Following is a summary of major news and comments in the Hong Kong Economic Journal, the parent publication of EJ Insight, on Tuesday, Feb. 4:
No new taxes in coming fiscal year, Tsang says
Hong Kong does not need to impose any new taxes to support fiscal expenditure if its level remains at about 20 percent of the city’s gross domestic product, Financial Secretary John Tsang said, adding that new levies, such as sales tax, can significantly hurt the job market. The remark came as the senior official is due to deliver the 2014/2015 budget policy statement by the end of this month. Tsang, meanwhile, reiterated that the government is inclined to keep in place the existing property curbs to maintain stability in the market amid potential impact from the Fed tapering in the United States.
Stronger renminbi bolsters Hong Kong festive season sales
Appreciation of the Chinese renminbi and a robust mainland economy have boosted retail sales in Hong Kong during the first three days of the Lunar New Year holiday, said Ricky Tse, chairman of Hong Kong Inbound Tour Operators Association. The average consumption of a tourist has climbed 20 percent to HK$6,000, with sales of jewelry and electronic audio-visual products surging over 20 percent, Tse said. Some hotel rooms have seen multi-fold tariff hikes during the festive season, he added.
HKEx to launch cash-deliverable commodities futures in second-half 2014
Hong Kong Exchanges and Clearing Ltd. (00388.HK) is planning to launch cash-deliverable commodities futures in the second half of this year, a spokesman said in response to a HKEJ inquiry. The bourse operator informed brokerages last month that it will test the trading system for transactions of commodities and currency derivatives, with a view to launching the related contracts trading in basic metals and thermal coal. However, the spokesman said it will take more time to prepare for the launch of iron ore and coking coal futures, which are more welcome by mainland investors.
China first-quarter growth set to slow amid weaker PMI
Weaker Purchasing Managers’ Indexes for both manufacturing and non-manufacturing activities in China may herald slowing momentum in the country’s economy in the current quarter. Giving the government’s goal to push forward structural changes in the economy and decline in domestic demand, authorities could seek more infrastructure expenditure and private investment. Monetary policy should therefore be flexible enough and appropriately lax to create a favorable environment for the structural reform.
Investment opportunities in retail, green industries seen in mainland
Investors tapping into the mainland market should bear in mind two trends in the country that are set to give a big push to the environmental protection sector and retailers which target sales to the middle class, former HKEJ chief editor Joseph Lian wrote. The quantitative easing measures over the past few years in the United States have driven capital into mainland China, boosting the latter’s urbanization and middle class. Meanwhile, China’s economic restructuring plan for the decade through 2020 could alleviate the terrible pollution in the country.
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