Following is a summary of major news and comments in the Hong Kong Economic Journal, the parent publication of EJ Insight, on Thursday, Oct. 31:
Mainland lenders’ 3Q profits dragged by lackluster interest income
Mainland banks have seen their net profit growth slow in the third quarter due to lackluster net interest income and higher non-performing loans. Six out of nine Hong Kong-listed Chinese lenders posted single-digit growth in net interest income during the period, while most of the small to medium-sized banks evidenced a fall of 5 to 12 basis points in their net interest margins. Outstanding non-performing loans have deteriorated in the period for most of the banks except Chongqing Rural Commercial Bank Co. Ltd.(03618.HK), which has seen both the outstanding amount and non-performing loan ratio improve in the third quarter. Bank of Communications Co. Ltd. (03328.HK) management expects bad debts in the sector to grow further in the coming year.
MPF authority mulls launch of low-fee core fund for working class
The Hong Kong Mandatory Provident Fund Schemes Authority is looking at launching a low-fee core fund for the mass working class, the authority said. This is despite the fact 30 percent of existing funds have lowered their fees since the employee choice arrangement that allows workers to choose service providers for their contributions was put in place in November 2012. The fee reduction is estimated to have saved HK$250 million (US$32.24 million) in costs a year for scheme contributors, the authority said. Certain labor groups, however, concerned that the expected returns on the proposed core fund may not be attractive enough, are urging the government to set a cap on scheme charges instead.
ECONOMY AND BUSINESS
Energy market reforms likely to be unveiled at top political meeting
Reforms in the energy sector are expected to be unveiled during the Third Plenary Session of the Chinese Communist Party’s 18th central committee, which is due to open next Saturday. Possible measures include stepping up efforts to allow private capital to invest in the upstream oil and gas exploration, while freeing up the import and export rights for crude, refined oil and natural gas, the state-backed China Securities Journal reported, citing sources. The mid- to downstream businesses, such as oil and gas storage and supply, are likely to be disintegrated from China National Petroleum Corp. and China Petrochemical Corp.
Banking plays seen gaining amid potential supportive measures
The central government may unveil measures to support the financial sector in a top political meeting next month, giving a boost to banking counters, analysts said, adding that market leaders with better liquidity and fundamentals are among their top picks. Meanwhile, the People’s Bank of China has relaunched sale of repurchase agreements to inject liquidity to the interbank market, soothing concerns over a cash squeeze in the sector. However, analysts said local government debts and the possible liberalization of interest rates are casting a shadow over mainland lenders. Some players may find it necessary to replenish their capital in the short term, they said.
Hong Kong Law Society head lashes out at Occupy Central campaign
Hong Kong Law Society president Ambrose Lam San-keung yesterday joined pro-government lawmakers and business groups in condemning the Occupy Central movement activists. He said the civil disobedience movement was without legal grounds and that the notion of “peaceful violence” is just “beautiful rhetoric”. Without naming the campaign, Lam accused some people of opposing for the sake of opposition and inciting unlawful acts in the name of justice. Hong Kong is a society with rule of law, he said, adding that people who are not happy with something should pursue changes through reform. His remarks were criticized by pan-democrats as ignorant and shallow.
US to pay a price for alleged spying on allies
Revelations about the activities of US spies in tapping the phone calls of German Prime Minister Angela Merkel have shocked political circles in Europe. Further revelations that said the US National Security Agency had monitored phone calls through more than 80 stations around the world including Hong Kong have not only undermined the trust of allies in the US but the leading role of the country in global affairs. German government spokesman said protection of personal data, privacy and business information should be included in regional trade pact. It shows the scandal will have adverse impact on US President Barack Obama’s political, economic and diplomatic agenda.
Rejection of HKTV’s TV license bid to cause HK$40.2 bln economic loss, Lian says
The decision to reject the bid by Hong Kong Television Network for a free-to-air license will cause an estimated total accumulated economic loss of HK$40.2 billion in five years, former HKEJ chief editor Joseph Lian wrote. He said the total amount is equal to the total construction cost of the West Kowloon Cultural District project. Chief Executive Leung Chun-ying has shown no remorse in making the decision that could cause such a big economic loss, without giving substantive reasons. That is not good governance. The reason behind the decision is suspect. The government should explain in detail to the public as soon as possible.
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