18 August 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 Wednesday, March 26:


Agricultural Bank of China poised for preference share issuance

Agricultural Bank of China Ltd. (01288.HK) is ready to issue its first tranche of preference shares, said vice president Li Zhenjiang {李振江}. The issuance will make the lender among the first batch of five other Chinese banks tapping a pilot scheme for capital replenishment recently pproved by the China Banking Regulatory Commission. The combined fundraising size is likely to top 100 billion yuan (US$16.13 billion), according to the China Securities Journal. The issuance can boost lenders’ tier-one capital adequacy ratios by 1 percentage point, analysts say.

Hong Kong banking watchdog warns of plunging property prices

The Hong Kong Monetary Authority has warned of a sharp decline in the city’s property prices that may far exceed expectations. The banking watchdog said in a semi-annual report that the market is likely to turn sensitive to interest rate hikes and changes in liquidity flows resulting from the US Federal Reserve’s tapering of its bond purchase program. It said homeowners’ mortgage burden may rise 30.2 percent if interest rates are raised 300 basis points, which will send their income leverage ratio to 83 percent, way above the 50 percent long-term average.

Partial defaults on local government debts seen likely, Li Daokui says

Chinese authorities may allow an orderly default on certain debts by local governments as part of their financial restructuring in the second half of this year, said Li Daokui {李稻葵}, former adviser of the People’s Bank of China. A small-scale crisis is expected to happen, yet it should be manageable given the still relatively low ratio of debt to gross domestic product in the country, Li said, adding that a systemic crisis is very unlikely. Moody’s Investors Service earlier estimated the debt to income ratios of local governments at a range of 69 to 156 percent.


Anson Chan’s nominating body plan a de facto primary CE election, Lau says

A proposal by a group headed by former chief secretary Anson Chan to elect 317 nominating committee members for the 2017 chief executive election under the “one person, one vote” principle has been criticized as a de facto primary election for the chief executive. Lau Siu-kai, deputy chairman of the quasi-official National Institute on Hong Kong and Macau Studies, said the proposal would put political pressure on the nominating body. Chan’s group proposed adding 317 more members to the 1,200-member election committee for it to become the nominating body. Any person who gets support from one-tenth of the members can become a formal candidate.

Government underestimating revenue in past 10 years, Legco study says

A study compiled by the Legislative Council Secretariat found the government has underestimated revenue persistently in the past 10 financial years. It said the underestimation might have constrained growth in government spending, thus causing an adverse impact on livelihood. The survey also found private homeowners gained 30 percent of the combined economic relief spending in the last seven budgets since 2007. Ordinary people received at least HK$8,000 handout from the relief measures.


Lessons to learn from crisis over missing Malaysian airliner

The crisis over the missing Malaysian airliner has exposed loopholes and deficiencies in the aviation industry, which should be reviewed and improved. It also showed the rules and mechanism of international rescue work in times of crisis have much room for improvement. Concerns about the leak of military and technology intelligence and geopolitical dynamics among countries have caused constraints to rescue efforts. How to make sure people’s lives are given top priority in times of crisis should be a pressing issue to be resolved by the international community.


Taiwan protest rings alarm for Hong Kong, Joseph Wong says

Students and other sectors in Taiwan who joined protests against the cross-strait trade deal are most concerned about its substantive and symbolic political implications on the developments on the island, former civil service minister Joseph Wong wrote. The occupation of the Legislative Council Yuan building in Taiwan should send an alarm to the Hong Kong government. Similar large-scale “unlawful acts” will happen any time if the government fails to respond and act on the list of people’s grievances, which are not just over political reform.

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