16 February 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. 21:

Hong Kong property price decline has only just begun

Analysis: The downtrend in home prices in Hong Kong has just begun, with an estimated 20 percent fall expected to be seen in the mass second-hand market and a 30 percent decline in the luxury segment, according to some property agencies. The downtrend came as property developers started to slash the selling prices of their newly completed home projects, a year after the government imposed the buyer stamp duty, among other curbs such as the double stamp duty that were put in place. The measures, however, have not had much impact on the prices until recently, with overall home prices growing about 8.1 percent from the beginning of this year through August.

Mainland anti-graft campaign brings opportunity to foreign PE firms, says Leung

Interview: The government-led anti-graft campaign in mainland China, coupled with the restructuring of the economy, is likely to change the business behavior of many companies in the country, creating more opportunities for foreign private equity firms, said Antony Leung, senior managing director and chairman of Greater China at The Blackstone Group. The group, which entered the mainland seven years ago, feels now is a good time to increase its investment in the country as market valuations have returned to more reasonable levels lately. It is eyeing more on gains from added values in businesses, rather than pre-initial public offering deals.


Dark pool guru calls on HK watchdog to emulate Australian reform

Interview: Hong Kong securities watchdog should follow the example of Australia in the latter’s reform of the dark pool market, said Seth Merrin, chief executive at Liquidnet Holdings Inc., the world’s largest dark pool operator. The Australian regulator has set a simple rule requiring institutional investors to prove that their transactions in the dark pool have price improvement, said Merrin, adding that the requirement can literally enhance the efficiency of the market as the bid-offer spread will then be narrowed. The Securities and Futures Commission of Hong Kong is going to solicit public opinions regarding the reform by the end of this year.

Mainland stock market seen volatile in fourth quarter

Interview: The top political meeting in Beijing may conclude in a way that falls short of market expectation, leading to a volatile stock market in the mainland in the fourth quarter, said Shi Bin {施斌}, managing director for China equities at UBS Global Asset Management (Hong Kong) Ltd. Shi said it will take time for the government to put in place measures that can enhance the market economy, land transfers and household registration reform. Shi, however, sees long-term investment values in consumption and property counters, given the existing government directives in restructuring the economy.

Alibaba partnership structure gains NYSE, NASDAQ confirmation on compliance

Alibaba Group Holding Ltd. is said to have been accepted on its partnership structure by the New York Stock Exchange and NASDAQ and started talks on a potential initial public offering in the United States. The two bourses have granted the group written confirmation of listing compliance regarding the concerned structure, including the management’s right in board member nominations, mainland media reported, citing a spokesman at Alibaba. Another spokesman told HKEJ that the group practically needs such a structure that can contribute to the long-term development of the company.


80,000 Hong Kong people join rally over TV license row

More than 80,000 Hong Kong people staged a march yesterday against the government’s decision not to grant a free-to-air television license to Hong Kong Television Network while giving the green light to the other two applicants. They demanded a full explanation and an approval of the HKT’s application. About 200 people staged a sit-down outside the Tamar Government Headquarters last night. They plan to petition the Executive Council when it holds its regular Tuesday meeting tomorrow. Police said 36,000 people joined the rally throughout the day. The government rejected calls for more details, citing the rule of confidentiality at Exco discussion.

Functional constituency voters’ base should be broadened, Bernard Chan says

Interview: Bernard Chan, a top adviser to the Chief Executive and former legislator representing the insurance sector, said functional constituency system has its own merits but agreed its electoral base should be broadened. He said the insurance functional constituency, which has only about 120 registered corporate voters in the 2012 election, should be broadened to allow intermediary bodies so that the total number of registered voters can be increased to up to several thousands. Chan said the nomination committee for the chief executive election should also be broadened. One option is to add all 400-odd district council members to the nomination body.


GDP rebound in 3Q creates room for structural reform in Party plenum

The rebound in China’s gross domestic product growth in the third quarter reflects credit and investment expansion following Premier Li Keqiang’s call for stabilizing growth, helping avert the risk of continued downtrend of the economy. There is now more room for economic structural adjustments. Hopes are high that the Communist Party’s central committee will roll out a comprehensive reform blueprint at its third plenum next month. Deepening financial reform will hinge upon the pace of internationalization of the renminbi and the change of China’s economic development model. One of the key areas of reform will be the use of market force in the distribution of financial resources.


CCP to set out reforms in five key areas in November plenum, Ren says

The Chinese Communist Party’s (CCP) central committee is expected to approve a master reform blueprint at its third plenary session next month, which will set out the tasks of China in the next 10 to 20 years, Beijing-based analyst Ren Huiwen wrote. The five key areas include finding ways for smoother relations between the government and the market and to inject vigor in social development. The three other tasks are ways to bring innovation to systems, realize social justice and enhance the executive capability of the ruling party.

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