27 May 2019

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. 10:


Currency uncertainty amid US tapering poses wider market risk

Capital markets face a risk due to the uncertainty and volatility that could come to the currency market by the misalignment between the United States and other nations in the time and pace at which they roll back their bond purchases, Nicholas Kwan, research director at the Hong Kong Trade Development Council, warned at an economic summit organized jointly by HKEJ and others. George Leung, advisor to the chief executive of the Hongkong and Shanghai Banking Corp. Ltd., said at the same event that the US is likely to start retreating from its bond purchase programs early next year, but may raise interest rates only from 2016, given tepid corporate income growth.

Hong Kong IPO market unlikely to cool off by US fund withdrawal

The recent strong momentum in initial public offering activities in Hong Kong is unlikely to be dampened by the planned scaling back of quantitative easing measures in the United States, although we may see some capital outflows and higher interest rates, said Chan Ka-keung, Secretary for Financial Services and The Treasury. Fund-raising activities are expected to remain robust, considering that the Chinese economy is gathering pace, especially after the top leaders’ meeting last month. Meanwhile, Chan said there are signs of speculation in the bitcoin market, but cannot say as of now whether a bubble has already formed.


HKEx cuts fees to lower burden on smaller brokers

Hong Kong Exchanges and Clearing Ltd. (00388.HK) is waiving the monthly fees for the first 10 data terminals taken up by small and medium-sized brokerages for collecting real-time market quotes on the cash market starting next year. The measure, which is aimed at lowering the burden on the brokerages by 20 percent in terms of operational expenses, will reduce the bourse operator’s revenue by about HK$12.05 million (US$1.55 million) a year. Market players welcomed the move but said it is only a minor gesture. Restoring the original trading hours would have offered more relief for the small brokerages, they say.

JP Morgan tips copper, iron ore for basic metals investment in 2014

Interview: Copper and iron ore are among the top picks for investment in basic metals next year, given robust demand from China, said Jiang Jihao {江基豪}, head of metals and mining research at JP Morgan Securities (Asia Pacific) Ltd. Urbanization and new infrastructure construction in the country is likely to push the price of copper to US$7,000 to US$7,500 per metric ton, while that of iron ore is seen remaining at the current US$135 level.

Xiao Nan Guo hit by anti-graft fight in Shanghai, Beijing

Interview: Xiao Nan Guo Restaurants Holdings Ltd. (03666.HK) has seen its business in Shanghai and Beijing hit by the country’s anti-graft campaign, said vice president Leng Yijia {冷怡佳}. The caterer has closed four stores in those cities during the first half this year. It is planning a switch to tap the mass-market next year by opening 20 stores catering to that market segment next year. The average amount of each bill is expected to decrease further to between 100 and 150 yuan (US$24.7) from the current 190 yuan.


Nomination procedure key issue in universal suffrage for 2017 CE election

Analysis: The key issue of the just-launched political reform consultation in Hong Kong is how to avoid a candidate unacceptable to Beijing from being elected in the city’s universal suffrage. If that happens, Beijing will have no choice but to refuse the appointment, causing political embarrassment and uncertainty. Beijing is inclined to allow pan-democratic candidates to be nominated as contestants in the first phase of nomination in the 2017 chief executive election. But it will ensure that candidates who they find acceptable will be screened out in the second phase of nomination so that they will not become formal candidates. They cannot do whatever they want, however. Pan-democrats still hold the power of veto of the electoral blueprint.


Interbank CD trading reform marks move towards interest rate liberalization

The People’s Bank of China on Monday will start implementing pilot management measures on interbank certificates of deposit (CD) as part of efforts to fully liberalize interest rates. The central bank is expected to introduce deposit insurance scheme soon. It will also gradually allow commercial banks to issue convertible interbank CD to non-financial companies and individuals and remove restrictions on the upper limit of deposit interest rate, which will be the last step of liberalization of interest rates.

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