Date
23 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 Tuesday, Nov. 26:

TOP STORIES

Brokerages raise Hang Seng Index targets

Brokerages have revised upward their forecasts for Hong Kong’s benchmark Hang Seng Index amid reduced risk for Chinese enterprises after a high-level meeting in Beijing earlier this month reaffirmed the country’s reform direction. Goldman Sachs Group Inc. has raised its 12-month target for the HSI by 1,000 points to 26,500, the most bullish among various brokerages. Cho Chi-ming, HKEJ chief consultant, expects the uptrend in the United States stock market to slow down in the next three to six months, possibly driving funds into emerging markets afterward and boosting the Hang Seng Index to 31,000 points.

Hong Kong working class may get 5 percent pay rise next year

A majority of employers are planning to give their staff 5 percent pay hike in the coming year, the Hong Kong General Chamber of Commerce said. In a survey, 53.4 percent of respondents had indicated such plan, it said. The result reflects serious labor shortage problem in the city, the chamber said, adding that rising labor costs could dampen the competitiveness of Hong Kong. Seventy-three percent of employers agreed that Singapore has competitive advantages over Hong Kong as a commercial and financial center. HSBC Holdings Plc. (00005.HK) Asia Pacific vice chairman and chief executive Peter Wong said separately that Hong Kong needs a long-term plan to strengthen ties with Guangdong to compete better with Singapore and Shanghai.

ECONOMY AND BUSINESS

Tencent allies with Sinolink Securities in online finance

Tencent Holdings Ltd. (00700.HK) has entered into a two-year strategic partnership agreement with Sinolink Securities Co. Ltd. (600109.CN) to tap into opportunities in the online financial market. The alliance will, for a start, collaborate in internet securities brokerage, online wealth management, and high-end investment activities offline, utilizing financial innovation technology and information platforms to be developed jointly. Tencent can receive 18 million yuan (US$2.95 million) of advertising fees each year from Sinolink, according to the agreement.

Hong Kong govt urged to boost support to innovation

Interview: The Hong Kong government should have more than half of its procurement sourced from local inventors, in a move to support innovation, said Allen Ma, newly appointed chief executive of Hong Kong Science and Technology Parks Corp. Ma sees water resources, energy and environmental protection crucial to the next structural change in the economy that will find innovations contributing to better use and transmission of water, storage and renewal of power and wastage recycling. He said the government should plan ahead by turning Hong Kong into a smart city taking into account key aspects in the three areas.

Liberalization of renminbi needs 5 to 10 years for completion

China is expected to hasten its pace in national reform toward a market economy, yet it is likely to take another five to 10 years for the full liberalization of the renminbi exchange rate, said Alan Oster, chief economist at National Australia Bank Ltd. Oster forecasts the daily trading band of the Chinese currency will be widened by the end of this year, sending its exchange rate against the greenback to break the 6-level next year. The economist meanwhile estimates the mainland economy to expand 7.6 percent this year and 7.25 percent next year.

POLITICS

Ronny Tong gives positive spin on NPC official on CE election

Interview: Civic Party legislator Ronny Tong, who was the only pan-democratic lawmaker sitting on the same table with senior NPC official Li Fei during a lunch hosted by the Hong Kong government, said the message over universal suffrage given by Li was positive. Tong said in an interview with HKEJ that one positive message was Li’s assurance that there would be no unreasonable restrictions over the right of election and voting. While insisting on civil nomination, he urged pan-democrats to prepare detailed proposals on matters relating to the nominating committee for the 2017 chief executive election.

Tiananmen leader-in-exile Wu’erkaixi regrets Hong Kong deportation

Tiananmen Square student leader Wu’erkaixi {吾爾開希} said he felt “frustrated, angry” over the decision of the Hong Kong government to send him back to Taiwan after he arrived in the city. Wu’erkaixi was on top of the list of wanted persons of the Chinese government after the suppression of the student-led protests in Tiananmen Square on June 4, 1989. He said he was prepared to go to jail in the mainland so that he could see his family after fleeing the country 24 years ago. A Hong Kong alliance in support for China democracy urged Beijing to allow Wu’erkaixi to go home for reunion.

EDITORIAL

Fears over Hong Kong lagging Shanghai grow

HSBC Holdings Plc. (00005.HK) Asia Pacific vice chairman and chief executive Peter Wong has warned that Hong Kong could be surpassed by Shanghai. A survey by the Hong Kong General Chamber of Commerce among members also found 70 percent of respondents said Shanghai has an edge over Hong Kong as an international financial center. Hong Kong’s business sector has become more worried about the city lagging Singapore. Faced with the acceleration of the opening up of China’s financial sector, Hong Kong must find new areas of growth as soon as possible. The city will pay a heavy price for inertia.

COMMENTS

China, Japan must resume talks to avoid military conflict, Lam says

The possibility of a military conflict in East China Sea following China’s announcement on the setting up of air defence identification zone should not be overlooked, HKEJ founder Lam Hang-chi wrote. The latest China move shows the Beijing leadership is prepared to go to war with Japan. The chance of accidental conflicts cannot be ruled out. Both sides should resume diplomatic talks as soon as possible to avoid the catastrophic consequences of a war between the two powers. Both will suffer immense loss in view of the enormous power of destruction of modern weapons.

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