Date
20 October 2017

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, Nov. 6:

TOP STORIES

Boyaa Interactive locks up HK$86.8 billion in IPO, a record this year

Boyaa Interactive International Ltd. (00434.HK) has locked up HK$86.8 billion (US$11.2 billion) of funds in its share sale in Hong Kong, surpassing all other initial public offerings in the city so far this year. The public subscription amount came in 832 times more than the shares available for sale. The online game company is set to list on the stock exchange next Tuesday. Meanwhile, Huishang Bank Corp. Ltd. (03698.HK), a city commercial bank, and China Success Finance Group Holdings Ltd. (03623.HK) have respectively locked up HK$10.9 billion and HK$600 million of funds in their share sales which also closed their subscription period on Tuesday.

Luk Fook buying 50 percent stake in 3D-GOLD operator for HK$301 million

Luk Fook Holdings International Ltd. (00590.HK) and Hong Kong Resources Holdings Co. Ltd. (02882.HK) have entered into a memorandum of understanding under which the former will buy from the latter a 50 percent stake in China Gold Silver Group Co. Ltd. that runs 3D-GOLD stores, in a HK$301 million deal. Meanwhile, Hong Kong Resources will issue HK$57.08 million worth of convertible bonds at an annual coupon of 3 percent to Luk Fook, representing 10 percent of issued share capital. Analysts see the deal as a means for Luk Fook to expand its business in mainland China. Both sides have agreed to jointly invest at least HK$150 million in 3D-GOLD in a specified time frame.

ECONOMY AND BUSINESS

Ministry of Finance to issue 10 billion yuan national bonds in Hong Kong

China’s Ministry of Finance is planning to issue 10 billion yuan (US$1.64 billion) of bonds in Hong Kong later this month, with 3 billion yuan worth of sales oriented toward retail investors through Hong Kong Exchanges and Clearing Ltd. (00388.HK). It will mark the first time the ministry will use the bourse operator’s platform for bond issue. HKEx chief executive Charles Li said more national bonds listing on the exchange can help boost the city as an offshore renminbi center. Market observers, meanwhile, expect foreign central banks to increasingly tap into Chinese government bonds as institutional investors, as part of their strategy to manage foreign exchange reserves after signing currency swap deals with China.

Party meeting to re-delineate functions, powers between central, local governments

Redefining certain functions and powers between the central and local governments is expected to be at the core of China’s next stage of fiscal reforms, analysts said. These functions and powers may include the provision of free education, social security welfare, medical expenses and cross-municipality infrastructure, among others. The central government may delegate power to local governments at provincial levels to issue bonds, in a bid to provide them with financing channels to resolve the local government debt issues. Analysts said such a solution may help enhance confidence of market players in the Chinese financial system and banking sector.

Watch for policy signals on long-term growth at China plenum, economist says

Attention should be paid more to what policy signals the upcoming top political meeting in Beijing will unleash regarding long-term economic growth and sustainability, although detailed measures may not be unveiled shortly, said Cui Li {崔歷}, senior China economist at Goldman Sachs Group Inc. The central government is likely to take a cautious stance on reforming state-owned enterprises, given the complexity of the issue, Cui said, adding that lowering the entry barriers in certain industries for private players is crucial in the process.

POLITICS

HK government fails to justify TV license decision in new statement

The Hong Kong government yesterday issued a six-page statement to explain its decision not to grant a free-to-air license to Hong Kong Television Network. It came on the eve of a move by pan-democratic legislators to invoke special powers to demand government confidential documents relating to the decision. The government elaborated the criteria adopted, but did not specify how HKTV was rated. It only said the two other rivals, who were given new licenses, were better overall than HKTV. HKTV criticized the government’s selective release of information as misleading and an act of injustice.

Leung warns of sanctions against the Philippines over bus hostage killings

Hong Kong Chief Executive Leung Chun-ying has given the Philippines government one more month to respond to the compensation demands by the families of victims of the Manila bus hostage killings in 2010. He said yesterday that the government will impose sanctions if there is no progress on the compensation talks. Leung’s move is seen as an attempt to put more pressure on the Philippines government to come to a compromise for an early deal.

EDITORIAL

New H7N9 case in Guangdong poses health risk

A three-year-old boy in Dongguan city in Guangdong was confirmed Tuesday to have been infected by the deadly H7N9 virus. In view of the proximity of the city to Hong Kong, the people and government in Hong Kong must stay vigilant and immediately upgrade the precautionary measures against the outbreak of a public health crisis.

COMMENTS

Hong Kong government urged to reconsider free TV license decision

The government should abandon the “face” factor and reconsider the decision not to grant a free-to-air license to Hong Kong Television Network, former civil service minister Joseph Wong wrote. Officials should make a commitment to explain in detail the review process. This is the best way to resolve the dispute fundamentally. The government decision has contravened the principle of justice, damaging the longstanding fighting spirit of the Hong Kong society and shattered the dream of a group of creative-minded young people.

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