19 January 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 Friday, Jan. 10:


StanChart to merge wholesale, consumer banking units

Standard Chartered Plc. (02888.HK) has unveiled a restructuring plan aimed at restoring income growth and cutting costs, the bank announced Thursday. The wholesale and consumer banking units will be integrated starting April, while certain staff with the back office and technology department of those units may be laid off. Analysts expect the bank to seek capital from the market at a later stage, although its chief executive Peter Sands said it has no plan for a rights issue. Meanwhile, finance director Richard Meddings and head of consumer banking Steve Bertamini are set to leave their posts.

StanChart revenue growth faces risks in South Korea

Analysis: A slowing economy and heavier staff costs amid rising union power in South Korea, once a growth driver for businesses, have changed the course of Standard Chartered Plc. (02888.HK) in sustaining its revenue expansion. The lender had earlier unveiled plans to shrink its presence by cutting 25 percent of its branches to about 250 and retreating from the consumer financing business in the country. The bank had been relying on growth in the emerging markets to weather through the financial crisis in the developed economy, in contrast to major rival HSBC Holdings Plc. (00005.HK) which had been struggling with its businesses in the United States and Europe.


ChinaVision’s Dong said being under corruption probe

ChinaVision Media Group Ltd. (01060.HK) chairman Dong Ping {董平} is said to have been detained for investigation into alleged involvement in a corruption case led by retired Communist Party leader Zhou Yongkang {周永康} and former vice minister of public security Li Dongsheng {李東生}. The company secretary was quoted as saying the board was not notified about the reported detention. The company’s share price slid 11.7 percent to its lowest since July last year before trading was suspended Thursday afternoon. Dong is widely regarded as the father of non-state-owned films in the mainland.

First physical A-share ETF launched in London

Hong Kong-based CSOP Asset Management, a subsidiary of China Southern fund management Co. Ltd., and London-based Source have jointly launched the first exchange traded fund (ETF) under the renminbi qualified foreign institutional investor (RQFII) in the London Stock Exchange Thursday. Called FTSE China A50 UCITS ETF, the fund sets a landmark for European retail investors to tap into Chinese stock markets through physical A-share funds in renminbi. Market observers said sales of renminbi-denominated ETFs issued in London may surpass those in Hong Kong and Singapore, given a higher recognition of funds regulated under The Undertakings for Collective Investment in Transferable Securities framework (UCITS).

China vehicle production, sales volume chart new world record

Vehicle production and sales volume in mainland China both exceeded 20 million last year, marking a new world record, data from the China Association of Automobile Manufacturers showed. The number of cars made last year rose 14.8 percent year on year to 22.12 million units while sales volume climbed 13.9 percent to 21.98 million units. The Ministry of Industry and Information Technology, however, says the uptrend may end this year despite the potential growth in the sales of new-energy cars.


Leung to announce pilot scheme for empowering district officers

Chief Executive Leung Chun-ying has picked Sham Shui Po and Yuen Long as testing grounds for giving more powers to district officers to handle district matters. The pilot scheme will be announced in Leung’s second policy address scheduled for Wednesday, sources said. Leung has pledged in his first policy blueprint to cut red tape by empowering district officers to resolve local issues “within the district”. The district officers can take their case directly to the Chief Secretary if other government departments refuse to cooperate.

Civil nomination not in line with the spirit of Basic Law, mainland official says

A senior Hong Kong-based mainland official said any proposal that undercuts the power of the nominating committee for the chief executive election would not be in line with the spirit of the Basic Law. Hao Tiechuan, propaganda chief of the central government’s Liaison Office, was commenting on the “three-track” nomination method proposed by the Alliance for True Democracy on Wednesday. Separately, Secretary for Justice Rimsky Yuen sidestepped a question on whether the idea of civil nomination, as contained in the alliance’s “three-track” plan, would be deemed a violation of the Basic Law. Yuen said he preferred to be ambiguous as the consultation period was still at an early stage.


Yellen looks set to tread cautiously on interest rate hike

The newly-appointed chairwoman of the US Federal Reserve Janet Yellen is a Keynesian in economic thinking, who will give top priority to tackling unemployment. In view of the risk of fluctuations in the US economy, Yellen is expected to adopt a cautious approach to the Fed’s decision to phase out its quantitative easing program. It is difficult to predict at this stage whether interest rates will start to climb by mid-2015. As it takes time for monetary policy to show its impact on the real economy, the Fed is likely to wait for evidence of strong economic recovery in the next six to 12 months before considering raising interest rates.

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