Tag Archives: finance

HK stares at tourism abyss as funds keep flowing

Hong Kong remains China’s key gateway for foreign investment despite the protests, according to the latest data from Beijing. As SCMP reports, China received US$62.9 billion in foreign direct investment via Hong Kong in the first eight months of this year, accounting for 70 per cent of total inflows. The rise was even sharper once the monthly number for August was calculated: US$7.53 billion, up 29.2% from the same month last year.

It’s hard to blame or credit these flows on anything Hong Kong is doing, as Investment decisions into China are often months, if not years, in the planning. Still, the numbers might bring some comfort at a time when the tourism pillar of the economy is crumbling. 

According to this SCMP report, Causeway Bay is struggling, with one in ten shops standing empty and thousands of staff facing job losses. We think a very painful withdrawal experience lies ahead as the city is forced off the drug that it has been hooked on since 2003. Mainland tourists have other options, including Macau, and once mainland tariffs on imported goods start being completely repealed, they will likely have little reason to come back – even if the protests somehow start to subside.

Across the city, the hotel industry is reeling. But landlords appear to be doing what they do best: forcing management companies to let go of staff while they figure out the best way to reconvert the buildings into office space. And they are in the meantime looking to move their real-estate projects as fast as possible before prices start to fall off a cliff as the government strong-arms them into offering below-market discounts.

Hong Kong needs a big, new vision for its future.

Coming up: Shenzhen’s new fintech trick

Yesterday the Shenzhen Evening News had a long article extolling the virtues of the Futian district as the city’s financial heart. The main thrust of the piece is preceded by accounts of what the political leadership has been up to recently, including that Party Secretary Wang Weizhong met on August 29 with Yi Gang, head of the central bank, in Shenzhen. They discussed what any two cadres with their fingers on the pulse of international finance would: Internationalization of the renminbi, digital currency research, green finance, etc. They decided to, first and foremost, continue to deepen financial reform and opening up, realize the high-quality development of Shenzhen’s financial industry, and fully promote the implementation of the major decision-making arrangements of the Party Central Committee.

Continue reading Coming up: Shenzhen’s new fintech trick

Qianhai gets another deregulatory boost

Shenzhen’s government is boosting experimentation in its special zone of Qianhai, announcing another round of deregulatory measures focused on opening various sectors further to foreign investment. Many of the measures, 39 in total, relate to easing restrictions on human resources and encouraging cross-border capital flows.

Hong Kong, Macau and Taiwan-funded enterprises are still getting the biggest share of new support measures. However, all foreign enterprises are seeing an easing of restrictions on work permits for foreigners and an encouragement to engage in cross-border trade from a base in Qianhai. Meanwhile, tax services and patent rights are among the new measures designed to make international investors feel more secure setting up in the zone. 

Banks in the zone will now be able to conduct cross-border RMB services and trade in RMB derivatives. This includes locally registered banks being able to issue RMB loans to overseas institutions and projects. Qualified residents, meanwhile, will be able to invest in securities listed overseas.

Read more in Chinese. 

Hengqin boosts supply-chain finance with rewards

Zhuhai’s Hengqin New Area recently issued new incentives to encourage development of financial services supporting the special zone’s supply chain, with up to RMB10 million rewards available to eligible financial institutions. 

Two types of financial institutions registered or operated in Hengqin are eligible. One is “supply chain financial institutions”, such as commercial banks, trust companies, microfinance companies, financing guarantee agencies, financial leasing companies, and commercial factoring companies. The other is “financial service platforms” which refers to institutions providing supplementary services such as information exchange, technological support, education, training, legal and tax services. 

For microfinance companies, financing guarantee agencies, financial leasing companies, and commercial factoring companies, the government offers a rebate of 1% of the tax paid, up to RMB10 million for each company. 

The management committee of the Hengqin New Area is also encouraging supply chain financial products, business model innovation, and other contributions to the local economy. RMB5 million will serve as reward for outstanding teams or individuals. 

Read more in Chinese.

GBA Briefs: 19/6/2019

Zhaoqing Park: Zhaoqing’s Deqing district has allocated a 100-acre site for its first industrial park. The park will see a total investment of RMB800 million to build an industrial cluster focusing on electronics and electrical appliances. Read more. 

Qianhai incentives: Shenzhen’s Qianhai is offering rental rebates of up to 50%, capped at RMB5 million annually, to attract those companies that have registered in Qianhai but are not yet operating in the area. Read more. 

Healthy Gaming: Macau’s gaming industry is a pillar of the local economy and local taxation, but the sector should be kept in a state of “healthy development”, said Ho Iat Seng who made a formal announcement yesterday to run for Macau’s chief executive. Read more. 

Superman Gift: Hong Kong tycoon Li Ka-shing is donating RMB100 million to his hometown Shantou University to fund tuition for all undergraduate students for the class of 2022 up until 2027, making it China’s first university to waive tuition fees for its entire student body. Read more. 

PBOC HK Issue: The People’s Bank of China will issue central bank bills worth RMB30 billion in Hong Kong on June 26, with the aim to improve the yuan yield curve in the city. Read more.

Earthquake alert: Shenzhen will build an earthquake-alert system next year which will send out messages to residents through an app on mobile phones or computers. Read more.

New finance zone: Guangdong has issued a white paper to explore the establishment of a Guangdong-Hong Kong-Macau financial cooperation zone, which would trial cross-border finance, financial leasing, shipping and marine finance. Read more

HK GDP: Hong Kong’s GDP increased by 0.6% in real terms in the first quarter of 2019 over a year earlier, compared with the 1.2% increase in the fourth quarter of 2018. Read more

Huizhou lagging: According to Huizhou’s statistics bureau, average per capita disposable income reached RMB33,929 last year, with about 70% coming from monthly salary. The average salary rose 7% in real terms, slower than the average of the province. Read more

Guangzhou goes after HK, Macau youth

The provincial capital is raising the bar for other Greater Bay Area cities, rolling out incentives for Hong Kong and Macau youth to live and work in Guangzhou. These include a RMB1 billion seeding fund, apartments, and other subsidies under a new program that will launch this weekend.

The key focus of the plan is to “encourage innovation and entrepreneurship”. The city government will build 10 innovation and entrepreneurship bases over the next three years, supported by more than 1,000 apartments, all underpinned by a RMB1 billion investment fund. Young talents from the two SARs can enjoy free company registrations, discounted office rents and a bunch of other support services at these venues.

Cold hard cash will be up for grabs, too. Subsidies for individuals of up to RMB200,000 per year will be available; for partnerships it will rise to RMB300,000 per person; and for enterprises it can rise as high as RMB3 million per company. Moreover, loans of up to RMB5 million per project will be offered.

That is not all. Talented youth who don’t feel terribly entrepreneurial just yet but would like a career to start, worry no more: Guangzhou will provide around 2,000 internship opportunities in the fields of information technology, artificial intelligence, biomedicine, autonomous vehicles, finance and government-related institutions.

Did we hear you say tax exemptions? Of course, those will be on offer, too. Details to come.

Read more (in Chinese).

P2P to get boost from GBA, says DBS 

China’s peer-to-peer (P2P) lending industry, which has shrunk dramatically under a government crackdown, should get a welcome boost from the development of the Greater Bay Area, according to DBS Bank.

By 2030, P2P lending will enjoy an annual growth rate of 17% in the region, making it the fourth-fastest growing sector, SCMP reported, citing the Singaporean bank’s estimate.

“We see that P2P lending across China could reach one trillion yuan by 2030, and the Greater Bay Area with its particular focus on innovation and entrepreneurship, would be more open to the P2P concept,” said Ken Shih, senior research director at DBS.

“A capital-intensive industry upgrade is inevitable, and P2P platforms can meet the financing needs of new business formats – small and micro companies in particular,” he added.

The bank ranks P2P lending fourth in a table of estimated growth rates for different sectors in the bay area by 2030. Smart appliances top the list with a forecast 30 per cent growth rate, while P2P is just behind online advertising in third place.

Read more.

HSBC plans more China tech jobs  

HSBC plans to add more than 1,000 jobs this year at its technology development centers in Guangzhou, Shanghai and Xi’an, reports Reuters.

HSBC’s expansion plan in China, a key market for the bank, comes amid growing use of technology in the financial sector – from payments to transactions. At stake is a bigger share of the billions of dollars worth of retail and corporate banking business in a major financial market with a growing customer base.

About 30% of the work done at the Guangzhou center, the largest HSBC tech facility in China with more than 5,000 employees, is for the mainland market and that share is expected to grow over the next couple of years.

Read more.

Netease Pay gets into export settlement 

Netease Pay, Guangzhou-based internet company Netease’s payment arm, has partnered with US-based Citibank to provide cross-border e-commerce operators with accounts that can collect payments in foreign currencies. China UnionPay and China Netcom will handle the forex conversion, reports Yicai Global.

The service is aimed primarily at Chinese exporters and is a new focus for Netease, which established itself as the country’s leading e-commerce platform for Chinese buying goods internationally. Cross-border financing, tax refunds and other services will likely be added in Q3, after the platform has improved its basic functions, according to a company spokesperson.

Netease’s Koala had a 27.5% market share of total cross-border e-commerce in Q1, according to Guangdong-based iiMedia Research. Alibaba’s Aliexpress service is its prime competitor.