Following is a summary of major news and comments in the Hong Kong Economic Journal, the parent publication of EJ Insight, on Wednesday, Oct. 2:
Analysts see Hong Kong stock markets less promising in 4Q
The Hong Kong stock market could remain volatile in the fourth quarter and is unlikely to provide better yields compared with the preceding three months, analysts said. They expect investors to remain cautious as the United States Federal Reserve prepares to start tapering its bond purchasing later this month or in December. Meanwhile, Beijing may announce new economic initiatives during a top political meeting of the Central Committee of the Chinese Communist Party in November. Analysts at Citigroup Inc. said the Hang Seng Index could reach 24,000 points, heralding a potential rise of 5 percent from the beginning of this month. The benchmark index climbed almost 10 percent or 2,056 points during the third quarter.
HKEx to add more products for after-hours futures trading
Hong Kong Exchanges and Clearing Ltd. (00388.HK) is looking at adding more products, including renminbi currency futures, CES China 120 Index Futures and other mini local index futures, in the after-hours futures trading session after a market review which is due later this month, said Calvin Tai, co-head of equities, fixed income and currency in the bourse’s global markets division. The potential move is partly because HKEx wants to compete with the Chicago Mercantile Exchange that supports 23-hour trading of the Chinese currency futures. Three to five percent of futures trading of the Hang Seng Index futures and the H-shares Index Futures of the Hang Seng China Enterprises Index are transacted during the after-hours session, Tai noted.
ECONOMY AND BUSINESS
Local govt debts may hinder stock performance
Mainland authorities will release the latest data on local government debts later this month, a factor that Macquarie Group Ltd. expects will hinder the performance of the stock market in Hong Kong. The brokerage said it is wiser for investors to take a cautious stance and make some defensive moves for the moment, with real estate, automobile, natural gas, renewable energy, rail and infrastructure related plays as top picks. Nomura Holdings Inc. earlier estimated that local debts may have amounted to 19 trillion yuan (US$3.1 trillion) by the end of 2012, compared with 10.7 trillion yuan as of the end of 2010.
Shanghai free-trade zone needs a critical mass to succeed
The proposed Shanghai free-trade zone, which is targeted to be a testing ground for the country on financial innovation and for a floating exchange rate, needs a critical mass to succeed, according to mainland experts. They expect the difference in the exchange rates of the onshore and offshore renminbi to narrow if authorities allow capital account in the zone to be fully liberalized. Meanwhile, the exchange rate in the zone will lie between the two. The country has to forgo its fixed exchange rate regime if it wants to keep its monetary policy independent and let capital flow freely.
National Day Holiday not a good time for mainland property sales
Statistics have shown that sales of mainland property developers are unlikely to rise in the week starting from the National Day, a survey by HKEJ found. The survey showed that sales dropped 20 to 50 percent in either month on month or week on week basis over the past five years. The room for significant growth is also slim as most of the major developers have achieved a large portion of their full-year targets. Country Garden Holdings Co. Ltd. (02007.HK) has accomplished almost all of its targeted sales for the year, while Greentown China Holdings Ltd. (03900.HK), Longfor Properties Co. Ltd. (00960.HK) and Evergrande Real Estate Group Ltd. (03333.HK) have completed 70 to 80 percent. Agile Property Holdings Ltd. (03383.HK), meanwhile, has fulfilled 60 percent of its goal.
Germany’s ‘two votes’ election model may suit Hong Kong, Tsang says
President of the Hong Kong Legislative Council, Tsang Yok-sing, said the city could consider the German election system to help narrow the differences over the functional constituency election. Under the “one voter, two votes” German system, voters have one vote among candidates in their geographical constituencies and another on a list of political parties. Candidates who have no strong district work record can contest in the list-based polls by joining political parties, Tsang said. He said the German system could retain the characteristics of functional polls.
Review of mainland multiple-visit policy in Hong Kong urgently needed
The introduction of a new tourism law in China that put restrictions on zero-fee tours, among others, could provide an opportunity for Hong Kong to review its mainland visitors program. The multiple-visit arrangement must be reviewed to help minimize adverse impact of the influx of mainland visitors on people’s livelihood. Streaming measures should be taken to avoid over-concentration of visitors in districts such as Tsim Sha Tsui, Causeway Bay and Mong Kok. The mainland individual visitor program has contributed to the city’s economy. A total ban is unwise, but the time is not ripe for further expansion either. More improvement is urgently needed.
Beijing could find strong candidate to beat democrats in 2017 CE polls, Wong says
Former civil service minister Joseph Wong said Beijing should be able to identify and groom a candidate who has a heart, high capability and popularity to beat any pan-democratic rival in the universal suffrage for the 2017 chief executive election. He said Beijing is not likely to put all hopes on Chief Executive Leung Chun-ying that he can reverse his unpopularity trend in the next few years. His two top aides, Chief Secretary Carrie Lam and Financial Secretary John Tsang, are capable. But it is unclear whether Beijing prefers a candidate with civil service background following the unsuccessful case of Donald Tsang.
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