Hong Kong Bankruptcies Rise Despite Economic Recovery

by Mary Swire, Tax-News.com, Hong Kong

22 July 2004

Figure released by Hong Kong’s Official Receiver’s Office have shown a second consecutive monthly increase in the number of bankruptcies, despite the more favourable economic climate.

According to the figures, the number of bankruptcy petitions in June rose 2% month on month to 1,069, although the rate was slower than the 6.6% increase witnessed in May.

Bankruptcy petitions are seen as a good indicator of future bankruptcies, although analysts were keen not to read too much into the figures.

“I wouldn't have forecast this. It doesn't seem to reflect what people are saying, though at the tail-end of a long downturn, there are always a few more [bankruptcies] shaken out,” observed CLSA chief economist Jim Walker according to a report in The Standard.

Meanwhile, the number of individuals declared bankrupt in June was over 20% higher than in May, rising from 1,042 to 1,260. However, this is taken as a much weaker indicator of future bankruptcy levels.

Winding-up orders also increased quite markedly, from 54 in May to 158 in June.

However, bankruptcy petition figures are now significantly lower than their peak in January 2003 when petitions hit 3,193.

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