Hong Kong Is China’s Financial Gateway To The World

Hong Kong is not only an international financial centre, it is the most important gateway to Mainland China – and connectivity is the key to enhancing cross-boundary transactions. The Chinese central government is committed to ensuring that Hong Kong maintains its status as a free port and a separate customs territory, and at the same time focus on the development of the Guangdong-Hong Kong-Macau Greater Bay Area (GBA).

Hong Kong has long been a gateway to and from Mainland China, and different data points show that the city originates and intermediates about two-thirds of China’s inward foreign direct investment and outward direct investments. As one of the Mainland’s principal trading partners, Hong Kong not only provides a channel for goods and services to go global, but also catalyses the international usage of renminbi along to the process.

The renminbi (RMB) has retained its position as the fifth most active currency for international payments by value, with a share of 2.15% as of August 2021, according to Swift data. Since the launch of the pilot scheme for cross-border trade settlement in renminbi in 2009, RMB trade settlement handled by banks in Hong Kong has seen exponential growth.

Hong Kong remains the most important offshore RMB economy by weight, accounting for more than 75% of the global total. For the financial services sector, central and Hong Kong authorities are seeking to further promote cross-boundary RMB investment and financing activities, encourage competitive Mainland Chinese enterprises are also issuing green and sustainability related products in Hong Kong, aiming it to become a hub for green finance within the GBA.

“With complementary advantages of respective markets and systems in the GBA, the financial services industry in Hong Kong has much expectation on the coordinated development of the region,” said Laurence Li, chairman of the Financial Services Development Council (FSDC), a high-level cross-sectoral advisory body set up by HKSAR Government in 2013 to promote Hong Kong’s financial services industry.

“At the same time, different stakeholders have been engaging in conversations and preparatory work to enhance the connectivity and standards of financial services and product offerings. With some favourable measures being introduced and implemented in an orderly manner, the industry believes the ever-improving connectivity of financial markets will lead to uncharted market potentials.”

The FSDC has made efforts in facilitating Hong Kong’s financial services industry to capture market opportunities in the GBA. FSDC has recommended and advocated for connecting cross-boundary payment and transfer infrastructure, enhancing the convenience of remote account opening procedures, as well as fostering cross-boundary mortgage financing, mutual funds, insurance and wealth management.

In a recent research paper, the FSDC recommended connecting cross-boundary payment and transfer infrastructure, enhancing convenience of remote account opening procedures, as well as fostering cross-boundary mortgage financing, insurance and wealth management businesses. Through capitalizing on its unparalleled strengths, Hong Kong can play a unique role in driving the concerted development of the financial services industry, and in turn enjoy the growth momentum in the region.

The newly launched Wealth Management Connect scheme will help diversify investment portfolios through exposure to overseas markets via retail funds domiciled and regulated in Hong Kong, while attracting offshore investments to onshore wealth management products in Mainland. It will also allow Hong Kong investors to broaden their mainland exposure.

Wealth Management is a major breakthrough in which retail investment funds domiciled in Hong Kong and authorized by the Securities and Futures Commission (SFC) are eligible for the scheme instead of the traditional product by product approval approach.

The scheme further integrates the Mainland and Hong Kong markets and promotes cross-border trading, following on from the successful launch of the two Stock Connect schemes that linked the stock markets of Hong Kong with Shanghai and Shenzhen in 2014 and 2016, respectively.

According to a recent KPMG client note, Wealth Management Connect represents another “significant development” in the liberalization of Mainland China’s capital account following the launch of QFII/QDII, the Mainland-Hong Kong Mutual Recognition of Funds scheme and the Stock Connect and Bond Connect schemes. The firm expected these developments would accelerate RMB internationalization and strengthen Hong Kong’s position as a global offshore RMB hub.

Meanwhile, the new southbound leg of China’s Bond Connect programed will stimulate demand from Mainland Chinese investors for Hong Kong and US dollar-denominated bonds, boosting liquidity and, thus, facilitate a more efficient price discovery process. The launch of the southbound link could broaden the investor base for both Hong Kong dollar and offshore RMB bonds, whereas the support for the US dollar bond market could be strengthened even further.

Hong Kong should also be a main contributor to the collaboration in green finance, development of Fintech and digital assets in the GBA in the future. Last but not least, the various financial liberalization measures carried out in the region will foster closer exchange among different stakeholders, including regulators and market participants, provide an appropriate market dynamic, and are in line with the longer-term national objectives of financial liberalization and internationalization. Hong Kong, in this context, will continue to play its unique role as China’s only international financial centre.

The cross-boundary nature of Hong Kong’s financial services sector, especially asset management, is constantly being reshaped thanks to the joint efforts of the government and the sector, leading to an increasing number of available product types, a wider reach to more local, international and Mainland investors with different experiences, and more diversified investment strategies and preferences. Just as the Wealth Management Connect is on the horizon, Hong Kong is marching steadily towards its vision of becoming the world’s premier wealth and asset management centre.

Follow FSDC on Twitter or LinkedIn. Check out www.fsdc.org.hk to stay in touch with their thought leadership.

Financial Services Development Council (FSDC) was established in 2013 by the Hong Kong Special Administrative Region Government as a high-level, cross-sectoral advisory body to engage the industry in formulating proposals to promote the further development of the financial services industry of Hong Kong and to map out the strategic direction for the development. The FSDC has been incorporated as a company limited by guarantee with effect from September 2018 to allow it to better discharge its functions through research, market promotion and human capital development with more flexibility.

Source: Hong Kong BrandVoice: Hong Kong Is China’s Financial Gateway To The World

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There’s No ‘Supply-Chain Shortage,’ Or Inflation. There’s Just Central Planning

It’s great that so many have copies of Adam Smith’s The Wealth of Nations, but very unfortunate that so few have read it. The alleged “supply chain” problems we’re enduring right now were explained by Smith in the book’s opening pages.

Smith wrote about a pin factory, and the then remarkable truth that one man in the factory working alone could maybe – maybe – produce one pin each day. But several men working together could produce tens of thousands.

Work divided is what enables the very work specialization that drives enormous productivity. If this was true in an 18th century pin factory, imagine how vivid the truth is today. Figure that something as basic as the creation of a pencil is the consequence of global cooperation, so what kind of remarkable global symmetry leads to the creation of an airplane, car, or computer?  The kind that can’t be planned is the short answer, but more realistically the only answer.

Please keep this in mind as you read media coverage of the so-called “supply-chain disruptions” resulting in “shortages” that are said to be causing “inflation.” If you want a bigger laugh, read about what President Biden wants to do in order to get “supply” back on the market with an eye on replenishing U.S. retail shelves that are increasingly bare. He’s decreed 24-hour port operations! Yes, thanks to the 46th president we now know what held the Soviets back, and ultimately destroyed the Soviet Union: their ports weren’t open long enough; thus the shortages of everything

All of the above would be funny if it weren’t so sad. Media members, “experts,” economists, and politicians don’t even disappoint anymore. To say they do would be to flatter them.

Either they think we have inflation, shortages, or a combination of both. Wrong on all counts. Really, who was talking about supply-chain shortages or the impossibility that is demand-driven inflation in early 2020? Very few were, and that’s because the U.S. economy was largely free then. At which point politicians panicked. And in panicking, they imposed a rather draconian form of command-and-control on the U.S. economy.

Some were free to work, some weren’t, and more still were free to work and operate their businesses within strict political limits. From freedom to central planning in a very small amount of time. At which point it’s worth considering once again the simple pin factory that Smith witnessed in the 18th century versus the global cooperation that was the norm 19 months ago.

The supply lines of February 2020 were impossibly complicated structures that no politician could ever hope to design. Think billions of individuals around the world pursuing their narrow work specialization on the way to enormous global plenty. Put another way, the shelves in economically free countries were heaving with all manner of products based on economic cooperation that was staggering in scope. Brilliant as some experts claim to be, and brilliant as some politicians think they are as they look in the mirror, they could never construct the web of trillions of economic relationships that prevailed before the lockdowns. But they could destroy the web. And they did; that, or they severely impaired it.

In which case let’s please not insult reason by talking about “shortages” or “inflation” now. Let’s instead be realistic and talk about central planning. We know from the 20th century that when politicians, authoritarians or both substitute their intensely narrow knowledge for that of the marketplace that immense want for very little (and lousy) supply is the logical result. Yes it is. When we’re not economically free, bare shelves are the inevitable result.

Conversely, product and service abundance is a certain consequence yet again of the infinite actions and trillions of economic relationships entered into by billions of people. These commercial tie-ups were constructed by consenting individuals over many years and many decades only for them to be wrecked by a political class arrogantly seeking to protect us from ourselves. That’s what happens when command-and-control replaces voluntary order. The remunerative ties that bind us fray, or vanish altogether. Consenting, profitable economic activity was suddenly illegal. Yet politicians and other experts are only now wringing their hands about a lack of supply?

Really, what did they think was going to happen? While politicians couldn’t ever create or legislate billions working together around the world, they could and can surely break voluntary economic arrangements. When you have guns, handcuffs, the power to quite literally shut off power sources to the productive, not to mention the wealth produced by the productive, you have the power to impose command-and-control. And so they did, only for the “supply chains” painstakingly created in self-interested but spontaneous form over many decades to suddenly break apart. Just don’t call it inflation, or shortages.

Inflation is a devaluation of the unit of account. In our case it’s the devaluation of the dollar. And while Treasury hasn’t always done a great job as the dollar’s steward over the decades, that’s just the point. Devaluation was routine problem in the 1970s, it ceased to be in the 80s and 90s, but it reared its ugly head once again during the George W. Bush administration in the early 2000s. To say inflation is a “now” thing is to ignore that it’s more realistically been a 21st century-long thing.

We don’t suddenly have an inflation problem. To say we do is the equivalent of saying that the Soviets had inflation because all the goods worth getting were both difficult to find, and incredibly expensive if they could be found. In our case we’ve had a lockdown problem care of nail-biting politicians that suffocated commercial cooperation around the world. And with work divided less than it used to be care of government force, productivity is naturally lower than it used to be.

Please consider modern productivity in terms of Smith’s pin factory example yet again, and ask what it would do to supply. The only thing is supply shortfalls are not evidence of inflation. A rise in one price due to lack of supply implies a fall in other prices. Yes, we have a central planning problem. Were he around today, Adam Smith could diagnose this in seconds.

Follow me on Twitter.

I’m the editor of RealClearMarkets, and a senior economic adviser to Applied Finance Advisors. I’m also the author of five books. The most recent released in March is When Politicians Panicked: The New

Source: www.forbes.com

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Natural Gas Market Soars To Record Heights

European and UK gas prices surged Wednesday to record peaks, energised by fears of runaway demand in the upcoming northern hemisphere winter. Europe’s reference Dutch TTF gas price hit 162.12 euros per megawatt hour and UK prices leapt to 407.82 pence per therm in morning deals.

However, prices later erased gains to flatline in early afternoon trade. “It’s panic and fear with winter just around the corner,” Commerzbank analyst Carsten Fritsch told AFP.

Soaring gas prices — coupled with oil which has struck multi-year highs — have fuelled fears over spiking inflation and rocketing domestic energy bills. Gas demand is also heightened in Asia, particularly from China, while key Russian exports are falling.

However, Russian President Vladimir Putin declared Wednesday that Europe was to blame for the current energy crisis, after soaring gas prices spurred accusations that Moscow is withholding supplies to pressure the West.

“They’ve made mistakes,” Putin said in a televised meeting with Russian energy officials. He said that one of the factors influencing the prices was the termination of “long-term contracts” in favour of the spot market.

Some critics have accused Moscow of intentionally limiting gas supplies to Europe in an effort to hasten the launch of Nord Stream 2, a controversial pipeline connecting Russia with Germany.

At the same time, global gas stockpiles remain worryingly low.

“Natural gas prices have climbed to new peaks … as insufficient levels of inventories ahead of the winter season drive concerns for a spike in inflation and energy prices for consumers,” XTB analyst Walid Koudmani told AFP.

“These supply constraints could translate into higher costs of fuel moving into the winter months, a prospect which could further slow down economic recovery and worsen moods across markets.”

Europe’s energy crisis has also been exacerbated by a lack of wind for turbine sites, coupled with ongoing nuclear outages — and the winding down of coal mines by climate-conscious governments.

Gas demand has also galloped higher in recent months as economies reopened worldwide from their Covid-induced slumber. “The rebound in industrial activity across the world following months of Covid-related restrictions and widespread remote working … boosted demand for natural gas,” noted UniCredit economist Edoardo Campanella.

European gas futures have now multiplied by eight since April. And the market is set to shoot even higher, according to French bank Societe Generale. “Never before have power prices risen so far, so fast,” wrote Societe Generale analysts in a client note.

Shows evolution of the price of natural gas in Europe this past year to September 28 on the Dutch TTF Gas market Shows evolution of the price of natural gas in Europe this past year to September 28 on the Dutch TTF Gas market Photo: AFP / Patricio ARANA

“And we are only a few days into autumn — temperatures are still mild. “A cold winter could cause severe problems for Europe’s energy markets, where politicians are already trying to contain the fallout.”

European leaders are divided on how to respond to the record rise in energy prices, with France and Spain calling Wednesday for bold EU-wide action, while others urged patience. The European Commission — which is the European Union’s executive arm — will next week propose measures to mitigate the price surge for consumers.

Those suggestions will then be discussed by the bloc’s leaders at a summit in Brussels on October 21-22. Britain is particularly exposed to Europe’s energy crisis because of its reliance on natural gas to generate electricity.

By Roland Jackson

Source: Natural Gas Market Soars To Record Heights

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China’s Internet Tycoons Suffer $13.6 Billion Wealth Drop As Regulatory Crackdown Triggers Market Sell-Off

China’s internet billionaires suffered the biggest losses on the list of the world’s richest people on Monday, as spooked investors continued to dump stocks targeted in Beijing’s widening regulatory crackdown.

Meituan founder Wang Xing, NetEase Chief Executive Williang Ding, Pinduoduo founder Colin Zheng Huang and Tencent Chairman Pony Ma racked up a combined $13.6 billion plunge in their wealth in just one day, according to the World’s Real-Time Billionaires List. The hits to their fortunes come as a sell-off in Chinese education and technology stocks continued to spread to other sectors, with investors pondering which companies could fall under Beijing’s scrutiny next.

“[The crackdown] is a continuation of previous policies of anti-monopoly and stop the disorderly expansion of capital,” says Shen Meng, director of Beijing-based boutique investment bank Chanson and Co. “China also wants to reduce discontent among different factions of the society, and alleviate overall pressure.”

For example, following reports of long working hours and dangerous conditions, regulators are now seeking to adopt safeguards to protect food delivery riders by requiring their employers to pay more in insurance and making sure the couriers earn above minimum wage. The announcement of the new guidelines sent shares of Tencent-backed food delivery giant Meituan, which is already subject to an ongoing anti-trust probe, tumbling by as much as 10% in Hong Kong on Tuesday, after plunging 14% a day earlier.

Tencent, which also backs online marketplace Pinduoduo, lost 5% in Hong Kong today, after regulators ordered the company to give up exclusive music copyrights. The company has already pledged to comply with the directive.

In the meantime, Beijing is also seeking to alleviate some of the financial burden of parents in support of its efforts to boost declining birthrates by targeting after-school tutoring. The sector once grew rapidly as students went online to study during the pandemic, but has recently been plagued by complaints of misleading pricing and false advertising.

NetEase’s New York-listed online learning unit Youdao lost more than 60% of its market value over the last three trading days. The U.S.-listed shares of Chinese education firms Gaotu Techedu, TAL Education and New Oriental Education & Technology all plunged a similar amount, after regulators unveiled a sweeping set of rules over the weekend. It requires tutoring firms seeking to teach school syllabus to register as non-profits, as well as stop offering courses over weekends and during school vacations. The companies are also banned from going public or raising capital.

“To remain listed, they may need to spin off the businesses that are in violation of government rules, ” says Tommy Wang, a Hong Kong-based analyst at China Merchants Securities. He adds that as much as 90% of the companies’ revenues could be hit as after-school tutoring for elementary and middle school students account for the bulk of their sales.

In this uncertain environment, foreign investors would be wise to take into account policy risks and re-assess the outlook for investing in Chinese companies, according to Chanson and Co.’s Shen. The crackdown on education companies, for example, has left global investors ranging from SoftBank to Temasek struggling to find a way out of their positions. They’re among investors who had placed multi-billion dollar bets on Chinese education startups like Yuanfudao, Zuoyebang and Yi Qi Zuo Ye, which are now also being subjected to heightened regulatory scrutiny.

Claudia Wang, a Shanghai-based partner at consultancy Oliver Wyman, says one option for investors is to simply wait, and exit when the startups find a market that is on par with the online education industry that was valued at 257.3 billion yuan in 2020, and transition their business. The wait-and-see attitude is already taking hold among some investors in public markets, according to Nomura securities.

“Bruised and shaken investors are now likely to ponder which other areas could potentially become the next target of expanded state control,” analysts including Chetan Seth and Yunosuke Ikeda wrote in a recent research note. “Until news flow on regulation starts abating (no signs of it yet), we think most foreign investors will likely remain on the sidelines despite some areas of the market looking attractive over medium term on valuation grounds.”

I am a Beijing-based writer covering China’s technology sector. I contribute to Forbes, and previously I freelanced for SCMP and Nikkei. Prior to Beijing, I spent six months as an intern at TIME magazine’s Hong Kong office. I am a graduate of the Medill School of Journalism, Northwestern University. Email: ywywyuewang@gmail.com Twitter: @yueyueyuewang

Source: China’s Internet Tycoons Suffer $13.6 Billion Wealth Drop As Regulatory Crackdown Triggers Market Sell-Off

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Critics:

The Chinese government’s crackdown on big technology companies will likely last for a few years, which means those stocks aren’t a buy for now, a BlackRock portfolio manager said Wednesday.

Since autumn, regulators have ramped up scrutiny on the country’s tech giants such as Alibaba and Tencent. After years of relatively unrestrained rapid growth, becoming some of the biggest companies in the world, the corporations now face fines and new rules aimed at curbing monopolistic practices.

“This regulatory cycle is long-lasting compared to 2018,” Lucy Liu, portfolio manager for global emerging markets equities at BlackRock, said during a mid-year Asia investment outlook event.

In contrast with that period of increased scrutiny, which ran for about six months to a year, she said that this time, “we think it’s going to be a multi-year cycle.”

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Google Maps Offensive Continues as Apple Begins Mapping New Regions

While Apple Maps is said to be a solid alternative to Google Maps, it’s not necessarily a secret that Apple’s app isn’t quite here yet. Especially outside of the United States, as Apple has often been extremely slow when it comes to rolling out new features for users who don’t live in the company’s home market.

Apple Maps, for example, has already received massive updates in the United States, including better maps and new features like traffic information with road signs and traffic light warnings, but this new experience continues to be available in limited markets.

But on the other hand, the iPhone maker is working tirelessly to expand Apple Maps to more markets, as the company itself knows it’s pretty much the only way to compete with Google Maps.

And more recently, Apple sent its fleet of Subaru Impreza used for data collection to Austria, with the mapping process due to start today. The company hasn’t shared any information on how long the entire process will take, but according to local media, Apple just wants to focus on vehicle-based data for now, so foot mapping wouldn’t take place. as part of this first step in the process.

This is probably a sign that Apple wants to improve the navigation component of its app, although time will tell how quickly the new data will be available to users in Austria.

The good news is that Apple is indeed making very good progress when it comes to expanding Apple Maps to more regions. Right now, this is one of the biggest shortcomings of using Apple Maps compared to alternatives like Google Maps, as the preloaded app on iPhones still lacks map data. updated and new features in many major markets.

Apple has yet to confirm Apple Maps’ expansion in Austria, but expect to see the company’s Subaru Imprezas on the streets of the country for several months.

After Apple hinted it was parting ways with Google Maps for its own proprietary system and application, Google is firing back, announcing it has new mapping technology ahead of Apple’s World Wide Developer Conference. In an invite sent to press last week, Google promised to “show off some of the newest technology and give a sneak peak at upcoming features,” according to CNET.

No word yet on whether the mapping technology will be for Google’s Chrome browser or for android phones or both, but mobile support seems likely. Will Google’s new application include something similar to Apple’s powerful new 3-D mode, which, according to 9-to-5 Mac, boasts “beautiful, realistic graphics”? Stay tuned as Map Wars 2012 continues.

Source: Google Maps offensive continues as Apple begins mapping new regions – OLTNEWS

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Critics:

The Google Maps apps for iOS and Android have many of the same features, including turn-by-turn navigation, street view, and public transit information.Turn-by-turn navigation was originally announced by Google as a separate beta testing app exclusive to Android 2.0 devices in October 2009. The original standalone iOS version did not support the iPad, but tablet support was added with version 2.0 in July 2013. An update in June 2012 for Android devices added support for offline access to downloaded maps of certain regions, a feature that was eventually released for iOS devices, and made more robust on Android, in May 2014.

At the end of 2015 Google Maps announced its new offline functionality, but with various limitations – downloaded area cannot exceed 120,000 square kilometres and require a considerable amount of storage space. In January 2017, Google added a feature exclusively to Android that will, in some U.S. cities, indicate the level of difficulty in finding available parking spots, and on both Android and iOS, the app can, as of an April 2017 update, remember where users parked. In August 2017, Google Maps for Android was updated with new functionality to actively help the user in finding parking lots and garages close to a destination.

In December 2017, Google added a new two-wheeler mode to its Android app, designed for users in India, allowing for more accessibility in traffic conditions. In 2019 the android version introduced the new feature called live view that allows to view directions directly on the road thanks to augmented reality Google Maps won the 2020 Webby Award for Best User Interface in the category Apps, Mobile & Voice. In March 2021, Google added a feature in which user can draw missing roads.

In 2005 the Australian Nuclear Science and Technology Organisation (ANSTO) complained about the potential for terrorists to use the satellite images in planning attacks, with specific reference to the Lucas Heights nuclear reactor; however, the Australian Federal government did not support the organization’s concern. At the time of the ANSTO complaint, Google had colored over some areas for security (mostly in the US), such as the rooftop of the White House and several other Washington, D.C., US buildings.

In October 2010, Nicaraguan military commander Edén Pastora stationed Nicaraguan troops on the Isla Calero (in the delta of the San Juan River), justifying his action on the border delineation given by Google Maps. Google has since updated its data which it found to be incorrect.

On January 27, 2014, documents leaked by Edward Snowden revealed that the NSA and the GCHQ intercepted Google Maps queries made on smartphones, and used them to locate the users making these queries. One leaked document, dating to 2008, stated that “[i]t effectively means that anyone using Google Maps on a smartphone is working in support of a GCHQ system.

References

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