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Hong Kong firm drops US$1.4b land purchase pact on economic worries

[HONG KONG] Hong Kong-based Goldin Financial Holdings Ltd has dropped out of a process to buy a land parcel worth about US$1.4 billion citing economic uncertainties, as the Asian financial hub's businesses take a hit from China's slowdown.

In a rare move, Goldin said in an exchange filing on Tuesday its board had decided to exit the tendering process for land use rights for a parcel in the Kai Tak area of Hong Kong due to "recent social contradiction and economic instability".

The firm, with interest in financial and property markets, did not explain what it meant by social contradiction. Company representatives could not immediately be reached by Reuters after regular business hours.

Hong Kong's economy expanded at its slowest pace in nearly 10 years in the first quarter due to weaker exports and as the former British colony was buffeted by the US-China trade war, along with cooling property prices and volatile stock markets.

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The government has maintained its forecast for Hong Kong's full-year 2019 growth at 2-3 per cent, compared with 3 per cent growth in 2018.

Despite economic weakness, home prices in one of the world's most expensive property markets rose for the fourth straight month in April, government data showed last month.

But analysts have said the rising price trend may not be sustainable, especially as trade tensions between China and the United States intensify again, leading to a plunge in transaction volume.

The trade tensions and its impact on the economy of Hong Kong could hit the rental business of the planned Kai Tak project, making the return period longer, said Thomas Lam, executive director of property consultancy Knight Frank.