Following is a summary of major news and comments in the Hong Kong Economic Journal, the parent publication of EJ Insight, on Monday, Nov. 11:
Hong Kong government plans to sell Islamic bonds
Hong Kong plans to sell Islamic bonds, also known as Sukuk, through the government bond program. Officials are undertaking a study on potential amendments of the Loans Ordinance to make the plan possible, in a bid to promote the development of the city’s bond market, a spokesman told HKEJ. The remarks came after Permanent Secretary for Financial Services and the Treasury Bureau, Au King-chi, revealed the plan at a forum last week. Market observers said the city has to find its niche in the Sukuk market to attract demand from the Middle East and the ethnic Muslim population in the mainland to make the program a success. The government will present the proposal to lawmakers next month.
Warburg Pincus said to call loans from Mingfa Group, raising default concerns
Warburg Pincus LLC, one of the world’s top private equity firms, is said to have sought the redemption of convertible bonds worth HK$1.55 billion (US$199.96 million) it purchased from Mingfa Group (International) Co. Ltd. (00846.HK), stirring concerns of a potential default, sources told HKEJ. The company is seeking loans from other private equity funds in an attempt to obtain more capital at lower funding costs, Mingfa company secretary Poon Wing-chuen said, adding that it is confident that it will be able to fulfill the obligation on the concerned bonds, given the company’s existing liquidity in the mainland. The property developer had 600 million yuan (US$98.51 million) of cash in hand as of the end of June.
ECONOMY AND BUSINESS
BlackRock to tap China market opportunities through QFII, RQFII
Interview: BlackRock Inc. is eyeing the US dollar and renminbi denominated qualified foreign institutional investor schemes as a means to tap into the growth potential and business opportunities as the mainland opens up its capital markets while becoming a superpower in the world’s economy and politics, said Asia-Pacific chairman Mark McCombe. The world’s largest asset management company also sees investment values in other Asian countries amid a growing middle class and longer life span expectancy. The firm will put more focus on private banking and retail fund sales for a longer-term of view of up to 20 to 50 years, McCombe said.
Bank of Singapore sees more competition for professional talent in private banking
Interview: Talent hunt in the private banking sector in Asia is expect to turn fierce as asset management businesses continue to grow in the region, said Sermon Kwan, chief executive of Bank of Singapore’s Hong Kong branch and global marketing head for Greater China region. The average profit margin of private banks in Asia has risen 4 to 16 basis points last year, with a 9.1 percent growth in newly invested funds, Kwan said, citing a survey by Boston Consulting Group. Certain financial institutions may expand their human capital via mergers and acquisitions with other private banking units in the market, Kwan added.
Intime Retail, Maoye join e-commerce operators for better sales
Intime Retail Group Co. Ltd. (01833.HK) and Maoye International Holdings Ltd. (00848.HK) have allied with electronic merchants Tmall.com and Tecent Holdings Ltd. (00700.HK) respectively to establish online-to-offline business cooperation. Analysts note that online sales have hit traditional department stores, forcing the latter to cut prices in a bid to lure customers. The so-called O2O business model may be a start for those department stores in dealing with the situation, but the effectiveness of such a strategy will take time to be proven. Maoye has already revealed that it may expand the O2O sales network to 40 of its stores if the pilot run proves successful.
Leung urged to learn a lesson from free TV license fiasco
A top adviser to the Hong Kong government has urged Chief Executive Leung Chun-ying to draw a lesson from the row over the granting of new free-to-air TV licenses, saying there was a wide gulf between the government decision and public opinion. Executive Council convenor Lam Woon-kwong said the government has suffered a heavy defeat in the controversy. He said the government should not see the row as history but instead learn from it, adding that it will be difficult for the administration to govern if it fails to do so.
China economy sees steady growth, but risks remain
A set of macro economic data released on Saturday showed China’s economy has maintained a steady pace of growth in the first month of the fourth quarter of this year. But domestic and external demand has not been stable. Improvement of the industrial overcapacity problem has been slow. The economy is still facing risks due to local government debts and property bubble. The grand economic blueprint, which will be released at the end of the ongoing Communist Party central committee plenum, will certainly be the critical factor shaping the economy in the near and long-term.
Communist Party will pursue political reform with Chinese characteristics
The Chinese Communist Party will stick to its path of Chinese characteristics when it pursues political reform, Beijing-based China commentator Ren Huiwen wrote. Ren said the party’s central committee will reaffirm the principle at the ongoing plenum that any political reform must only be implemented on the basis of the Party’s leadership in the long-term, but not to create a new system. Ren said one major initiative was to change the function of government by reducing its powers of administrative approvals. A change of the role of government will pave the way for broader administrative reform and political reform in the long run.
– Contact us at [email protected]