Hong Kong's October exports growth belies market expectation, driven by a rebound in Asia trade, especially the mainland market. AFP

Hong Kong's total exports in October rose 9.4 percent, the SAR government said yesterday. The figure is in sharp contrast to the market prediction of merely 0.5 percent in export growth in a Reuters survey published on Wednesday.

The rise in exports, however, is mainly due to the surging trade with the mainland.

"Merchandise exports showed a notable year-on-year growth in October, mainly driven by the rebound in exports to the mainland and some other major markets in Asia," said a government official in a statement.

The SAR's total exports in the three months to end-October, however, were 0.4 percent lower than the previous three months, after seasonal adjustment.

"It shows a slight decline over the past three months, thus sounding a note of caution to Hong Kong's external trade amid the challenging external environment," the government spokesman said.

The SAR's exports rose 15.8 percent, 14.5 percent, 11.1 percent and 9.4 percent in January, April, July and October, respectively.

Some economists agree that the demand on the mainland and other Asian markets is the main driver for the exports growth in October but some comment that it is because of the Beijing Olympics.

"It is reasonable that demand from the mainland can boost the figures in October. However, we don't think the mainland's demand can support the surge of local exports in the coming two months," said Daniel Chan, a spokesperson at DBS Bank.

"The figures were delayed because of the Beijing Olympics. The October figures only reflected the post-Games situation," Irina Fan, economist at Hang Seng bank, said.

While a rebound in an individual month does not show signs of economic recovery, outlook for local exports and imports seem to be grim in near term.

"If we look at the figures on a three-month basis, we can actually see a downward trend in both exports and imports this year," Fan said.

Hang Seng Bank expects the export figures to range between 1 and 0 percent for November and December while DBS forecasts a 0.5-2.5 percent for the same period.

Hang Seng Bank forecasts a 6.4 percent growth for the whole year for local exports in 2008 and a 2-3 percent in 2009. The bank expects recovery to take place by the end of next year when the stimulus packages offered by governments worldwide comes into effect.

(HK Edition 11/28/2008 page2)