22 March 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 Monday, Dec. 23:

Blackstone’s Leung joins listing candidate Nan Fung

Former Financial Secretary Antony Leung is standing down as chairman for Greater China at Blackstone Group LP to join Nan Fung Group as chief executive, in a bid to help the developer accomplish its Hong Kong listing plan, sources said. The developer’s controlling family has been involved in an estate litigation, which is scheduled for another preliminary hearing next month. Leung was said to have been referred to the board by vice chairman Frank Seto, who is the long-term live-in partner of chairwoman Vivien Chen. Nan Fung was reportedly planning to float its assets in the city by acquiring an existing listed developer, possibly Lippo China Resources Ltd. (00156.HK) or Allied Properties (HK) Ltd. (00056.HK).

Mainland property plays to benefit from urbanization next year

The supportive measures that may come to the market amid the second phase of urbanization in the mainland are expected to help the share prices of property counters next year, analysts said. Developers with more assets in tier-two cities are likely to outperform firms which dominate tier-one cities. Ten major mainland developers listed in Hong Kong have seen their share prices drop more than 10 percent on average since the beginning of this year, although six of them have completed their sales targets for this year and the rest achieved 80 to 90 percent of their goals.


HKMC sees mortgage rates rising next year

Transaction volume in the Hong Kong property market is likely to fall further next year as interest rates for mortgage and reverse mortgage schemes are expected to rise after the United States starts scaling back its bond purchases in January and the Fed funds rate is set to rise in 2015 or 2016, said Raymond Li, chief executive of Hong Kong Mortgage Corp. Ltd. The annuity for beneficiaries of the agency’s reverse mortgage scheme will not be reduced though, Li said, adding that it is planning to study the feasibility of the launch of disaster bonds to manage potential risk in the expanding reverse mortgage businesses.

Golden period in sales of precious accessories may have passed, Tang says

Interview: The golden period of retailing precious accessories in Hong Kong is probably gone, Prince Jewellery and Watch Co. chairman and chief executive Jimmy Tang said. As mainland authorities have stepped up anti-graft efforts, sales growth of the company has slowed to 10 to 12 percent in September and October this year, compared with a 20 percent growth in the first half, Tang said, adding that the company has changed its strategy to sell more items at a medium price range to offset the sales decline in high-end products

Photovoltaic supply targets on track, Goldpoly New Energy says

Interview: The nationwide construction of photovoltaic grids in the mainland is on track and there is no oversupply in the market, said Li Yuan {李原}, chief executive at Goldpoly New Energy Holdings Ltd. (00686.HK) and chairman of China Merchants Energy Group. The country is targeting a total of 35 gigawatts by 2015. Li said his company is planning to put on grids a capacity of 2.2 gigawatts by that time through acquisitions worth a combined 20 billion yuan (US$3.29 billion). The company aims to raise 70 percent of the funds from banks and the rest from private sources.


Welfare spending will rise after court ruling, John Tsang says

The Hong Kong government’s expenditure on comprehensive social security assistance scheme will definitely go up in next year’s Budget after the Court of Final Appeal ruled a seven-year residency law on the eligibility of welfare payment as unconstitutional. Financial Secretary John Tsang wrote on his blog yesterday that he would adjust upward the welfare spending, but did not give a figure. A University of Hong Kong social work lecturer, Law Chi-kong, said total welfare expenditure would be raised by HK$400 million to HK$800 million. He said the increase would be small compared with the total recurrent expenditure the government could set aside for services.

Restrictions over nomination for CE election not original idea in Basic Law, Lee says

Interview: The restrictions imposed by the present Chinese central government over the nomination for the universal suffrage for the 2017 chief executive election have deviated from the provisions and original ideas made by the now-defunct Basic Law Drafting Committee, a former drafter Martin Lee said. Lee said the drafting body had not discussed the composition of the nomination committee for the chief executive election. Chinese officials said the nomination committee should be comprised of representatives of four sectors including business and professionals.


Abe makes bigger bet for economic recovery

To avoid adverse impact on consumption caused by an increase in goods and services tax next year, the Japanese government has decided to increase spending and government debts. It represents a big bet taken by the government to beat deflation and spur economic growth. But in view of the rigidity of the labor market and decline in competitiveness and innovation of enterprises, the Japanese economy remains weak. There are growing doubts about the effectiveness of the Abenomics and fears that the problem of government debts will worsen.


Xi aims to build a fairer society with deeper reform, Ren says

The recent third plenum of the Chinese Communist Party’s central committee has set out seven major areas of reform that aim to give a fair share of the fruits of the reform policy to all people, Beijing-based analyst Ren Huiwen wrote. Ren said the seven areas include state enterprises, public services and sale of rural land. The leadership under Xi Jinping is aware of the importance of promoting equity in society as the nation becomes prosperous. Reform policy will be meaningless and unsustainable if it cannot bring concrete benefits to people and lead to a fairer society.

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