Date
22 April 2018

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. 28:

TOP STORIES

HKMA said to have required certain lenders to get more stable fund sources

The Hong Kong Monetary Authority has sent written notices to certain lenders to require them to secure stable funding sources starting next year to match with their higher loan growth, sources said. Those lenders will be further required to set aside certain amount of long-term funds of at least six months in deposit tenor if their annual credit expansion comes at a rate higher than the 20-percent threshold set by the banking watchdog while not meeting other liquidity requirements. The authority earlier has estimated that more than 20 lenders have to bring in more stable sources to meet the new funding requirement.

Chong Hing Bank deal may reflect a P/B valuation below 2.08 times

Chong Hing Bank Ltd. (01111.HK) may hold net assets worth way more than HK$7.45 billion (US$960.83 million) as shown on its book as of the end of June, reflecting a price-to-book valuation of less than 2.08 times in the acquisition deal offered by Guangzhou government-backed Yue Xiu Group. Under the deal, Liu Chong Hing Investment Ltd. (00194.HK), the lender’s major shareholder, will take back the headquarter property for HK$2.23 billion. The price represents a market value of more than seven times higher than the unaudited book value of HK$264 million. Meanwhile, Yue Xiu will pay HK$35.69 a share in its partial offer to acquire at least 50.01 percent shares, or 75 percent at most, of the lender to keep its listing status in Hong Kong.

ECONOMY AND BUSINESS

Ford remains upbeat about growth in mainland China vehicle market

Interview: Ford Motor Co. sees growth momentum in the mainland market remaining robust in the coming few years, said chief executive Alan Mulally. About 40 percent of the total sales will be generated in Asia, with the rest evenly shared by the United States and Europe, including Russia, Mulally said. The US car maker has posted 51 percent growth in sales in mainland China for the first three quarters this year as compared to the same period last year, sending the total sales volume to 650,000 vehicles. Sales in September came in at 96,000 units, up 61 percent from a year ago.

Think-tank suggests turning RMB into international settlement currency in 10 years

Development Research Center of the State Council has proposed to turn the renminbi into an international settlement and investment currency in 10 years. The think-tank made the remarks as it unveiled for the first time a reform blueprint that is due to be discussed in a top political meeting next month. A roadmap has been laid out on eight areas, namely administration, anti-trust, land ownership and transfer, financial system, fiscal regime, state-owned asset management, innovation and market opening. More competition will be brought into the energy, technology, media and telecommunications sectors.

AXA taps Asia markets for expansion

Interview: AXA S.A. is seeking to expand its presence in Asia through organic growth, acquisitions and partnerships, said chairman and chief executive Henri de Castries, eyeing markets such as Singapore, Malaysia, Thailand and the Philippines. The region has turned into the world’s growth engine and has been contributing half of the insurer’s new business value. Its mainland unit, ICBC-AXA, the country’s largest foreign insurance joint venture, has booked about 6.5 billion yuan (US$1.07 billion) of premiums income for the first half this year, up 9.24 times from a year ago.

POLITICS

HK government urged to talk to Beijing on approval of mainland migrants

A former Hong Kong Basic Law drafter Martin Lee Chu-ming has urged the government to discuss with the central government for a say in granting approval for mainland migrants to the city. He said the Basic Law has not imposed restrictions for Hong Kong to take part in the process. The government has been urged to “regain” the power over approval for mainland migrants to help control population growth. Security minister Lai Ting-kwok reiterated yesterday that the issue does not exist as the power of approval is vested with the central government.

EDITORIAL

Room for credit tightening will be limited

China’s central bank has refrained from making any moves in three open market operation sessions from October 17. The tightening of cash flow has raised concern about a possible reemergence of a credit squeeze. In view of a number of domestic and external factors, the tightening appears to be a short-term phenomenon. But with a rebound of inflation, rise in property prices and increase in foreign reserves, the central bank’s move has signaled a moderate tightening. The room for real tightening will be limited as investment remains an important driving force of the economy.

COMMENTS

NPC body should be given greater power for checks and balances on officials

China’s Supreme People’s Procuratorate has submitted an anti-corruption report to the National People’s Congress Standing Committee on October 22, which detailed their anti-graft work between January and August. The move signals an attempt to affirm the supreme constitutional status of the NPC body in checking the exercise of powers by officials, Beijing-based China expert Ren Huiwen wrote. Hopes are high that the Communist Party’s central committee will give greater powers to the NPC body over impeachment and dismissal of officials. Doing so will help show that people are the masters of the nation.

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