Annual Report 2019

Management Discussion and Analysis 15 ANNUAL REPORT 2019 GENERAL OVERVIEW In 2019, the global economy sustained a slow growth in general with a weakened momentum in the manufacturing industry and global trade. Throughout the year, the market sentiment has been volatile due to various factors, including, among others, the tariffs further imposed by the US on the imported products from China and China’s countermeasures, concerns over the disruption of technology supply chain, uncertainties brought by the prolonged Brexit process, geopolitical tensions and changes in interest rate policies of central banks worldwide. Developed and emerging market economies almost simultaneously adopted the quantitative easing monetary policies in order to reduce the downside risks on economic growth and restrain expectations on inflation. According to the “World Economic Outlook” update report published by the International Monetary Fund (“ IMF ”) in January 2020, the global economic growth rate of 2019 was expected to be 2.9%, down by 0.7 percentage point as compared to 3.6% in 2018, among which, developed economies grew by 1.7% while emerging markets and developing economies grew by 3.7%, down by 0.5 percentage point and 0.8 percentage point as compared to those of 2018 respectively. Total global trade volume (including goods and services) grew by 1.0%, representing a decrease of 2.7 percentage points as compared to that of 2018. Despite the complex and challenging environment inside and outside China, the Chinese economy maintained steady growth in 2019 with the annual GDP growth of 6.1%, representing a decrease of 0.5 percentage point over the previous year. China’s economic growth is under the “new normal” of gradual deceleration, yet the long-term positive trend remained unchanged. Facing the new normal of the economy, China continued to deepen the supply- side structural reform and strengthen the countercyclical adjustments to achieve high-quality economic development. In 2019, the economic development witnessed many positive changes thanks to continuous optimisation and upgrade of economic structure, material results achieved on the optimisation and adjustment of industrial structure, significant benefits brought by tax cut and fee reduction policies, as well as steady implementation of control targets of “stabilising land prices, housing prices and market expectations” in the real estate market. Meanwhile, the economic growth continued to be exposed to the relatively significant downward pressure, as affected by unfavourable factors, such as escalating US-China trade frictions, stable but slowing industry development, lacklustre investment demand and unstable consumption demand. According to the statistics published by the General Administration of Customs of China, China’s total foreign trade of import and export value amounted to US$4.58 trillion in 2019, representing a year-on-year decrease of 1.0%, among which the total export value was US$2.50 trillion, representing an increase of 0.5% year-on-year; while the total import value was US$2.08 trillion, representing a decrease of 2.8% year-on-year. The growth rates of China’s import and export with countries along the Belt and Road as well as emerging economies in Africa and Latin America were higher than the overall growth rate, which has become an important driver for the development of China’s foreign trade. Affected by the global economic and trading conditions, the growth of global ports throughput generally slowed down during 2019, and lower growth of throughput volume was recorded by ports in China. According to the data published by the Ministry of Transport of China, the container throughput handled by Chinese ports totalled 261 million TEUs in 2019, representing an increase of 4.4% year-on-year, of which, 231 million TEUs were handled by coastal ports, representing a year-on-year increase of 3.9%. In 2019, the Group’s ports handled a total container throughput of 111.72 million TEUs, up by 2.4% over the previous year, and bulk cargo volume of 449 million tonnes, down by 10.5% over the previous year. As at 31 December 2019, the Group’s revenue amounted to HK$8,898 million, representing a decrease of 12.4% over the previous year. Profit attributable to equity holders of the Company amounted to HK$8,362 million, representing an increase of 15.4% over the previous year.