Following is a summary of major news and comments in the Hong Kong Economic Journal, the parent publication of EJ Insight, on Thursday, Oct. 24:
Hong Kong metal group taps Hunan to expand online platform
Interview: The Chinese Gold and Silver Exchange Society has been in discussions with the government of Yongxing county in Hunan province over potential collaboration on enhancing the liquidity of the society’s electronic transaction platform for silver, paving the way to building a metal warehouse in the Qianhai experimental zone in Shenzhen and launching renminbi-denominated products, said chairman Haywood Cheung. Banks and metal brokerages are likely to show more interest in using the electronic platform once the liquidity is enhanced, Cheung said, adding that an agreement is expected to be signed with the nation’s largest silver producing county by mid-December.
Yue Xiu close to inking takeover deal for Chong Hing Bank
Guangzhou government backed Yue Xiu Group is said to soon ink an agreement to acquire the family-controlled Hong Kong lender Chong Hing Bank Ltd. (01111.HK). The deal may be unveiled by the end of this week, Bloomberg reported, citing sources. Analysts said the acquisition, if approved, would mean that authorities have given a green light for non-financial companies to take over local banks, possibly increasing the number of potential non-financial buyers which are eyeing lending and securities brokerages businesses in Hong Kong. Separately, Agricultural Bank of China Ltd. (01288.HK) is said to be considering the acquisition of Wing Hang Bank Ltd. (00302.HK), according to Reuters.
ECONOMY AND BUSINESS
Shanghai pilot free-trade zone increases marginalization risk for Hong Kong
Interview: The pilot free-trade zone in Shanghai is turning fast into an area that serves the functions highly similar to those of Hong Kong for large multinational corporations and banks, increasing the threat of marginalizing the latter, said Haywood Cheung, chairman at the Chinese Gold and Silver Exchange Society. Shanghai’s competitive advantage will be boosted to a large extent when the renminbi is allowed to be fully convertible with a free interest rate regime, Cheung said, adding that the Qianhai experimental zone in Shenzhen, in contrast, serving small to medium-sized enterprises still has a long way to catch up with Hong Kong in regard to its financial, shipping and high-ended services.
Out on the Street seeks Chinese banks to join LGBT equality movement
Interview: Wall Street’s equality movement for LGBT (lesbian, gay, bisexual, and transgender) Out on the Street is seeking Chinese banks to join the group in promoting a diverse and inclusive working environment for non-heterosexual colleagues, said founder Todd Sears. Statistics have showed that such a fair environment can essentially reduce turnover rate of LGBT personnel and enhance their focus on work, helping financial institutions save as much as 40 percent of related costs, Sears said. He added that the economy can also get boosted by LGBT’s high consumption power, with such people said to spend a total of US$860 billion a year in the United States.
Even a totalitarian government would explain decisions to people, York Chow says
Interview: Former health minister York Chow has expressed deep grief over the failure of the Hong Kong government to give justification of its decision not to give a free-to-air license to Hong Kong Television Networks. He said even a totalitarian feudalistic government would be obligated to explain its decision to the people. Chow said it was not common for the Executive Council to reject proposals made by the relevant policy bureaus. The public uproar over the government’s decision, he said, has already precipitated a governance crisis.
Hong Kong launches population policy consultation
An extension of retirement age aimed to boost manpower supply is one of the three key proposals contained in a consultative paper on Hong Kong’s population policy to be released by the government on Thursday for a four-month-long public consultation. The other two are importation of foreign and mainland workers to help ease labor shortage in some sectors and incentives to encourage people giving birth. It is learned that the ideas will only be raised in open-end format without details to help encourage public discussion. The government will also refrain from giving its policy preferences at this stage.
Time for China to reform managing principle of foreign exchange reserves
The time has come for the Chinese government to reform the managing principle of its foreign exchange reserves. Despite a reduction of US$11.2 billion in treasuries holding in August, it is still unclear whether such a fall will become a trend. However, given an increasing risks in holding US dollar-denominated assets and a rising size of China’s foreign exchange reserves, it is now time to change to a risk-weighted strategy and downplay the potential political impacts of reducing the reserves’ investment in US treasuries. The new regime should also use its returns to improve social welfare while diversifying its investment portfolio.
Occupy Central links with external political forces overstated
DAB chairman, Tam Yiu-chung, has called on pro-establishment lawmakers to sign a statement in relation to the Occupy Central movement, whose leaders had recently met certain members of Taiwan’s Democratic Progressive Party. The statement that noted the meeting as having introduced pro-independence external political forces has actually overstated the influence of those DPP members, columnist Yu Kam-yin wrote. Certain pro-establishment lawmakers, meanwhile, are concerned that the meeting will get on Beijing’s nerve, potentially posing more hurdles to Hong Kong constitutional reform.
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