26 April 2019

HKEJ Today: Highlights

Following is a summary of major news and comments in the Hong Kong Economic Journal, the parent publication of EJ Insight, on Monday, Oct. 7:


Twelve companies seek to raise HK$72.1 bln in Hong Kong IPOs

At least 12 companies plan to float their shares in Hong Kong by the end of this year, seeking to raise as much as HK$72.1 billion (US$9.3 billion) in total, sources said. These companies include The Hongkong Electric Co. Ltd., a subsidiary to be spinned off from Power Assets Holdings Ltd. (00006.HK), which aims to raise HK$39 billion. Meanwhile, city commercial lenders Bank of Chongqing Co. Ltd. and Huishang Bank Co. Ltd. target HK$7.8 billion and HK$11.64 billion, respectively. Several property developers are also in the queue, including Glory Real Estate, Jingrui Properties Group and Logan Real Estate Co. Ltd., which aim a combined HK$3 billion.

Telecom service providers plan to enter electronic payment market

Competition in Hong Kong’s electronic payment market is likely to intensify as telecommunication carriers are entering the field currently dominated by lenders, sources told HKEJ. Hutchison Whampoa Ltd. (00013.HK) subsidiary 3 Hong Kong is expected to launch such service by the end of this month using near field communication technology and an electronic purse function installed in mobile phones. SmarTone Telecommunications Holdings Ltd. (00315.HK), a subsidiary of Sun Hung Kai Properties Ltd. (00016.HK), is also said to be planning to launch its own platform.


Liquidity seen flowing into Japan equity markets on tax concession, better economy

Japan economy series: Foreign capital is likely to continue flowing into the Japanese equity markets as the economy has been improving since the first quarter of this year on a range of stimulus measures, analysts said. The country’s upcoming tax concession that will be put in place next year could also attract liquidity from local investors, they said. Many pension funds and individuals are considering moving their deposits and bond investments into stocks, an HKEJ investigation found. The Japanese government plans to grant each individual investor 1 million yen (US$10,290) in investment tax allowance a year starting next year, in a bid to channel more funds to the equity markets.

Financial structure of local governments likely to be changed soon

Interview: The restructuring of financial burdens and decision making authorities shared between the central and the municipal governments is likely to be on the agenda of a top political meeting of the Central Committee of China’s Communist Party to be held next month, said Vincent Chan, head of China equity research at Credit Suisse Group A.G. The potential restructuring may herald a breakthrough in the revenue and expenditure structure of local governments, potentially resolving the long-standing local government debt problems. However, Chan says there is still a long way to go in reforming the land transfer and household registration system in the country.

HKICPA, Financial Reporting Council seek authority in overseeing independent auditors

The Hong Kong Institute of Certified Public Accountants and the Financial Reporting Council are, separately, seeking the authority to supervise independent auditors in the city as the government considering reform of the industry. The government-appointed Financial Reporting Council only has the authority to investigate cases involving independent auditors currently, while the industry body is in charge of registration, inspection and standard-setting issues. An independent consultation review endorsed by the council will be unveiled on Thursday, and the institute will solicit the opinions of its members on Tuesday, paving the way for a public consultation next year.

Physical A-share ETFs to play key role in opening of capital account

Interview: Physical A-share exchange-traded funds (ETFs) will play a critical role in the opening of the Chinese capital markets and the liberalization of the renminbi, said ETF expert Deborah Fuhr. The
launch of physical A-share ETFs in Hong Kong and ETFs that track the city’s stocks in the mainland have made possible two-way fund flows from and to the Chinese financial market, increasing the chances for the country to fully liberalize its capital market by 2020. There are eight physical A-share ETFs out of a total of 104 ETFs in Hong Kong, of which 10 can be denominated in renminbi.


Xi sets out bottom line on political reform in Hong Kong

Chinese President Xi Jinping has reiterated that political reform in Hong Kong must conform with the Basic Law and relevant decisions by the National People’s Congress Standing Committee. Xi’s remarks were reportedly made at a meeting with Chief Executive Leung Chun-ying on the sidelines of the APEC leaders’ summit in Bali. Asked if they have discussed the “Occupy Central” civil disobedience movement, Leung quoted Xi as saying both the SAR government and the whole society should act in accordance with the law as the city is a society which follows the rule of law.

Basic Law adviser cautions against civic nomination for CE election

A Hong Kong member of the Beijing-appointed Basic Law Committee, Albert Chen, has cautioned against the insistence of pan-democrats on their demand for civic nomination for candidates to the 2017 chief executive election. Chen said the idea was sharply different from the requirements on nomination for chief executive elections in the Basic Law. He said it would be difficult to reach a consensus with Beijing on electoral arrangement if pan-democrats insisted on the civic nomination proposal.


Xi-Siew meeting in Bali sees increased flexibility in cross-strait ties

The meetings between Chinese President Xi Jinping and former Taiwan vice president Vincent Siew and officials from both sides in charge of cross-strait policy in Bali showed Beijing has adopted a more flexible approach in its Taiwan policy. It is likely that both sides will intensify interactions between the two governments to speed up the development of cross-strait relations. As relations across the Straits have become relatively stable, China appears determined to boost mutual trust with Taiwan and to help the island in the ongoing talks on regional economic integration.


Communist Party urged to set up independent anti-graft watchdog

The Chinese Communist Party’s central committee should make a breakthrough in its anti-graft drive by setting up an independent anti-corruption watchdog, Beijing-based writer Ren Huiwen quoted unnamed experts as saying. Ren said the present anti-corruption and supervision bureaus at the central and regional levels should be separated from the government structure and be put directly under the central authorities to boost their independence in anti-graft probe. Ren quoted sources as saying the current anti-graft drive would target state-owned enterprises, mainland-funded firms outside China and the central offices of the Party and the State Council.

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