The last thing Hong Kong wants to do right now is increase borrowing costs. But that’s exactly what it will be forced to do when the Federal Reserve starts lifting interest rates.
Hong Kong’s $344 billion economy is under strain as extreme zero-Covid policies keep the city isolated and a slowdown in China clouds the outlook for corporate earnings. Its stock market was the world’s worst performing last year due to Beijing’s crackdowns on industries such as tech, property and casinos. Making matters worse, concern over closed borders and growing Communist Party influence is spurring a brain drain.