Following is a summary of major news and comments in the Hong Kong Economic Journal, the parent publication of EJ Insight, on Thursday, Nov. 21:
CLP, Hongkong Electric said to keep 9.99% permitted return
The Scheme of Agreements the government signed with CLP Holdings Ltd. (00002.HK) and The Hongkong Electric Co. Ltd., a wholly-owned subsidiary of Power Assets Holdings Ltd. (00006.HK), is said to largely remain unchanged after an interim review, heralding a constant permitted return level for both power companies, sources told HKEJ. The current permitted return level that stands at 9.99 percent is likely to stay until the arrangement ends in 2018, potentially leading to higher tariffs as the companies invest more in power plants fueled with natural gas. Observers expect CLP to seek to raise tariff by 4 percent to 5 percent next year, and Hongkong Electric by 0.5 to 1 percent. The review report is due to be presented to the Energy Advisory Committee Thursday.
Phoenix Healthcare IPO said to have locked up over HK$100 billion
Phoenix Healthcare Group Co. Ltd. (01515.HK) may have locked up over HK$100 billion (US$12.9 billion) in its initial public offering in Hong Kong, likely beating Boyaa Interactive International Ltd. (00434.HK) as the city’s most welcomed listing this year in terms of funds captured. The healthcare company has seen its book for institutional investors oversubscribed 80 times, sources told HKEJ. Meanwhile, a combined HK$28 billion of margin financing has been recorded by a total of 10 brokerage firms, translating into 188 times oversubscription for the retail portion that is seeking only HK$148 million.
ECONOMY AND BUSINESS
Mainland property transactions seen rising 5 percent next year
Urbanization in the mainland will continue to jack up transaction volume of residential properties next year, said CCB International Securities Ltd. The brokerage expects the overall transaction volume in the country to rise 5 percent next year, boosting property prices in Shanghai and some tier-two and tier-three cities. However, given the existing limits on home purchases and mortgages in certain places, it estimates that the combined target sales of Chinese developers will only be up 12.5 percent next year.
Zurich Insurance selling New China Life stake for HK$7.31 billion
Zurich Insurance Co. Ltd. is withdrawing its investment in mainland insurer New China Life Insurance Co. Ltd. (01336.HK), sales documents obtained by HKEJ showed. The Swiss firm is offloading all of its remaining 292.5 million H shares, or 9.4 percent of issued share capital, at HK$25 per share, cashing in HK$7.31 billion. The selling price was 7.7 percent lower than the Chinese insurer’s closing share price of HK$27.1 on Wednesday. The Swiss firm was the fourth largest shareholder of New China Life. Analysts expect the sale to weigh on the mainland insurer’s share performance Thursday.
Lee Shau-kee to donate more land for building affordable homes for young people
Henderson Land Development Co. Ltd. (00012.HK) chairman Lee Shau-kee is planning to donate two more land plots in Tuen Mun and Yuen Long for public use, the tycoon said. The land parcels, which occupy a combined 50,000 square feet of area, are situated near the lands Lee has donated to construct nursing houses for the elderly, as well as public housing that is still in discussion with the government. The new batch of land to be donated is intended for construction of affordable homes or hostels for young people, providing 6,000 units.
Pan-democrats make open call for meeting with NPC officials on reform
Only two pan-democratic Hong Kong legislators have been invited to a lunch hosted by Chief Secretary Carrie Lam for two officials from the National People’s Congress who will pay a three-day visit to gauge views on the city’s political reform. Yesterday, 23 pan-democratic lawmakers issued an open letter to Lam, saying the government has the duty to arrange a meeting between them and Li Fei and Zhang Rongshun, who are chairman and vice-chairman of the NPC’s Basic Law Committee respectively. Political scientist Ivan Choy said it would be a step backward compared with a similar visit in 2004 if no pan-democrats and academics were arranged to meet with the mainland officials.
Tsang denies joint ticket with Antony Leung for next chief executive race
Legislative Council President Tsang Yok-sing has dismissed as sheer speculation reports that he has teamed up with former financial secretary Antony Leung to meet with different people on political reform to pave the way for running in the next chief executive election. He confirmed both he and Leung have attended such meetings, but the rest of the press reports about the meetings were inaccurate. Tsang said they shared the wish to help avert a crisis that may erupt if political reform talks fail.
Prolonged US low interest rate poses risks to global economy
US Federal Reserve chairman Ben Bernanke said in a speech that low interest rates would stay for a long period even after unemployment rate drops below 6.5 percent. Taken together with recent remarks by his successor-nominee, market expectation for the beginning of tapering of quantitative easing this year has waned. In view of the prolonged low-interest rate environment in the US, the OECD said in a report that the uncertainty in US financial and monetary situation poses increasing risks to global economic recovery. The risks posed by global asset bubbles, which may be caused by the low US interest rates, deserve even more attention.
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