Following is a summary of major news and comments in the Hong Kong Economic Journal, the parent publication of EJ Insight, on Friday, Oct. 18:
PBoC may end daily RMB exchange cap for HK residents
The People’s Bank of China says it may be feasible to scrap the daily limit on the amount of renminbi the city’s residents can exchange, according to Norman Chan, chief executive of the Hong Kong Monetary Authority. The Hong Kong regulator proposed the idea to the mainland authorities as a delegation of Hong Kong bankers paid an official visit to the central bank and other financial regulators in Beijing. The HKMA will follow up on the issue and seek to end the cap as soon as possible, Chan said. The move is expected to boost the development of renminbi-related products and wealth management businesses, said Benjamin Hung, chairman of the Hong Kong Association of Banks.
Canadian think tank airs concern for rule of law in Hong Kong
The regression in the city’s rule of law has affected the degree of economic freedom in Hong Kong, significantly undermining its leading edge in comparison to Singapore, said Fred McMahon, head of research in economic freedom at the Fraser Institute. The Canadian think tank has raised concerns about the independence of Hong Kong’s legal system, which it said is a cornerstone of the economic freedom that has a huge influence on investors’ willingness to put their capital into the city. Meanwhile, the US dollar-peg system has also worsened inflation in the city, McMahon said, adding that it is time to review the regime.
ECONOMY AND BUSINESS
Depreciation in HK$ prompts investment in British properties
Interview: More Hong Kong residents are investing in properties in Britain and elsewhere overseas as the city’s dollar falls in value, said David Hui, overseas sales director at Centaline Property Agency Ltd. Some of the investors see the move as a stepping stone for emigration, Hui noted, adding that Japan, Canada and countries such as South Korea, Spain, Portugal and Cyprus that give right of abode to property investors are also common investment destinations. The agency has sold about 250 home units each month on average over the past year.
Wong may seek review of free-TV license rejection in weeks
Hong Kong Television Network Ltd. (01137.HK) chairman Ricky Wong may seek a judicial review in the coming weeks to overturn the government’s rejection of HKTV’s application for a free-to-air license. The company will disclose details of its application process down the track, Wong said, adding that HKTV has prepared an alternative plan to reconsider a rather risky investment option to air their programs. The telecommunications and media guru also denied that he contacted the Central Government’s Liaison Office in Hong Kong regarding the license application.
HSBC closes retail brokerage, depository business in India
HSBC Holdings Plc (00005.HK) is closing down its retail brokerage and depository business in India. It has stopped opening new accounts and has sent existing clients notice about the operations’ termination date, the lender said in a statement, noting that it will continue with other retail banking, wholesale banking, investment banking, insurance as well as wealth and asset management businesses in the country. The bank has been scaling back parts of its less profitable operations worldwide since 2011, including divestment from its credit card business in the United States and its stake in Ping An Insurance Group Co. of China Ltd. (02318.HK).
Leung launches surprise consultation on HK political reform
Hong Kong Chief Executive Leung Chun-ying made a surprise announcement yesterday to set up a three-member team led by Chief Secretary Carrie Lam to spearhead a public consultation on political reform. He told lawmakers during question time that the team will begin operating immediately and is expected to publish a consultation paper by the end of the year. The other two members are justice secretary Rimsky Yuen and constitutional affairs chief Raymond Tam. Officials said the consultation paper would not contain detailed options for the chief executive and Legislative Council elections by 2017 and 2016 respectively. Pro-government political parties welcomed the announcement. But pan-democrats criticized it, saying it was a cosmetic move and too late.
CE warns of fresh property speculation if curbs watered down
Speculative activities in Hong Kong’s property market will become rampant again if the government relaxes the curbs on purchases, Chief Executive Leung Chun-ying told lawmakers yesterday. He cited as a case in point the enthusiastic response to flat sales at some residential projects last weekend after developers offered rebates to buyers for the anti-speculative special stamp duty. He called on lawmakers to give an early nod to the curbs, which took effect but need the legislature’s approval.
US debt default crisis averted — for now
A financial and debt default crisis in the United States was averted after the Democrats and Republicans sealed an eleventh-hour deal on the debt ceiling and 2014 spending. But the political bullfight will take its toll on the US’ gross domestic product growth in the fourth quarter of this year, upsetting the pace of tapering in quantitative easing. The perennial dispute over deficit cuts will prolong fears about debt defaults, which will erode international confidence in the role and status of the US dollar in international finance.
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