Following is a summary of major news and comments in the Hong Kong Economic Journal, the parent publication of EJ Insight, on Friday, March 21:
Norman Chan gets five more years as Hong Kong central bank chief
Financial Secretary John Tsang has given Norman Chan a second five-year term as head of the Hong Kong Monetary Authority, effective this October. Market observers said the reappointment can help ensure financial stability at a time when the city is undertaking some constitutional reform. They expect more room for business development to be created by the 59-year-old central banker, who will have his fixed salary raised 8.3 percent to HK$6.5 million (US$837,115) for the coming year, plus a floating salary capped at HK$2.6 million.
Hong Kong Monetary Authority warns of uncertainty in capital flows
The Hong Kong Monetary Authority has warned that capital flows in emerging markets are likely to be affected by the changes in market expectation over the time and pace of hikes in the United States Federal funds rate. The alert came as Janet Yellen, the Fed’s chairperson, indicated that she expects the US to end its bond purchase by this autumn, with the Fed funds rate likely to experience its first hike in years six months afterward. The Hong Kong banking watchdog said Yellen’s remark suggests that the monetary environment is starting to normalize alongside a steady recovery in the US economy.
Li & Fung plans to spin off Global Brands Group
Li & Fung Ltd. (00494.HK) has revealed its intention to spin off its Global Brands Group for a separate listing, as part of a bigger three-year plan through 2016. The spun-off unit will no longer be controlled by Li & Fung but by its parent Fung Group. Meanwhile, chief operating officer Spencer Theodore Fung, the eldest son of co-founder Victor Fung, will be named chief executive to succeed Bruce Rockowitz, who will then head Global Brand Group after the spin-off. Analysts said the flotation plan will take away a growth driver from the conglomerate.
Patten lends his weight for press, academic freedom, rule of law
Hong Kong’s last colonial governor Chris Patten has underlined the importance of free media, autonomous universities and the rule of law, saying they are the cornerstones of a free society. During a visit to the city yesterday, Patten was asked by reporters to comment on the brutal attack against former Ming Pao chief editor Kevin Lau and criticism against a University of Hong Kong pollster. Patten said although he had been the subject of some smear by the media during his reign in the city, he has and would defend the right of a free press and fair reporting.
Civil nomination gets support from international political experts
Most international constitutional experts gave their backing to the idea of civil nomination for the 2017 chief executive election, adding it was desirable but not a must. They told a University of Hong Kong conference that civil nomination helps absorb public opinion in the election process. The nominating committee arrangement stipulated in the Basic Law, they said, should meet the relevant requirements under international human rights charter. The experts will announce a set of benchmarks they propose for the election.
US interest rate hike next year set to shake global equity markets
The Janet Yellen era will begin when the United States’ monetary policy returns to normal mode after the Federal Reserve ends its bond-purchase program by autumn and begin raising interest rate next year. The rise of interest rates will come earlier than expected. The super-low rate era will come to an end as a new cycle of appreciation of the US dollar will begin. A new round of shift of wealth and reconfigurations of different equity markets will begin.
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