Date
24 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 Thursday, Dec. 12:

TOP STORIES

Singapore seeks RQFII business, posing a challenge to Hong Kong 

Singapore authorities have been soliciting interest from potential issuers for launch of financial products under the renminbi-denominated qualified foreign institutional investor scheme (RQFII). A number of financial institutions in the Lion City, mainland China and Hong Kong have given positive feedback since Singapore gained blessing from China in October to explore new offshore renminbi business opportunities, a spokesman with the Monetary Authority of Singapore said in response to a HKEJ inquiry. Market observers, however, said Hong Kong should not compromise on its regulatory standards even though stringent requirements might undermine its competitiveness over Singapore in attracting new RQFII business.

SFC to release first review on financial institutions’ risk policies

Hong Kong’s Securities and Futures Commission will release later this month its first review on the risk culture of large financial institutions in the city, said chief executive Ashley Alder. The review will reveal the tendency and precautionary measures of the institutions regarding their risk management. The watchdog is planning to extend its oversight to supervising the leadership and strategy formulation process of the institutions, but is unlikely to amend the code of conduct at this stage, Alder said.

ECONOMY AND BUSINESS

Google to double investment in Taiwan data center

Google Inc. has pledged to invest an extra US$300 million in Taiwan for the construction of the second phase of its data center, on top of its existing US$300 million investment in the first phase which was recently completed. The center is aimed to meet rising demand in Asia. The company has scrapped plans to build a similar complex in Hong Kong and choose Singapore and Taiwan instead, reportedly due to the high land costs in Hong Kong.

Top Spring in talks to pull investor to property projects in China

Top Spring International Holdings Ltd. (03688.HK) is in talks with a third party about setting up a joint venture company to develop some land plots in mainland China, the developer said in a stock exchange filing Wednesday. Two indirectly wholly owned subsidiaries will also participate in the projects, Top Spring said. Sources told HKEJ that the third party is a leading Hong Kong property developer.

HSBC to sell off stake in Bank of Shanghai

HSBC Holdings Plc. (00005.HK) has agreed to sell off its remaining 8 percent stake, worth about HK$3.63 billion (US$468.13 million), in Bank of Shanghai Co. Ltd. to Banco Santander S.A. The proposed sale, which is expected to be completed in the first half of next year, will yield a profit of 4.5 times on HSBC’s initial investment. HSBC will then be left with three holdings in its portfolio in China: a 19 percent stake in Bank of Communications Co. Ltd. (03328.HK), and — through subsidiary Hang Seng Bank Ltd. (00011.HK) — interests in Industrial Bank Co. Ltd. (601166.CN) and Yantai Bank Co. Ltd.

POLITICS

Basic Law Committee members hint civil nomination for universal suffrage not acceptable

Two Hong Kong members of the Beijing-appointed Basic Law Committee said the idea of civil nomination did not fall within the legal parameters of the universal suffrage for the 2017 chief executive election. Committee vice-chairman Elsie Leung and member Maria Tam also said the proposal of nomination by political parties for universal suffrage had been rejected during the drafting of the Basic Law. Convenor of the Alliance for True Democracy Joseph Cheng has insisted their proposals did not deviate from the Basic Law. He added that Hong Kong people would not accept manipulation by political forces in the nomination process of CE election.

EDITORIAL

Volcker rule approval marks beginning of business change of US banks

US regulators approved on Tuesday the Volcker rule that aims to tighten supervision over the trading activities of banks. As the approval was expected, it has not caused major fluctuations in prices of bank shares in the stock market. It remains to be seen what effect the new supervisory system will have as it will only take effect in April and be fully implemented in July 2015. But the trend of US banks adjusting their businesses and the financial market deleveraging will become more obvious.

COMMENTS

Popularity of anti-government icon creates opportunity for pan-democrats

The enthusiastic public response to Lufsig, a cuddly toy wolf that has become an anti-Leung Chun-ying icon in Hong Kong, has marked the emergence of a new force between the moderate and radical wing in the pan-democratic camp in the city, former HKEJ chief editor Joseph Lian wrote. Hong Kong’s democratic development has entered a critical juncture as the rival force against democracy supporters has become more powerful. The challenge facing the leaders of the radical and moderate pan-democratic force is how to broaden their support base and integrate to fight the tough battles ahead.

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