22 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. 17:


Tencent launches fund product, stepping up competition with Alibaba

Tencent Holdings Ltd. (00700.HK) has launched its first online wealth management fund for customers using its online payment service, scaling up its competition with Alibaba Group Holding Ltd. in online businesses. The fund currently offers investors a 6.435 percent annualized yield, compared with Alibaba’s 6.618 percent and the 0.35 percent on-demand saving interest rate provided by lenders in the mainland. Tencent is also doubling the proportion of profits that game and software designers can share this year to 10 billion yuan (US$1.65 billion) in another move to take on Alibaba.

CBRC sets up task force in reform push

The China Banking Regulatory Commission has established a special task force headed by chairman Shang Fulin {尚福林} to push forward reforms in the sector, sources said. The priority of the task force is to deal with issues arising from the growing interbank and wealth management businesses of lenders. The watchdog has required local bureaus to submit reform proposals by the end of the first quarter. Shang earlier said the lack of oversight in the businesses has bolstered capital leveraging with no economic purposes, increasing financing costs in the market.


Taiwan, Hong Kong can cooperate in RMB business, Lee Jih-Chu says

Interview: Taiwan and Hong Kong can collaborate in expanding the renminbi-related business, especially on issues related to repatriation of funds in the Chinese currency back to the mainland, said Bank of Taiwan Ltd. chairwoman Lee Jih-Chu {李紀珠}. The island is currently awaiting approval by its legislature on the launch of the 100 billion yuan worth renminibi-denominated qualified foreign institutional investor scheme, said Lee, who also serves as the chairwoman of Taiwan’s Bankers Association. Such a scheme, together with foreign direct investment, can diversify the ways Taiwanese park their money in mainland China, she said.

Hong Kong renminbi financing costs seen stable this year

Interview: Renminbi financing costs in Hong Kong are expected to remain stable this year amid sufficient liquidity in the city’s renminbi pool, said Huang Rui {黃睿}, deputy general manager of Wing Lung Bank Ltd., a subsidiary of China Merchants Bank Co. Ltd. (03968.HK). More business is likely to get through in trade finance, syndicate loan and issuance of renminbi bonds, Huang said. Meanwhile, Huang sees the possibility of Chinese authorities easing the 20,000 yuan daily exchange limit on individuals in the first quarter.

ICBC won’t compensate investors in problem trust product

Industrial and Commercial Bank of China Ltd. (01398.HK) has decided not to compensate investors for the potential losses on a troubled trust product issued by China Credit Trust Co. Ltd. and marketed at the lender’s branches. The 3 billion yuan worth trust has invested in private coal miner Shanxi Zhenfu Energy Group Ltd., which has been dissolved after company management was found guilty of drawing funds illegitimately through shadow banking activities to the concerned trust product. The trust is due for redemption at the end of this month.


Poll shows middle class unhappy with Leung’s policy address

Public rating of Hong Kong Chief Executive Leung Chun-ying’s second policy address, delivered on Wednesday, has been poor. Results of a poll conducted by a University of Hong Kong research institute found middle-income respondents are particularly unhappy with the policy blueprint. Leung announced a HK$10 billion package of relief measures for grass-roots, but offered little for middle-income people. Chinese University political scientist Ivan Choy said middle-class people fear they might have to shoulder heavier tax burden for the welfare spending.

Leung criticized for backing down over MPF reform

Unionist legislators have blasted Chief Executive Leung Chun-ying for bowing to pressure from lawmakers representing the business sector by dropping a plan to withdraw the accrued benefits of the Mandatory Provident Fund. Chan Yuen-han claimed business legislators have threatened to vote down the policy address if Leung stuck to his plan. Leung said the fact that he had not mentioned the MPF issue in his speech Wednesday did not mean he would not handle the issue in his current term.


IMF reform loses steam as US keen to uphold dollar role

The US Congress has delayed approval for additional funding for the International Monetary Fund. The move shows reform of IMF’s voting mechanism would hit a snag. China’s demand for a greater say in the international body would stall. The determination of the US authorities to uphold the dominant role of the US dollar in international finance system has resulted in a dilution of their interest in reforming the IMF. 

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