Official data released on Friday showed the number of bankruptcy petitions in Hong Kong had risen to the highest level in two years.

According to figures by the Official Receiver’s Office, there were 871 bankruptcy petitions in May, 17 percent higher on a monthly basis, and 35 percent higher from a year ago, while marking the highest number since April 2022.

The number of bankruptcy orders by the court, however, significantly dropped last month, standing at 624.

That was nearly 27 percent less compared with April when it hit a three-year high, and nine percent lower year on year.

The office also received 61 compulsory winding-up petitions in May, eight percent lower than April, but 85 percent higher from last year.

There were also 43 winding-up orders by the court last month.

Commenting on the latest figures, Simon Lee, honorary fellow at Chinese University's Asia-Pacific Institute of Business, said that higher borrowing costs were a factor in the latest surge in bankruptcies.

“The high interest rates have been persisting for quite a long time, the economy still remains weak for some sectors,” Lee said.

“And for those who didn't manage their debts well when they purchased their residential accommodations, I think they experienced all the hardship.”

The economics professor also noted that an overall downward trend in the city’s property prices had also added to the cashflow woes of both individuals and businesses.

“Usually people create wealth from the properties, but now that the property prices have dropped about 16 percent in the past two years, and the industry remains weak.”

“If the properties’ values are depreciating, for property owners, no matter if they sell the properties or use the properties as a guarantee [to secure bank loans], their cash flow status will remain weak, and this will increase the chance of having bankruptcies,” he added.

The Financial Services and the Treasury Bureau, meanwhile, said via social media that the latest figures “cannot accurately reflect the city's economic situation”, as the monthly data are volatile.

The city’s economy grew 2.7 percent in the first quarter, while the jobless rate hovered at around three percent with moderate inflation, the bureau said.

It also estimated the city would welcome a total of 46 million visitors this year, which would be 35 percent more compared with last year.

“The government will keep promoting the mega-event economy and improve consumption sentiment...to further improve the city’s competitiveness.”

Lee agreed the latest bankruptcy indicators alone could not reflect the city’s overall economic recovery, but called on authorities to do more to help small-and-medium-sized businesses survive, such as to further implement measures for them to defer their principal payments on corporate loans and mortgages.
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Last updated: 2024-06-21 HKT 18:41