The economies of the countries of the world offer a different set of opportunities for investors. That is why it is essential to evaluate the market and the national economy prior to taking any decisions in the sphere of business investment. Financial markets are diverse and they require careful assessment and risk evaluation. It is difficult to estimate and forecast financial results for some economies, which have not been open to the world markets.
However, in the case with Hong Kong, due to its trade history which lasted for many years, some economical processes can be easily identified, which helps business people decide whether investment in the economy can bring sustainable returns and which spheres of economy require development and growth.
The primary performance indicator of an economy is GDP. However, in the global markets, the exchange rates of national currency and the interest rates play a more important role (Hollein, 2002). At the same time, the overall state of the political system also demonstrates the ability of the economy to function properly within the existing legal system (Kim & McElreath, 2001). Hollein (2002) also believes that monetary policy is a strong factor of investment attraction of the country.
Starting new businesses in Asia has become popular. However, when looking at the development indicators of the developed economies in the region (e.g. Japan), we can see a small degree of stagnation (Kang-Chung & Lau, 2013). Despite the fact that the economy is still functioning properly, there is no lack of the workplaces, and the employment rates keep the government taxation system at the appropriate level, the region’s most developed economies have given the way to the fast growing Asian ‘tigers’, among them Hong Kong in China.
The size of the country and the cultural mix of peoples reveal the strong focus on business development and growth of the economy. The social policies introduced in the past decades in Hong Kong disclose the high level of cultural development, intellectual property expansion, and the overall high degree of social security in the country’s economic system (Lam, 2013).
At the same time, there are other processes affecting the decision to invest in the international markets of the chosen country either positively or negatively, such as real estate prices, money supply, the state of health insurance system, banking system mechanism, etc. As Kwok (2013) observes, the real estate prices going down have a positive outcome for the economy and the investors: ‘a fall in property prices means a significant easing of the costs of running small and medium-sized businesses, a lower cost of living for households and less so-called systemic risk for the banking system’ (para. 3).
However, it is also necessary to pay attention to the information in the economic journals and press which relates to country rankings. Despite the fact that the procedure of ranking may sometime be considered not fully reliable (Hollein, 2002), as the rankings are based on social studies, they still allow room for thought for the potential investor. If markets are reacting to the world economic processes so severely that the economic downturn starts happening, then the investment opportunity in the country should be put to doubt (Kim & McElreath, 2001).
For Hong Kong, the rankings have not demonstrated the positive results recently. Kang-Chung and Lau (2013) argue that ‘Hong Kong has lost its status as the world's most competitive economy, according to the latest report by the International Institute for Management Development (IMD)’ (para. 1). The authors believe this has happened due to the economic performance (Kang-China & Lau, 2013).
Therefore, despite the positive overview of the Hong Kong and the potential strength of political system and infrastructure, the development of Asian markets in retrospective shows that the rise of the Hong Kong economy can be very short in terms of time. Therefore, investments made should be oriented on quick returns, include contingency plans and risk strategies. It is not worth investing lots of money into the economy, which has a tendency for quick fall.