Business

Top banks anticipate intra-Asian trade to grow triggered by the "China plus one" strategy at Tuesday's global financial leaders' investment summit held in the nation's offshore financial centre. “The China-plus-one strategy has formed a virtuous circle and brought opportunities among Asia, and ASEAN, as China's largest partner, has benefited regionally,” said Georges Elhedery, the chief executive officer of HSBC, in the Hong Kong Global Investment Summit, organised by The Hong Kong Monetary Authority.  The “China Plus One” Strategy, where investors avoid investing in China only but also invest in its neighbourhood to hedge against tariffs and geopolitical conflicts, could increase the intra-Asian trade by 65% this year, as estimated by Elhedery. According to China's General Administration of Customs, China's imports and exports to ASEAN grew by 10.5% in the first half of 2024, making it the number-one trading partner for the fourth consecutive year. Meanwhile, China also accounts for around 50% of the Foreign Direct Investment in ASEAN countries, according to Elhedery. “The opportunities in ASEAN are vast and varied, and as a large trade bank, (we view) the Asian market is very important to us, especially the Chinese market,” said Bill Winster, the chief executive officer of Standard Chartered. The expanding trade corridor between China and Southeast Asia meant more opportunities for the bank, said Winster. However, Huang Yiping, the Dean of the National School of Development of Peking University,  said that although the Chinese government's policies are “aggressive enough”, it should do more to boost its economy. In September, the Chinese government revealed a series of stimulus policies towards the nation’s sluggish property market, including trimming the lending rates, mortgage rates and down payments with facilities for institutional investors on the stock market. “China will run out of the advantage of low cost and the population ageing in …

Hong Kong's virtual banks need more regulations that would make them more competitive compared to the conventional brick-and-mortar banks, the experts said on Tuesday. "HKMA treats us the same as traditional banks, and its policies are based more on the status quo of traditional banks, which took a lot of our time and manpower and affected our normal business operations," said Tobie Marais, the head of the Information and Cyber Security of Mox Bank, in the Hong Kong Fintech Week. Marais's call follows the latest decision from the Hong Kong Monetary Authority to stop issuing licences for branchless banks in August, which will give the city's current eight virtual banks more space to grow. The eight licensed digital banks together gained HK$49.9 billion in assets last year, which accounts for only 0.3% of the total market shares, according to the HKMA's data. Paul Tang, the chief operating officer of Payment Asia, echoed the proposal that virtual banks need more pertinent regulations to support their business expansion in the short term. "The investment cost of virtual banks is high in the early stage, while the operation mode is also different from traditional banks," said Tang. The virtual banks in Hong Kong were established with the mission of stimulating more innovations, fintech adaptations, and competitiveness. Nonetheless, all eight licences haven't started to make profits and have to follow the exact requirements as brick-and-mortar banks, according to the city's de facto central bank. Virtual banks, such as Air Star, provide up to 6.88% of annual interest rates, offering higher interest rates to attract people's deposits. "Digital banks are different from traditional banks, so old ways don't fit. Only with new policies can digital banks leverage their unique advantages," said Oliver Hughes, Head of International Business at TBC Bank Group, highlighting that virtual banks …

Hong Kong's stock market twisted the six-day increase and closed lower as China’s central bank slashed the short-term rate after the US interest rate eased the yuan’s pressure. The Hang Seng Index edged down by 0.06% to 18,247.11 at the close, snapping the six-day streak to last Friday, and the Hang Seng Tech Index decreased by 0.15% due to the drop in mainland electric vehicle stocks. XIAOMI-W Holdings jumped by 3.37% to HK$20.55 after announcing the official launch of the latest Redmi Note 14 series on Sept. 26. Chinese Aoyuan Group surged by 126.89% as the UAE-based investment firm, Multi Gold Group, became its main shareholder. The Chinese Biotech company Wuxi AppTec dropped by 3.65% at the close, and WuXi Biologics, its subsidiary, slipped by 5.08%. CHINA RES Power Group rallied 3.33% to its five-day high of HK$19.84 after the company published its financial report. LENOVO Group surged 2.56% to HK$9.63, and GEELY AUTO Group added 2.11% to HK$10.18 on its first trading day after launching its new car last Friday night. “The cut of US interest rate last week made Hong Kong’s stock gain rapidly,” said Herald van der Linde, the head of equity strategy, Asia Pacific at HSBC.“But this week, as initial excitement and confidence at first hearing the interest rate cut have passed, people are considering whether the market could meet their expectations.” Financial Secretary Paul Chan Mo-po reminded investors the pace of cuts in the prime rate used by commercial banks ‘may be slower’ than those in the US on Sept. 19. The People’s Bank of China cut the 14-day reverse repurchase rate to 1.85% from 1.95% on Monday to maintain the liquidity of the banking system, according to the statement on its website. The weak outlook of the US economy leads to the interest rate …

Hong Kong lenders have lowered their prime rates for the first time since 2019 to boost the local economy just after the US Federal Reserve’s interest rate cut. HSBC cut the prime lending rate by a quarter of a point to 5.625% effective Friday, and the deposit rate over HK$5,000 will be decreased by the same margin to 0.625% per year, according to the bank. Bank of China (Hong Kong), also reduced the loan rate for its best customers by the same amount to 5.625%, starting from Sep. 23, the bank said. The action echoed the US Federal Reserve’s decision to cut the base rate by 50 basis points on Thursday. Hong Kong Monetary Authority, the city’s de facto central bank, followed the decrease to 5.25% to maintain the exchange rate with the US dollar. “By now various indicators show that inflationary pressure in the US has eased,” said Howard Lee, the acting chief executive at HKMA. “With signs of labour market cooling down, the Fed’s 50-basis-point rate cut is largely in line with market expectations.” During the Fed’s rate-hike cycle since March 2022 in response to inflation, interest rates were raised 11 times by a 5.25 percentage point, according to the HKMA. Chong Tai-leung, the executive director of Lau Chor Tak Institute of Global Economics and Finance, said the Interest rate cut will release money from fixed deposits, and most of this money will go back to the stock market, which simulates stocks upwards first.  “If all the money from fixed deposits comes back, the stocks could be pushed to over 30,000; even half of it comes back, our stocks could also soar to about 24,000.” The Japanese stock market tops the increase of 2.1% among major Asian markets on Thursday. The Hang Seng Index reached a two-month high …