Date
22 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, Dec. 3:

TOP STORIES

RMB deposits seen accounting for 30 percent in Hong Kong in two years

The proportion of renminbi deposits in Hong Kong is expected to rise to about 30 percent by 2015 from more than 10 percent at present, if the internationalization of the Chinese currency maintains its progress and mainland authorities relax the daily purchase limit of the renminbi for individuals, said HSBC Holdings Plc. (00005.HK) chief executive for Hong Kong Anita Fung. Fung also estimates that the total renminbi-denominated assets under management in the wealth management market will double and even triple in the next two years, with total deposits in the currency seen topping 6 trillion yuan (US$984.68 billion) in five years.

John Tsang affirms rule of law in Hong Kong

Rule of law is Hong Kong’s core value, Financial Secretary John Tsang said, responding to concerns raised by tycoon Li Ka-shing about the local political and economic outlook. Tsang reassured that Hong Kong will not move toward protectionism, but will strive for a decent business environment to attract more inbound foreign investment. Tsang also said that the government will not loosen its grip over control of potential risks of property bubble. The government will seriously take into account the affordability of the public, external economic factors and the US Federal Reserve interest rate policy before it decides whether or not to remove the existing property curbs.

ECONOMY AND BUSINESS

Shanghai FTZ rules mark liberalization of individual fund flows

Detailed rules governing the activities in the Shanghai free-trade zone mark a breakthrough that could boost the opening of the country’s capital account, analysts said. According to a document posted on the People’s Bank of China website yesterday, residents in the zone can set up free-trade accounts to directly transfer renminbi to and from other offshore accounts, the first time that such free flow of the Chinese currency is allowed. Other rules include further liberalization of interest rates in the zone, as well as enhancement for renminbi-denominated financing and investment.

SFC chairman says no hidden agenda in Ma’s appointment

The appointment of Mary Ma, chairperson of Boyu Capital Advisory Co. Ltd., as an independent non-executive director at the Securities and Futures Commission in Hong Kong has nothing to do with a purported listing of Alibaba Group Holding Ltd. in the city, said the watchdog’s chairman Carlson Tong. Boyu Capital is one of the institutional investors of Alibaba. Tong said the SFC is in no position to comment on the listing issue of the Chinese e-commerce giant, which is handled by Hong Kong Exchanges and Clearing Ltd. (00388.HK).

Poor sentiment in mainland sends RQFII new quotas to 6-month low

The lackluster performance and poor sentiment in the mainland capital markets has adversely affected the demand for new quotas for the renminbi-denominated qualified foreign institutional investor scheme, sending the amount in November to 5 billion yuan, the lowest since authorities began approving quota applications on a monthly basis in April. Newcomer PineBridge Investment LLC, controlled my PCCW Ltd. (00008.HK) chairman Richard Li, gained 800 million yuan of quotas.

POLITICS

2017 Chief Executive election consultation set to begin Wednesday

Public consultation over political reform in Hong Kong is set to begin on Wednesday after Chief Executive Leung Chun-ying convenes a special Executive Council to give a green-light to the first round of consultation on the 2017 CE election. Chief Secretary Carrie Lam is expected to speak at the Legislative Council, followed by a press conference. Media reports said Leung will only formally kick-start the process of electoral arrangement at the end of the consultation. Formal electoral proposals are not expected until 2015. Occupy Central movement organizer Chan Kin-man accused the government of resorting to delaying tactics, and said they do not rule out the earlier blockade action.

EDITORIAL

HK property market to be distorted further if govt curbs stay

The number of property transactions in Hong Kong fell sharply but prices only dropped slightly after the government imposed punitive taxes to curb speculation. The effects of the measures have proved to be limited. Prices will not go down markedly and demand will not shrink if the low interest rates continue for a long period. The city’s property market will be further distorted if the punitive levies remain unchanged. The government must review its policies immediately and take long-term solutions including land supply to solve the housing problem.

COMMENTS

Cameron China trip to yield limited result on China-Britain ties, Ling writes

Diplomatic analysts said the visit of British Prime Minister David Cameron to Beijing would help give a a fresh start to China-Britain relations after ties were strained following Cameron’s meeting with the Dalai Lama last year, international affairs analyst Ling Kim-ho wrote. But two basic factors are constraining their relations. They are relations between Britain and other European countries and the close ties between Britain and the United States. At best, Cameron’s visit can only help restore ties with China to the level that prevailed before the British leader’s meeting with the Dalai Lama.

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