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Worse than financial crisis, deadlier than Sars: coronavirus to push Hong Kong bankruptcies to decade high
Enoch Yiu
Published: 12:15pm, 24 Feb, 2020
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Hong Kong is poised to see the biggest jump in more than a decade in personal bankruptcies and companies winding up this year, as individuals and firms are overwhelmed by “multiple problems” that are far worse than any crisis seen previously, according to the Hong Kong Institute of Certified Public Accountants.
“I expect the situation will be worse than previous crises such as Sars (Severe Acute Respiratory Syndrome) in 2003 because we are facing multiple problems which have been dragging on for more than a year, ranging from the US-China trade war, social unrest and now the coronavirus outbreak,” Johnson Kong Chi-how, the new president of HKICPA, which represents more than 45,000 accountants.
“We have seen a lot of potential restructuring and liquidation inquiries from many companies since last year as the US-China trade war and the social unrest have hit hard the local and mainland economies,” said Kong said in a telephone interview last week.
In 2019, personal bankruptcies in Hong Kong rose 9 per cent year on year to 8,151, while company winding-up petitions jumped 14 per cent to 419, according to data from the government’s Official Receiver’s Office.
Johnson Kong Chi-how, president of Hong Kong Institute of Certified Public Accountants. Photo: Handout
The sharp rise in company collapses will push the unemployment rate higher than the 3.4 per cent for the three months to the end of January, already up from 2.8 per cent in the year-earlier period. The unemployment rate during Sars was 8 per cent.
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Analysts said this was worrying because unlike many countries such as the US and Europe that have comprehensive unemployment benefits, Hong Kong hardly has any protection for jobless people. This will further cut down local consumption while banks may face higher levels of bad debt.
Hong Kong accountants’ body asks stock exchange to delay deadline for filing annual results
11 Feb 2020
The increases last year were already the highest annual jump in both categories since 2009, when bankruptcy petitions jumped 36 per cent to 15,784, while company winding-up rose 22 per cent to 759. Kong expects these numbers to soar further.
The Sars epidemic in 2003 saw company winding-up petitions rise 1.4 per cent from 2002 to a record 1,451. Personal bankruptcies, however, fell 18 per cent to 22,092, compared to an all-time high of 26,922 in 2002.
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Kong, who is the managing director of accounting firm BDO and a liquidation veteran, said some winding-up hearings have been postponed because of the ongoing Covid-19 outbreak, which is rapidly growing into a global epidemic with cases of infections in some three dozen countries.
- The trade war, social unrest and coronavirus outbreak will make it harder for individuals and companies to stay afloat this year, says Johnson Kong of HKICPA
- In 2019, personal bankruptcies in Hong Kong rose 9 per cent year on year to 8,151, while company winding-up petitions jumped 14 per cent to 419
Enoch Yiu
Published: 12:15pm, 24 Feb, 2020
Advertisement
Hong Kong is poised to see the biggest jump in more than a decade in personal bankruptcies and companies winding up this year, as individuals and firms are overwhelmed by “multiple problems” that are far worse than any crisis seen previously, according to the Hong Kong Institute of Certified Public Accountants.
“I expect the situation will be worse than previous crises such as Sars (Severe Acute Respiratory Syndrome) in 2003 because we are facing multiple problems which have been dragging on for more than a year, ranging from the US-China trade war, social unrest and now the coronavirus outbreak,” Johnson Kong Chi-how, the new president of HKICPA, which represents more than 45,000 accountants.
“We have seen a lot of potential restructuring and liquidation inquiries from many companies since last year as the US-China trade war and the social unrest have hit hard the local and mainland economies,” said Kong said in a telephone interview last week.
In 2019, personal bankruptcies in Hong Kong rose 9 per cent year on year to 8,151, while company winding-up petitions jumped 14 per cent to 419, according to data from the government’s Official Receiver’s Office.
Johnson Kong Chi-how, president of Hong Kong Institute of Certified Public Accountants. Photo: Handout
The sharp rise in company collapses will push the unemployment rate higher than the 3.4 per cent for the three months to the end of January, already up from 2.8 per cent in the year-earlier period. The unemployment rate during Sars was 8 per cent.
Advertisement
Analysts said this was worrying because unlike many countries such as the US and Europe that have comprehensive unemployment benefits, Hong Kong hardly has any protection for jobless people. This will further cut down local consumption while banks may face higher levels of bad debt.
Hong Kong accountants’ body asks stock exchange to delay deadline for filing annual results
11 Feb 2020
The increases last year were already the highest annual jump in both categories since 2009, when bankruptcy petitions jumped 36 per cent to 15,784, while company winding-up rose 22 per cent to 759. Kong expects these numbers to soar further.
The Sars epidemic in 2003 saw company winding-up petitions rise 1.4 per cent from 2002 to a record 1,451. Personal bankruptcies, however, fell 18 per cent to 22,092, compared to an all-time high of 26,922 in 2002.
HK BUSINESS BRIEFING
Get updates direct to your inbox
SUBSCRIBE
By registering, you agree to our T&C and Privacy Policy
Kong, who is the managing director of accounting firm BDO and a liquidation veteran, said some winding-up hearings have been postponed because of the ongoing Covid-19 outbreak, which is rapidly growing into a global epidemic with cases of infections in some three dozen countries.
