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 Tuesday, Dec. 24:


Hong Kong property market unlikely to slump next year, Kwok says

Hong Kong’s property market is unlikely to see a slump in prices next year although the United States will begin a reduction of its bond purchase scheme and that certain local developers may cut new home prices to boost sales, said Thomas Kwok, joint-chairman of Sun Hung Kai Properties Ltd. (00016.HK). Kwok said he expects the Fed funds rate will not rise drastically even if the US resumes its rate-hike cycle in 2015 as the country may face deflationary, not inflationary, pressure by then. SHKP, meanwhile, will replenish its land bank in accordance with the pace of its sales. Separately, Secretary for Financial Services and the Treasury Chan Ka-keung said the government intends to keep existing property curbs although it forecasts asset prices to normalize in the coming 12 months.

230 companies seeking 170 bln yuan in mainland in 2014, Deloitte says

Deloitte Touche Tohmatsu Ltd. has estimated that 200 to 230 mainland companies would complete their listing plans in the Shanghai or Shenzhen stock markets next year after the application of initial public offerings resumes in January. An approximately combined 150 billion to 170 billion yuan (US$28 billion) could be raised. The consulting and auditing service provider also expected that 51 companies in the IPO pipeline could debut next month. They include big names such as China Postal Express and Logistics Co. Ltd. and Shaanxi Coal and Chemical Industry Group Co. Ltd., which plan to raise 9.98 billion yuan and 17.25 billion yuan respectively.


China government debts may have reached alarm level

The aggregate debt levels in China, taking into account, among others, non-financial corporations, financial institutions and other governmental and household unites, may have surged to 111.6 trillion yuan, reaching an alarming level at 215 percent of the total gross domestic product in the country last year, said the Chinese Academy of Social Sciences. The combined government debts at both local and central levels may have totaled 28 trillion yuan by the end of 2012, representing 53 percent of the GDP last year. The government think tank also estimated local government debts may have contributed 19.94 trillion yuan to the total amount. The last estimate of the country’s local government was 10.7 trillion yuan as of the end of 2010.

Shui On Land pledges further sales of minority stakes in mainland projects

Shui On Land Ltd. (00272.HK) will continue to dispose minority stakes of certain commercial projects in the mainland to enhance its inventory turnover ratio and lower its debt levels, said chairman Vincent Lo. The developer is also planning to spin off its subsidiary China Xintiandi Co. Ltd. in 2015. Lo said the group has adopted its strategy in the mainland by lands where the local governments have completed the relocation of affected residents to shorten the time of completion of projects.


Nominating mechanism for CE election helps avoid constitutional crisis, Tam says

Interview: The setting up of the mechanism of nomination committee for universal suffrage for the chief executive election in the Basic Law is aimed to avoid constitutional crisis when candidates who confront the central government is being elected, a former Basic Law drafter Tam Yiu-chung said. Tam said the original thinking behind the nominating body, which is comprised of four sectors including business and professionals, is aimed to find an “appropriate” candidate acceptable to Beijing. He said people who have advocated ending one-party dictatorial rule in China will not be acceptable to Beijing.

Property developers unhappy with Leung’s housing policy, Tam says

A Basic Law Committee Hong Kong member Maria Tam said yesterday Chief Executive Leung Chun-ying has encountered great difficulty in governance because he might have offended some property developers in his housing policies. She said developers might feel unhappy because Leung has worked hard to find land for housing for the people. Her claim, however, was rebutted by Thomas Kwok, joint-chairman of Sun Hung Kai Properties Ltd. Kwok said the power of developers in influencing government policies “was very limited.”


China needs reform to end chronic credit crunch

Fears of a credit crunch have engulfed China’s monetary market as the seven-day repurchase rate, a gauge of liquidity in the financial system, hit a record 10.77 percent yesterday. The emergence of another credit crunch shows the structural problem of misallocation of financial resources in China remains unresolved Cash squeeze will continue to hit China’s financial market if mainland banks do not change their business structure and beef up their management of liquidity.


Chief Executive’s work report for Beijing should be made open, Lui says

The formalization of the reporting of duty of the Hong Kong Chief Executive to the central government should be a two-way process, University of Hong Kong social work professor Lui Tai-lok wrote. He said the city’s chief should publicise the report, or at least part of it, he or she has made to Beijing leaders given the fact the chief executive is accountable both to the central government and the people of Hong Kong. Any move to limit the reporting arrangement to a one-way process will give rise to suspicion and doubt, which is not good to both Beijing and Hong Kong.

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