Major banks are bullish on Hong Kong's economy and China growth prospects

Major lenders Standard Chartered and HSBC expect Hong Kong and China's economy to rebound, even as Beijing continues to ramp up its Covid measures and Hong Kong's economy posted its worst quarter in more than two years.

Their comments come as China imposed fresh lockdowns in Guangzhou, Wuhan and Xining last week.

"Hong Kong business is as strong as it has ever been," said StanChart's CEO Bill Winters. "We had record results in Hong Kong in the third quarter of this year, which seems incongruous with the ongoing, lingering Covid type restrictions and the challenges in China."

Both banking powerhouses also posted their earnings recently.

"I think only about half the growth we've had ... was coming from interest rates. The other half is coming from the fact that the markets where we operate are kicking back fully into gear, including Hong Kong and interestingly China as well," he told CNBC.

HSBC's CEO Noel Quinn echoed similar optimism over Hong Kong.

"I think Hong Kong will rebound strongly following Covid ... I have every confidence Hong Kong will rebound strongly next year," Quinn said, adding that it was understandable that the economy would slow due to the lockdowns.

HSBC third quarter profits fell 42% due to surging loan losses on top of charges from selling its French business.

China and Hong Kong stocks soared on Tuesday after rumors based on an unverified social media post said Beijing was forming a committee to assess whether to lift border controls. Chinese foreign ministry spokesperson Zhao Lijian told Reuters he was unaware of such a committee.

"Covid will pass. Eventually China will start to open up and the economy will rebound strongly," Quinn told CNBC.

"We're patient. We're continuing to invest in China. We see strong growth prospects, as the market turns into a much stronger consumption market over the next decade."

China recently reported that third-quarter GDP grew by 3.9% from a year ago, beating expectations.

However, both banks acknowledged that the slowdown in China's real estate sector is still a sticking point.

Total liabilities disclosed by major developers Evergrande, Kaisa and Shimao was more than 2.6 trillion yuan (equivalent to the current value of $357.21 billion) as of mid-2021, after which the three developers' financial problems worsened. They make up only a fraction of the total real estate sector.

"It's a problem that that is just going to have to work itself through," said Winters.