Date
21 October 2017

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 Monday, Nov. 25:

TOP STORIES

A slew of share sales seek a combined HK$43 billion this week

Eight companies are kicking off initial public offerings this week, together with three issuers that have already started their share sale activities, seeking to raise a combined HK$43 billion (US$5.55 billion) and marking the most robust week for IPOs this year, sources told HKEJ. Among the eight newcomers are China Cinda Asset Management Co. Ltd. (01359.HK), one of the bigt four wealth management firms in the mainland, and the country’s major coal port operator Qinghuangdao Port Co. Ltd. (03369.HK). Cinda Asset Management will kick off subscription period for retail investors Monday, eyeing HK$19.04 billion, while Qinghuangdao Port is due to open for public subscription Thursday.

Hang Seng Index may see some volatility this week

The Hong Kong stock market’s Hang Seng Index is likely to see some volatility this week due to changes in MSCI Index constituent stocks on Tuesday and the Hang Seng Index Futures contract settlements on Thursday, analysts said. However, the benchmark index may still have a chance to hit 24,000 points, given good sentiment in the capital markets in China and the United States. Six counters will be added to the MSCI China Index, including New World China Land Ltd. (00917.HK), while AAC Technologies Holdings Inc. (02018.HK) is switching from MSCI Hong Kong Index to MSCI China Index. Parkson Retail Group Ltd. (03368.HK) will be removed from the China sub-index.

ECONOMY AND BUSINESS

Chinese rush for vineyards in California

More Chinese are investing in vineyards overseas to seek long-term returns, with a lot of interest in properties in the United States. Patricia Lin, a Taiwanese businesswoman, has acquired stake in 35 vineyards and a brew house in Southern California under the well known golf and wine brand Callaway for millions of dollars back in 2005, expecting to make a fortune in 10 years. Joyce Chan, an owner of vineyard investment agency firm Keyways Neyard Winery, has witnessed the trend and the financial strength of Chinese investors, saying they, on average, put in US$7 million for each deal.

Volkswagen sees strategic value in Hong Kong market

Interview: Volkswagen Group Hong Kong Ltd. is positioning itself to be a front-runner to lure business from the entire South China market, said managing director Thorsten Jaede. Hong Kong market is crucial for the parent company to achieve its goal to be the world’s number one automobile maker by 2018., Jaede said, adding that the company’s sales in Hong Kong have risen to 5,000 vehicles a year, from 1,000 in 2008, with market share growing to 11-12 percent from 2-3 percent over the period. The company is seeking an expansion of about 10 percent in sales volume each year.

China may speed up reforms in foreign exchange regime, analysts say

Renminbi currency reforms are expected to be hastened as top leaders, including central banker Zhou Xiaochuan {周小川}, have expressed support for reduced intervention in the market, analysts said. It is now a good time for authorities to loosen the daily movement limits on the exchange rate of the currency, they said, adding that such arrangements are aligned to the government objective to further open up its capital account as stipulated in the report of the top political meeting held earlier this month in Beijing. Some market observers have anticipated that the trading limit of the renminbi exchange rate will be widened to 2 percent from 1 percent in the near future.

POLITICS

Leung says chief executive, public officers should ‘love China, Hong Kong’

It is only “perfectly justified” for the Hong Kong chief executive and public officers to have to “love the country and Hong Kong”, the city’s head Leung Chun-ying said yesterday. He echoed the remarks made by a deputy secretary general of the Chinese National People’s Congress standing committee, Li Fei, during his just-ended visit. Leung admitted that the sense of nationhood among some people in Hong Kong has been weak due to the long history of colonial rule. There has been no territory-wide discussion on Basic Law in recent years, he said, adding that he plans to strengthen Basic Law education in the city. Pan-democrats said it will be difficult to define “love the country and Hong Kong”.

Li Fei sets no new rules on chief executive election, Tsang says

Legislative Council President Tsang Yok-sing said deputy secretary general of the Chinese National People’s Congress standing committee, Li Fei, has imposed no new restrictions on the 2017 chief executive election. Tsang said the parameters spelled out by Li during his visit were already stipulated in the Basic Law and the NPC resolutions on universal suffrage previously announced. Li has only elaborated the relevant requirements, Tsang said. Chief Secretary Carrie Lam said she did not want to see confrontation in the society over specific proposals before a government consultation has even begun.

EDITORIAL

China air defence zone raises risk of conflict in East China Sea

China announced that it was setting up the Air Defence Identification Zone in the East China Sea, which includes disputed islands. It is clearly aimed to counter the US-Japan defence alliance. The risk of military conflicts in the region has increased. To avoid misjudgment in the defence zone, China and Japan should establish an effective crisis management mechanism for communication to contain the conflicts and risks within a manageable level.

COMMENTS

‘Selective’ asset declaration rule for new cadres not feasible, Ren writes

Faced with various risks and resistance, the Chinese Communist Party leadership has decided at its recent central committee plenum to adopt a trial scheme to require officials to declare their assets, Beijing-based China commentator Ren Huiwen wrote. In response to demand from society, the Party leadership has decided to first require newly-recruited officials to declare their assets. But the new requirement will only be an expediency arrangement. It should be extended to cover all officials as soon as possible as selective anti-graft arrangement would anger the people, Ren said.

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