25 September 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 Friday, Nov. 8:


Hong Kong Monetary Authority buys 50 percent stake in London property project

Hong Kong Monetary Authority has invested in property development in London by establishing a 50:50 joint-venture with British developer Great Portland Estate Plc. (GPOR.UK) for the Hanover Square commercial project in West End that requires an estimated total investment of about 400 million to 450 million pounds (US$724.3 million). A spokesman with the banking watchdog said the project is a prudent investment that is expected to provide decent returns to the Exchange Fund. Great Portland Estate will inject the commercial project, which is valued at 202 million pounds and scheduled to complete construction by the end of 2018, to the joint venture company GHS Limited Partnership.

China COSCO senior executive said to be under probe in relation to corruption case

China COSCO Holdings Co. Ltd. (01919.HK) executive director Xu Minjie {徐敏杰} is under investigation by relevant regulatory body in the mainland, the company said in a stock exchange filing Thursday after being informed by its controlling shareholder China Ocean Shipping (Group) Co. Sources said the investigation may be related to a corruption case concerning a large sum of money. Xu is the number five man in the parent group, according to its website. Analysts anticipate more existing and former senior executives may be involved in the case. The listed company said in its statement that the investigation will not have material adverse effect on the group and that its business and operations remain normal.


Galaxy mulls HK$10 bln non-gaming entertainment venture in Hengqin

Galaxy Entertainment Group Ltd. (00027.HK) is planning to invest at least HK$10 billion (US$1.29 billion) in a non-gaming entertainment and recreational project in Hengqin that will take more than four years for the development of all three phases of the complex, said vice chairman Lui Yiu-tung. The company expects the first phase will commence operation in 2016, with details still in discussion with the Zhuhai government. Lui also said the company is eyeing opportunities overseas and will lodge bids in the event that Taiwan or Japan invite operators to apply for gaming licenses.

Cathay Pacific expects cargo business to remain dull next year

Cathay Pacific Airways Ltd. (00293.HK) is seeing gloomy prospects in its cargo operation this year and in 2014 amid lackluster demand in the market, said cargo director James Woodrow. The airline will continue to control its fuel costs and seek business for the new cargo terminal at the Hong Kong International Airport, in a bid to offset the impact of the current trough in cargo freight operation, Woodrow said. However, the performance in the fourth quarter is likely to be buoyant amid higher demand for festive season. The company plans to cut its fleet capacity by cutting six cargo planes, sending the total to 24 by the end of this year, Woodrow said.

More private companies seen entering restricted markets in China

More private companies are likely to be allowed to enter restricted markets in the mainland, in a bid to improve economic efficiency and soothe social grievances arising from corruption cases involving state-owned enterprises (SOEs), said Liu Hongge {劉紅哿} China economist at CCB International Securities Ltd. Delegating the appointments of directors and other senior executives, except chairmen and party secretaries, of SOEs to the company management to help them recruit talent openly in the market may also be on the agenda of the upcoming Third Plenary Session of the 18th Central Committee of the Communist Party, Liu added.


Chinese officials said to lobby against motion on free TV license

Two Hong Kong legislators have revealed that officials from the central government’s Liaison Office have lobbied them to vote against a Legislative Council motion demanding the release of government confidential reports on free-to-air television licenses in the city. Medical functional constituency legislator Leung Ka-lau quoted officials as saying the government would “lose face” and its authority would be undermined if it changes its decision and grants new licenses to all three companies that had applied. The motion was vetoed after most pro-government lawmakers either opposed or abstained.

Motion on suspension of visa-free access for Philippines visitors to Hong Kong passed

Hong Kong’s Legislative Council has passed a non-binding motion for the government to suspend the visa-free access arrangement for Filipinos to put pressure on the Philippines government over the compensation for victims of the Manila bus hostage killings in 2010. Secretary for Security Lai Tung-kwok said the suspension would have minor impact on Hong Kong. But he cautioned against the proposal on putting restrictions over the issue of work permits for Filipino domestic helpers.


US Fed in dilemma over QE exit amid slow economic recovery

US gross domestic growth rose by a 2.8 percent annual rate in the third quarter, the quickest pace since the third quarter of 2012, as business restocking rose. However, there were some warning signs as growth in consumer spending faltered. A slowdown in business investment and growth of property prices would also slow the pace of economic recovery. Given the uncertainties, a plan by the US Federal Reserve to start tapering its quantitative easing from the end of 2013 may get stalled.


Shanghai FTZ poses challenge, also opportunity, to Hong Kong

The Shanghai free trade zone will pose a challenge to Hong Kong over its function and role as an offshore renminbi market, retired banker Roger Luk and Victor Zheng Wan-tai, co-director of Chinese University’s Centre for Social and Political Development Studies, wrote. However, Hong Kong will be able to consolidate its status as an international renminbi center if it can play a role in China’s renminbi conversion mechanism and internationalization.

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