Following is a summary of major news and comments in the Hong Kong Economic Journal, the parent publication of EJ Insight, on Wednesday, Nov. 13:
Poly Culture said to sell shares in Hong Kong by year-end
Poly Culture Group Corp. Ltd. is planning an initial share offering in Hong Kong by the end of this year, sources told HKEJ. The state-backed auction house is said to have filed an application to Hong Kong Exchanges and Clearing Ltd. (00388.HK) in September, seeking to raise US$100 million to US$200 million in a deal arranged by CITIC Securities Co. Ltd. However, it is now looking at boosting the fundraising size to a maximum of US$500 million amid buoyant sentiment in the IPO market recently, the sources said. Poly Culture is a subsidiary of the state-owned China Poly Group Corp.
Revenue to Hong Kong govt coffers seen dropping after court case loss
The Final Court of Appeal in Hong Kong has ruled in favor of Nan Fung Group subsidiary Nice Cheer Investment Ltd. in a lawsuit related to certain alleged taxable profits worth HK$250 million (US$32.25 million) that were categorized by the company as unrealized profits, setting a precedent that may have negative implications to tax revenues. The judgment states that the authority should evaluate corporate tax based on realized profits, rather than unrealized profits listed in companies financial statements. A government spokesman said the Inland Revenue Department will look into the judgment and make adjustment accordingly. Observers, however, believe the department will not set any retroactive date for the matter.
ECONOMY AND BUSINESS
ICBC named global systemically important bank
Industrial and Commercial Bank of China Ltd. (01398.HK) has been named one of the global systemically important banks by the Financial Stability Board, heralding a more stringent capital requirement regime for the bank. The lender was the second Chinese bank named to the list that now contains a total of 29 big lenders, including Bank of China Ltd. (03988.HK), which has been on the list since two years ago. Both the Chinese banks need to set aside an extra one percent capital on top of a benchmark requirement of 11.5 percent in capital adequacy ratio and 8 percent in core tier-one adequacy ratio.
Thailand’s Charoen Pokphand Group pledges some Ping An shares
Charoen Pokphand Group Co. Ltd. has pledged 880 million H shares of Ping An (Group) Co. of China Ltd. (02318.HK) to UBS A.G., representing 11.23 percent of the issued share capital, the insurer said in a stock exchange filing. The Thai conglomerate’s move came less than a year after it closed the deal to purchase the stake from HSBC Holdings Plc. (00005.HK) at the beginning of this year. The Thai group’s subsidiary Gongbujiangda Jiangnan Industrial Development Co. Ltd. has also pledged some A shares of Ping An it holds, the filing said. The CP group, which remains the insurer’s single largest shareholder with a 13.5 percent of stake, however said it has no intention to offload its share interests in Ping An.
HKGolden50 suggests city should attract 200,000 migrants in 20 years
Franklin Lam, a former member of the Executive Council, has urged the government to progressively bring in 200,000 talented and highly qualified migrants to the city in the coming 20 years, in a bid to solve the shortage of labor and aging problems. The idea was backed by a study by Hong Kong Golden 50, a think-tank headed by Lam. The study report suggests the government should introduce 3,000 people in the first year, and an extra 1,000 for each of the subsequent years. Observers, however, have raised concerns that the proposal may jeopardize the employment opportunities for local students.
TV license row sends Leung’s popularity to new low
The row over the issuing of new free-to-air television licenses has taken its toll on the popularity of Hong Kong Chief Executive Leung Chun-ying. Results of a poll published yesterday showed his popularity sank to a record low since taking office in July last year. He scored 4.12 points out of a total of 100 in performance rating. Sixty-three percent opposed his appointment. Only 22 percent supported him. Popularity of commerce minister Greg So, whose portfolio includes broadcasting, also saw his popularity plummet.
Hong Kong government faces challenge from loyalists over country park plan
Hong Kong government is faced with a fresh challenge for preservation of the city’s country parks, as a plan to incorporate a coastal enclave into a country park in Sai Kung was blocked by a Legislative Council bills committee. Members passed an amendment moved by rural Heung Yee Kuk constituency chairman Lau Wong-fat to exclude Tai Long Sai Wan from a list of three enclaves the government has earmarked for incorporation into country parks. In a departure from partisan politics, the opposition pan-democrats supported the government move while the pro-government camp led the move to drop Tai Long Sai Wan from the list.
Vested interests pose challenge to Party’s key reform
The bottleneck in China’s economic restructuring that urgently needs to be removed is the hurdle in getting market forces to play a bigger role in the cost and flow of capital. Excessive intervention of the government in micro economic activities has seriously distorted the market. One of the major reforms set out in the Communist Party’s Central Committee plenum that ended on Tuesday is to redefine the role of government for it to devolve powers of administrative approvals. The reform is set to encounter difficulty as it would upset vested interests. Under the present political system, it is difficult to assess the chance of its success.
Beijing should name political adviser in CE office to handle conflicts of interests
The intervention of the Chinese central government’s Liaison Office in Hong Kong affairs is not lawful, but inevitable and necessary, HKEJ founder Lam Hang-chi wrote. Since Hong Kong is part of China, the SAR government cannot adopt any policies that deviate from national policies on the ground that the city practices a different system. The Liaison Office is supposed to play the function of “liaison”, but, in practice, has intervened in Hong Kong affairs. It would be better for the central government to appoint a political adviser in the Chief Executive’s Office to help reconcile differences over the interests of the central authorities and Hong Kong.
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(First posted: 08.03)