Hong Kong

What links unrest in Ukraine, the US Federal Reserve, and rising Chinese equities? The answer, quite possibly, is the Hong Kong dollar, which has been testing the limits of its US dollar peg over the past month.

The Hong Kong Monetary Authority has been forced to intervene in the market in order to maintain its 31-year old currency peg to the US dollar. It bought more than US$6bn to weaken the Hong Kong dollar in July alone - the first such move since late 2012Read more

Ben Simpfendorfer, Silk Road Associates

Walk along the chilled meat aisle in Wellcome, a Hong Kong supermarket chain, and Betagro’s pork products stand out. The company is one of Thailand’s largest poultry and pork producers exporting nearly $700m annually with the large share shipped to Europe and Japan, where buyers are attracted by not just the product’s price, but also its quality.

Indeed, it’s the latter that makes Betagro’s pork products stand out from its competitors in Hong Kong. Each package has a QR code that allows customers to trace the product’s origins right back to the farm-gate, a major attraction in a market where food health safety concerns are an increasingly big driver of consumer preferences, local and foreign. Read more

My bubble's bigger than your bubble

Rising house prices and property bubbles are something of a UK obsession. But for all the help to buy worries, house prices rose by just 1.4 per cent year-on-year in the second quarter, according to estate agents Knight Frank.

The figure for London is much higher, of course. But for a housing boom of far greater magnitude, just take a look at Asia. Read more

The influx of Chinese tourists has turned Hong Kong into the great mall of China. But demand for luxury watches, jewellery and handbags has sent retail rent prices soaring. For small businesses on the edge of the prime shopping areas, staying in business is becoming ever more difficult. Josh Noble reports

With the largest tumble in gold in three decades, the shares of Hong Kong’s three biggest jewellery retailers fell sharply this week, despite a rush of customers wanting to take advantage of lower bullion prices.

Investors were clearly more interested in the impact of lower gold prices on the stores’ margins than in the potential benefits of the surge in sales. Read more

International banks are likely to jump at the opportunities offered by China’s latest move to liberalise the renminbi – this month’s decision to open the Renminbi Qualified Institutional Investor (RQFII) programme to non-Chinese financial companies in Hong Kong.

That in turn will allow them to offer renminbi-denominated funds to their clients around the world. This is a big change – until now only Chinese brokers and asset managers have been able to offer these services. Read more

On the face of it, Hong Kong’s market for new equity listings has perked up. Deal volume in the year to date is at its highest since 2010, while retail investors have finally returned. But, with many of the recent deals faring poorly in secondary trading, and China’s equity rally losing steam, the market for new offerings may stall before it gets out of first gear.

So far this year, Hong Kong has seen six deals, which have together raised $788m, compared with $452m by this time last year and $256m in 2011, according to Dealogic. Retail activity has also picked up, with heavy oversubscription in a number of this year’s offerings.

 Read more

By Georgina Adam

The Chinese art market, which in 2011 was reported to have leapfrogged the US to become the largest in the world, took a severe battering in 2012 and may have already lost its number one position, according to the front-page story in February edition of The Art Newspaper.

According to the publication, sales at China’s two largest auction houses, Poly Auction and China Guardian, have plummeted by more than half. Poly, part of a conglomerate which also includes the Chinese People’s Liberation Army, saw sales drop from $1.9bn in 2011 to $965m in 2012. China Guardian reported $1.8bn in 2011 but just $820m in sales in 2012. Read more

It has taken almost a week, but one of China’s biggest scrap metal dealers is finally ready for a, er, scrap.

China Metal Recycling, a HK$11bn company, was targeted by a Californian short-seller and research company on Monday. Glaucus Research Group, a new name on the beat-em-up circuit, issued a report on Monday accusing the the Hong Kong-listed group of exaggerating the size of its business. Read more

No retail sector in the world has benefitted as much from the new wealth in China as Hong Kong’s has. But in the second half of 2012 retail sales growth slumped to single digits, a far cry from the 20 per cent monthly growth rates in 2011.

However, despite this slowing growth, the Hong Kong Tourism Board revealed on Monday a 16 per cent increase in visitor arrivals to the city to 49m in 2012, with a staggering 35m coming from mainland China. Why the slump? Read more

From time to time concerns are raised that Hong Kong could one day be eclipsed by financial centres on the Chinese mainland, notably Shanghai. But such fears are overblown according to a new report from HSBC’s Donna Kwok, which says Hong Kong has quite enough advantages to avoid being put in the shade any time soon. Read more

This time last year, foreign retailers were queuing to open flagship stores in Hong Kong in order to capture the millions of mainland Chinese who visit the low-tax territory each year to shop.

But this week’s data on retail sales is a reminder that the shoppers’ paradise is losing its lustre. Read more

Lean times require mean valuations. And so it is with Chinese state-owned insurer PICC Group, which has cut back the proposed price tag on its Hong Kong IPO from an original estimate of up to $30.5bn to $15.4bn-$18.2bn.

The much-delayed sale would still raise up to $3.6bn in Hong Kong’s biggest offering since AIA (also an insurer) secured $20.5bn in 2010. With cornerstone investors headed by US insurer AIG and Chinese state companies pledging $1.85bn, the deal – at its new price level – finally seems set to reach the market. Read more

According to some measures, Hong Kong has the second worst air quality in China. It is a problem the city must address if it wants to maintain its position as Asia’s leading international city.

Big city Chinese tend to look down on people from anywhere other than Shanghai, Beijing and Guangzhou. But last year nearly 9m Chinese from cities other than those three visited Hong Kong and spent the night, according to the latest Mainland Chinese Visitor Study from Nielsen – up 43 per cent last year over the previous year.

Like their big city brethren, they come to shop – but they don’t necessarily like to buy the same things. Read more

There is a chill in the air as Sotheby’s opens its Hong Kong autumn sales on Friday, and it’s not because the worst of the summer heat is over.

This week is China’s “Golden Week”, traditionally the public holiday when the world’s most populous country goes on holiday and spends a lot of money abroad. But retailers in Hong Kong – the most popular destination for mainland tourists – have noticed a sharp fall off in sales growth this year. Read more

Webb and web

It’s a basic rule of investing: don’t buy shares in companies whose directors and advisers have poor track records.

The trouble, however, is that digging up this kind of historical data has traditionally been a laborious undertaking, particularly for retail investors without access to expensive terminals like Bloomberg or Reuters.

Not any more – at least in Hong Kong, thanks to a powerful, free, online database created by David Webb, the corporate governance activist. Read more

Coal may be an unloved commodity and IPO markets may be floundering, but a Chinese coal producer has just raised $900m in Hong Kong’s second-biggest new share sale this year.

Inner Mongolia Yitai Coal, the biggest coal group in the Chinese region bordering Mongolia, sold 162.8m shares at HK$43 (US$5.50) apiece on Friday, at the low end of a range marketed to investors, Reuters reportedRead more

If it ain’t broke, don’t fix it. That’s the reaction in Hong Kong to the suggestion by Joseph Yam that the territory should consider breaking its currency’s 28-year-old peg to the US dollar.

Yam, who ran the Hong Kong Monetary Authority for 16 years until 2009, proposed in a paper on Tuesday that the Hong Kong dollar could be managed in a more flexible fashion against the dollar, renminbi, or a basket of currencies. Read more

The cost of borrowing in Hong Kong will rise for homebuyers, businesses and mainland clients as credit becomes more scarce and provisions for bad loans tick higher, according to analysts.

Banking sector teams at Macquarie and Barclays Capital agree the outlook for local banks is set to worsen this year but differ on the reasons why – with Barclays citing convergence with the Chinese monetary system through the offshore renminbi market and Macquarie blaming competition from Chinese banks. Read more