SILK ROAD RISK

Silk Road not risk-free

Jennifer Li
Wednesday, January 06, 2016

Local investors should be wary of risks when chasing after opportunities arising from the mainland's "One Belt, One Road" scheme, said Tse Kwok-leung, head of policy and economic research at Bank of China Hong Kong, yesterday.
Aside from geopolitical risks, investors also need to grapple with complicated cultural and religious issues in more than 60 countries covered by the development scheme to strengthen infrastructure along the Silk Road Economic Belt and 21st Century Maritime Silk Road, he said at a seminar organized by the Hong Kong Export Credit Insurance Corporation.Foreign-exchange risks can be minimized, if not avoided, if transactions are mostly settled in yuan, Tse said. Nicholas Kwan Ka-ming, director of research at the Hong Kong Trade Development Council, said traders can find opportunities in developing markets like Africa with "smart technology" products likely to do well.He noted, though, that Hong Kong may post zero growth in its exports this year due to weak global demand. In the future, the Trans-Pacific Partnership agreement might boost competition between Hong Kong and developing economies.China, which contributed over half of the SAR's exports last year, will remain the largest importer from Hong Kong this year, Kwan added. Meanwhile, confidence among local firms for the next six months has fallen to its lowest level since 2009, according to HSBC's biannual Trade Forecast survey. Hong Kong's trade confidence score fell to 102 in the second half of last year from 124 in the first half.