Date
11 December 2017

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 Thursday, March 27:

TOP STORIES

CITIC Group seeks to put entire assets afloat through CITIC Pacific

CITIC Pacific Ltd. (00267.HK) has entered into a framework agreement with its ultimate parent company CITIC Group Corp. to purchase 100 percent of the total issued shares of CITIC Ltd., which holds the assets of the entire group, the listed company said in a stock exchange filing. The acquisition costs will be paid by cash and new shares at HK$13.80 (US$1.74) apiece, representing a premium of 6.48 percent to its last price on Monday before trading was suspended. Sources said the deal, which virtually puts the whole state-backed conglomerate group afloat, is likely worth US$40 billion.

HKEx set to impose name-and-shame regime on sponsors

Hong Kong Exchanges and Clearing Ltd. (00388.HK) is poised to fully implement in April a new regulatory regime over sponsors and the quality of their work in terms of the accuracy and sufficiency of information in listing documents and prospectuses. Listing sponsors that fail to pass the three-day preliminary documents review by the authority will have their names permanently marked on the rejection list for listing applications. The HKEx chief regulatory officer and head of listing David Graham said he expects the new name-and-shame regime can effectively improve the quality of listing applications and attract more firms to go public in the city.

Bank of China reviews credit risk of local government debts

Bank of China Ltd. (03988.HK) is evaluating the potential for default of certain local government debts and other relatively risky loans in its portfolio, said president Chen Siqing {陳四清}. The bank has lent a combined 853.5 billion yuan (US$137.46 billion) of loans to local government vehicles, the property sector and other industries with overcapacity problems as of the end of last year. Meanwhile, the bank expects a wider net interest margin (NIM) in its overseas businesses amid the global economic recovery, providing a buffer to a narrowing NIM in the mainland while authorities step up efforts at interest rate liberalization.

POLITICS

Pro-government lawmakers call for higher threshold for CE election candidates

Pro-government legislators have proposed a higher threshold for candidates for universal suffrage for the 2017 chief executive election. Lawmakers from the Democratic Alliance for the Betterment and Progress of Hong Kong suggested anyone can only become a formal candidate if he or she gets the support of more than half of the nominating committee members. The Liberal Party shared a similar view. Pan-democrat legislator Albert Ho said the idea would definitely be unacceptable. Political scientist Ivan Choy agreed and said it was unreasonable, adding similar restrictions could not be found in the electoral systems of other countries.

Universal suffrage, anti-subversion law two separate issues, Carrie Lam says

Chief Secretary Carrie Lam said the introduction of universal suffrage in Hong Kong and an enactment of an anti-subversion law are two separate issues. She made the comment after it was reported that a legislator has said at a meeting that universal suffrage should only be introduced after the legislation, known as Article 23 of the Basic Law, was put in place. A pro-Beijing legislator Chung Shu-kan clarified he suggested Hong Kong could adopt a more democratic electoral system after Article 23 became a law.

EDITORIAL

Downgrade of sovereign credit ratings of emerging economies rings alarm

Standard & Poor’s downgraded the credit rating of the sovereign debts of Brazil, putting an end to the trend of rating upgrades on the country in the past 10 years. It exposed the fragility of the economy of emerging markets as a result of capital outflows. The recent downgrading of the credit rating of sovereign funds in emerging economies including Ukraine, Russia and Brazil has rung an alarm bell over the potential economic risks caused by political turbulence and the imminent end of the United States’ quantitative easing.

COMMENTS

Nominating body for chief executive poll should become rubber stamp, Lian says

Beijing should heed public opinion, adopt democratic principles and the constitutional conventions of the world to completely marginalize the role of the nominating committee for universal suffrage for the 2017 chief executive election, former HKEJ chief editor Joseph Lian wrote. The nominating body should become a rubber stamp that fully reflects the views of people, who support the idea of public nomination.

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