21 August 2019

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 Thursday, Nov. 7:


Wheelock subsidiary wins prime hotel site for HK$4.4 billion

Harbour Centre Development Ltd. (00051.HK), a subsidiary of Wheelock and Co. Ltd. (00020.HK), has won a bid to rebuild the site of former Murray Building government office complex in Central for HK$4.4 billion (US$567.62 million), paying more than 30 percent above the market average estimate, making the site the most expensive hotel land plot in Hong Kong in terms of land premium per square foot of floor area. Harbour Centre Development, which beat 17 other consortia, plans to invest over HK$7 billion, including the land premium, in the project that is expected to complete construction by the end of 2018.

HKEx 3Q earnings rise 20% with little contribution from LME

Hong Kong Exchanges and Clearing Ltd. (00388.HK) has seen its net profit for the third quarter rise 20 percent from a year ago to HK$1.2 billion, the highest since the fourth quarter in 2011, beating market forecasts. The London Metal Exchange merely contributed HK$51 million to the earnings, reflecting high depreciation costs for fixed assets as well as information and technology system. Analysts have a mixed view on the outlook for the bourse operator’s shares, noting little chance of a significant surge in the daily average transaction volume for the rest of the year while income from LME may have room to rise.


China Development Bank sells 4.5 billion yuan dim sum bonds

China Development Bank Corp. has sold 4.5 billion yuan (US$738.54 million) worth of dim sum bonds in Hong Kong on Wednesday. The issue included a batch of 1.9 billion yuan bonds with a tenor of two years at a floating rate of 20 basis points above the 3-month Hong Kong Interbank Offered Rate for offshore renminbi (CNH Hibor). It marked the first time a mainland policy bank used the benchmark interest rate fixed by the lenders in the city in the issuance of dim sum bonds. Market observers saay the policy bank’s move can help develop a yield curve in the dim sum bond market based on CNH Hibor.

Financial reforms hinge on interest rate liberalization, RMB internationalization

Interview: The reforms of the Chinese financial market are likely to hinge on the liberalization of interest rates, the development of the bond market and the internationalization of the renminbi, said Qu Hongbin {屈宏斌}, chief economist for Greater China at HSBC Holdings Plc. (00005.HK). Qu said he expects leaders will put forward a road map regarding the reforms during the upcoming top political meeting in Beijing. The interest rates on savings deposits may be fully liberalized in the coming two to three years, along with further expansion in both the US dollar and renminbi-denominated qualified foreign institutional investor schemes and the qualified domestic institutional investor scheme, he said, adding that it could pave way for the Chinese currency to be fully convertible earlier than previously expected.

Vigorous reforms seen on state-owned enterprises

Interview: The reforms in state-owned enterprises (SOEs) may come in bigger than current market expectations, said Liu Hongge {劉紅哿}, China economist at CCB International Securities Ltd. Possible measures may include introduction of competition mechanism in restricted industries, such as telecommunications, oil and gas, as well as railways, Liu said. Other areas like management incentive system, consolidation and divestment of certain non-core assets and businesses could also be on the agenda, in a bid to improve the effectiveness of SOEs in the longer term, Liu said, adding that the central government may seek to expand its balance sheet while local governments deleverage in the coming years.


Legco vote on disclosure of government reports on TV license in the balance

A pro-government legislator Lam Tai-fai has given his support for a motion backed by the opposition pan-democratic camp to invoke the Powers and Privileges Ordinance to press the government to hand over confidential reports relating to its decision on free-to-air TV license. But the motion still needs the support of three functional constituency legislators who have not yet indicated their decision on the first day of the debate, which ended last night. It will adjourn this morning. Pro-government lawmakers and the commerce ministers were escorted by police when they left the Legislative Council building as they were surrounded by protestors.

Civil nomination for chief executive election gets 62% support in poll

A poll commissioned by the Alliance for True Democracy found 62 percent of respondents support the civil nomination proposal that all voters are allowed to nominate candidates for the chief executive election. Forty-four percent favor a dual system with both civil nomination and a nomination committee. Only 27 percent back the present system, under which a 1,200-member nomination committee is given the task to name candidates. Alliance convenor Joseph Cheng said the public support for civil nomination showed people fear political screening would be introduced in universal suffrage election.


Liquidity transparency boost to pave way for interest rate liberalization

China’s central bank yesterday published for the first time data of the newly-launched Special Lending Facility, which was aimed to boost transparency of its liquidity control to help avoid exchange rate fluctuation and money crunch. The move shows moderate tightening of liquidity will remain the key monetary strategy in the current quarter. Doing so will help maintain a stable environment for full liberalization of interest rates.


Government defense on free TV license flawed, Joseph Lian says

The latest government defense of its decision to deny a free-to-air license to Hong Kong Television Network is wrong in its argument about the financial support of applicants and the size of TV advertising, former HKEJ chief editor Joseph Lian wrote. He said the financial strength of a company which applied for a license should not be linked to its parent company as the government has argued. The size of advertising pie will get bigger if there are more players in the free TV market.

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