21 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 Wednesday, Oct. 23:


Singapore gains blessing from China on RQDII

The Monetary Authority of Singapore has entered into an agreement with Chinese authorities to further explore offshore renminbi businesses in the city-state, including the launch of renminbi-denominated qualified domestic institutional investor scheme, when conditions are deemed appropriate. The agreement may pave the way for the Lion City to overtake Hong Kong as a pilot city for the scheme that will allows mainland Chinese investors to buy into the capital markets in Singapore through products to be sold in China. The Chinese authorities, meanwhile, agreed to let Singapore have more autonomy in developing new renminbi businesses related to projects in the co-invested Suzhou Industrial Park and Tianjin Eco City.

Chinese outbound investment growth to slow, ING says

Interview: A slower momentum is likely to be witnessed in China’s outbound direct investment amid lower growth of the country’s economy and as the Ministry of Commerce and other authorities have tightened their grip on approval of new projects, said Wu Zhige , ING Bank N.V. head for corporate finance in China. The fact that the renminbi is still not fully convertible is another factor undermining overseas investment growth, Wu said, adding that he expects the value of Chinese outbound investment this year and the next may just match the level of last year, which stood at about US$88 billion.


Hong Kong likely to pass OTC regulation review by European authority, ISDA says

The International Swaps and Derivatives Association (ISDA) believes Hong Kong will be accepted by the European Securities and Markets Authority in an assessment of the city’s new regulation related to registered exchanges for over-the-counter derivatives transactions, given the strength of the city’s securities watchdog in supervising the exchanges, said Keith Noyes, ISDA’s Asia Pacific regional director. The draft bill in Hong Kong was submitted to the legislature in June and has passed a committee review recently, pending deliberation by all lawmakers in the Legislative Council. It could still meet the European authority’s assessment deadline if Hong Kong can pass the bill in the first half next year.

China may unveil package solution for local govt debts next month, Robeco says

Interview: Chinese authorities during a top political meeting next month are likely to come up with a solution package to help local governments in dealing with their debt issues, said Victoria Mio, co-head of Asia Pacific equities and fund manager for Chinese equities at Robeco Asset Management Ltd. The package may includes fiscal supportive measures on areas such as taxation and public expenditures, as well as allowing local governments to issue bonds, she said, adding that she expects the problems can be under control. China is due to reveal the latest figure of local government debt, which is generally estimated at 16 trillion to 18 trillion yuan (US$2.95 trillion), later this month or in early November.


Ricky Wong says Leung’s defence on TV license ‘adds oil to fire’

Hong Kong Chief Executive Leung Chun-ying yesterday gave a strong defence of a government decision to reject the application for a free-to-air license by Hong Kong Television Networks. He said all three applicants were informed the new licenses would be granted under the principle of “gradual and orderly” process, insisting they have adhered to the principle of justice in procedures. Unconvinced, HKTV chairman Ricky Wong rebuked Leung’s defence as “adding oil to the fire”. He said he plans to seek a judicial review of the government decision in the next two to three weeks, saying the government should not move the goalposts at “one man’s will”.

Chief Executive candidates must pledge to protect China’s Constitution, David Wong says

The candidates taking part in the next Chief Executive election in the universal suffrage 2017 should pledge to defend China’s Constitution and the Basic Law of the city, said David Wong, chairman of the Business and Professionals Federation of Hong Kong, and a representative of the National People’s Congress. The central government should still have the right of appointment and removal of the Chief Executive-elect, Wong said, adding that certain pan-democrats could obtain enough nominations to participate in the election if they do not confront against the central government.


Sino-Singapore renminbi deals signal faster currency internationalization

The Sino-Singapore agreement signed on Tuesday reflects faster momentum in the internationalization of the Chinese currency. The agreement has granted the city, among others, 50 billion yuan of quota in the renminbi-denominated qualified foreign institutional investor scheme, the direct currency exchange status, and the chance to pilot the renminbi-denominated qualified domestic institutional investor scheme. The opportunity for Singapore RQDII heralds more fierce competition with Hong Kong as they seek to be the leading centers for offshore renminbi business development in the region.


New economic diplomacy to prevail in ties with China

A new way of diplomacy that will only improve ties of a foreign country with China on the economic front but not on political matters is likely to prevail, HKEJ founder Lam Hang-chi wrote. Lam said the latest example is evidenced in the recent visits to Beijing by the British delegations led by Chancellor George Osborne and London Mayor Boris Johnson, both of which have brought Britain valuable businesses collaborating with private and state-owned firms. The top officials of the Chinese Communist Party and the government, however, have not given any receptions to the delegations due to a diplomatic cool-off triggered by a meeting between British Prime Minister David Cameron and the Dalai Lama in London in May last year.

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