25 January 2020

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 Friday, Nov. 1:


Mainland firms raise record US$30.4 bln so far this year in Hong Kong

Mainland companies have raised a combined US$30.4 billion in the first ten of months of this year in Hong Kong through initial public offerings, placement of new shares and issuance of convertible bonds, marking a record since 2010, financial data provider Dealogic (Holdings) Plc said. The fundraising, which compares with US$25.6 billion a year ago, came as mainland authorities suspended approvals of new share sales in the domestic market. The number of such fundraising deals in Hong Kong, meanwhile, rose to 121 during the period from 103 a year earlier, with IPOs alone climbing to 31 from 28, snapping up US$7.3 billion or 2.65 times the figure a year ago.

Development limitation impairs city commercial banks’ attractiveness, analysts say

Geographical limitation on the development of city commercial banks in the mainland and their risk-management ability may cause concern to investors at a later stage, undermining the attractiveness of such banks in their share sales in Hong Kong, analysts said. Mainland authorities require those lenders to seek approvals when they expand to places out of their registered regions, putting hurdles on their development. Meanwhile, the banks may have channeled loans to restricted sectors, such as real estate and local government vehicles, through off-balance sheet businesses, raising their credit risks that may not be fully factored in their non-performing loan ratios, the analysts said.


Yuan deposits in HK seen growing at a faster pace in Oct on currency appreciation

The growth in renminbi deposits in Hong Kong is expected to gain momentum in October as the Chinese currency has appreciated at a faster pace, analysts said. The aggregate amount of reminbi deposits in Hong Kong that includes deposit certificates has climbed to 907.62 billion yuan (US$148.92 billion) as of the end of September, up 3.97 percent from a month ago, according to the latest data released by the Hong Kong Monetary Authority on Thursday. The total amount of renminbi-denominated cross-border trade settlement rose 9 percent to about 331.7 billion yuan during the period, with outstanding renminbi loans standing at 115.4 billion yuan as of end-August.

Renminbi cross-border commodity trade settlement set to reduce risks

The purported launch of renminibi cross-border trade settlement for commodities in Tianjin can largely reduce the foreign exchange risks facing offshore investors, Hong Kong futures veterans said. The Bohai Commodity Exchange is said to have gained approval from authorities to conduct renminbi settlement business for cross-border trades of commodities in the cash market, Xinhua News Agency reported, citing sources. The exchange currently trades up to 52 varieties of commodities around the clock, recording an average daily transaction volume worth over 20 billion yuan.

Most Hong Kong people support waste levy, survey finds

About 55 percent of 824 interviewees in a survey have agreed to a waste surcharge based on quantity to be launched in the city, the Hong Kong Institute of Asia-Pacific Studies at the Chinese University of Hong Kong said. However, only 42 percent of the respondents are confident about the effectiveness of such a measure in reducing the amount of waste. A majority has supported putting the levy on households at a monthly rate below HK$30 (US$3.87) for a family of three. The institute said the government should provide other incentives and improve recycling facilities in the city, rather than simply relying on the proposed levy, in its bid to reduce waste.


Chinese official’s comments on supreme status of chief executive draw rebuke

A senior Hong Kong-based mainland official said the city’s chief executive has a status higher than the legislature and the judiciary under the political system, insisting the local constitutional structure was not a case of separation of three powers. Hao Tiechuan {郝鐵川}, head of the propaganda department of the central government’s Liaison Office, wrote in an article that the chief executive is directly accountable to the central government under the Basic Law. It would therefore be against the Basic Law if the chief executive is subjected to checks and balances by the two branches. His remarks drew criticism from the pan-democrats that the chief executive could do anything he or she wants if that was the case.

Manila, bus hostage victims closer to compensation deal

Differences between Manila and the families of victims of the 2010 bus hostage killings over compensation issues have narrowed, a joint statement issued by the Hong Kong government said. It came after a representative from the Manila city government and the victim’s representative held their second meeting. Legislator James To, who represented the families, said both sides have made fresh proposals in regard to the four demands of the families at the meeting. The statement said both sides agreed to continue discussion.


Uncertainty over QE exit poses more global financial risks

The US Federal Reserve kept its quantitative easing policy unchanged at its meeting on Wednesday, meeting market expectations. But its post-meeting statement did not mention the economic impact of the government shutdown. It predicted a moderate expansion of the economy, leaving the possibility of an exit of QE at its December meeting open. The Fed remains undecided about exit, however, as the economic recovery remains unstable and unemployment still stands at a high level. The uncertainty surrounding the tapering of QE is posing more risks to global financial markets.


Political reform not on the agenda of key Party meeting, Ding says

The Chinese Communist Party’s central committee will endorse a set of economic and administrative reforms at its third plenum that will be held next week. But political reform will be off the agenda, veteran China watcher Ding Wang {丁望} wrote. The country’s political scene has moved towards the conservative side as leftist thinking has grown. The growth of political conservatism stemmed from the collapse of the former Soviet Union in 1991, prompting the Communist Party to keep tight control in ideological matters. The ruling authorities must resolve people’s grievances by addressing the deficiencies in the political system and the major social contradictions.

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