainland, which will assist in travel planning. Travellers may also use the same air ticket to reach the fast-developing cities in the Western Pearl River Delta (Western PRD), boosting the economic development in the Western PRD and the Bay Area. This essentially echoes with consolidating and enhancing Hong Kong’s status as an international aviation hub as set out in the Outline Development Plan.
 
     Regarding the initiatives in the Outline Development Plan concerning deepening management reform in low-altitude airspace, expediting the development of general aviation and steadily developing cross-boundary helicopter services, both sides also agreed to expand the scope of cross-boundary helicopter services to cover points in Guangdong Province to provide travellers with a high-end and convenient means of air transport. Air connectivity in the Bay Area will be enhanced, giving impetus to the diversified commercial and business activities in the Bay Area. The frequency of air services between Hong Kong and Shanghai Hongqiao International Airport will also be increased.
      
     Mr Chan said that the MoU signed between the Mainland and the HKSAR is conducive to the implementation of the Outline Development Plan, in particular in consolidating and enhancing Hong Kong’s status as an international aviation hub and strengthening its role as an aviation management training centre. The new MoU not only expands the air services and the intermodal arrangements between the Mainland and Hong Kong, but is also in line with the objective of the Outline Development Plan in terms of creating a word-class airport cluster by differential development and positive interaction amongst airports in the Bay Area. The arrangement has forged excellent conditions for better aviation infrastructure connectivity in the Bay Area.

    

The following is issued on behalf of the Hong Kong Monetary Authority:
 
     The Hong Kong Monetary Authority (HKMA) published today (February 19) the results of Survey on Small and Medium-Sized Enterprises (SMEs)’ Credit Conditions for the fourth quarter of 2018.
 
     Regarding SMEs’ perception of banks’ credit approval stance relative to 6 months ago, 78 per cent of respondents perceived similar or easier credit approval stance in the fourth quarter of 2018, compared with 77 per cent recorded in the previous quarter (Chart 1 in the Annex). 22 per cent of respondents perceived more difficult credit approval stance relative to 6 months ago in the fourth quarter of 2018, as compared to 23 per cent in the previous quarter.
 
     Of those respondents with existing credit lines, 84 per cent reported that banks’ stance on existing credit lines was easier or unchanged in the fourth quarter of 2018, down from 98 per cent recorded in the previous quarter (Chart 2 in the Annex). 16 per cent of respondents reported tightened banks’ stance in the fourth quarter of 2018, up from 2 per cent in the previous quarter.
 
     The Survey also gauged the results of new credit applications from SMEs. 3.8 per cent of respondents reported that they had applied for new bank credit during the fourth quarter of 2018. For respondents who already know their application outcomes, 94 per cent reported fully or partially successful applications, unchanged from the previous quarter; the proportion of respondents that reported fully successful applications dropped to 57 per cent from 83 per cent in the previous quarter (Chart 3 in the Annex). The proportion of respondents that reported unsuccessful application remained unchanged at 6 per cent. It should be noted that owing to a small sample size (i.e. 3.8 per cent of surveyed SMEs), the results on new credit applications from SMEs could be prone to large fluctuations. Care should be taken when interpreting the survey results.
 
About Survey on Small and Medium-Sized Enterprises (SMEs)’ Credit Conditions
 
     In light of the importance of SMEs to the Hong Kong economy and concerns about potential funding difficulties facing SMEs over the past few years, the HKMA has appointed the Hong Kong Productivity Council (HKPC) to carry out this Survey, starting from the third quarter of 2016. This Survey is conducted on a quarterly basis, covering about 2,500 SMEs from different economic sectors each time. The results of this Survey can help monitor the development of SMEs’ access to bank credit from a demand-side perspective.
 
     The results of this Survey should be interpreted with caution. Similar to other opinion surveys, views collected in this Survey may be affected by changes in sentiment due to idiosyncratic events that occurred over the Survey period, which can make the results prone to fluctuations. Readers are advised to interpret the results together with other economic and financial information. In addition, views collected are limited to the expected direction of inter-quarter changes (e.g. “tighter”, “similar” or “easier”) without providing information about the magnitude of these changes.
 
     Detailed tables and technical information of this Survey are published on the website of the HKPC (smecc.hkpc.org). read more