GMT EIGHT - Hong Kong & MaCao

The number of companies established in Hong Kong and startups has reached a new high, and Hong Kong's competitiveness continues to rise.

On December 17th, the results of the "2024 Annual Survey of Companies with Overseas Parent Companies in Hong Kong" and the "2024 Startup Business Survey" showed that in 2024, the number of companies with parent companies overseas and on the mainland in Hong Kong increased to 9960, while the number of startup businesses in Hong Kong increased to 4694, both reaching a new high. This demonstrates that Hong Kong's business attractiveness is increasing, and it continues to be an ideal location for companies from both domestic and international markets to establish or expand their businesses. Nicholas Yang, the Secretary for Commerce and Economic Development, said, "With its unique advantages under the 'one country, two systems' policy, Hong Kong is the best dual platform for overseas companies to explore the mainland market and for mainland companies to 'go global', making it their preferred investment destination. Despite uncertain global economic conditions, changes in market patterns post-pandemic, and factors like geopolitical tensions hindering companies' plans to expand globally, Hong Kong's business-friendly environment continues to maintain its unique advantages and attractiveness, bringing huge opportunities for businesses." He continued, "On the other hand, the number of startup businesses in Hong Kong continues to grow significantly, showing that the various support measures introduced by the government in recent years are effective in providing an ideal ecosystem for startups, promoting the vibrant development of local startup businesses." As Hong Kong continues to recover after the pandemic, the number of companies with parent companies overseas and on the mainland in Hong Kong has grown substantially. According to the "2024 Annual Survey of Companies with Overseas Parent Companies in Hong Kong" conducted jointly by Invest Hong Kong and the Census and Statistics Department, the number of such companies reached 9960 in 2024, an increase of more than 920 from the previous year, representing a 10% increase, with 493,000 employees, a 5% year-on-year increase. By analysis based on the location of the parent company, in 2024, the number of companies from mainland China in Hong Kong was the highest (2620), followed by Japan (1430), the United States (1390), the United Kingdom (720), and Singapore (520). Yang pointed out, "Mainland companies in Hong Kong continue to take the lead, once again proving that Hong Kong is the preferred platform for mainland companies to 'go global'. The increasing number of companies from overseas in Hong Kong also reflects that despite the impact of geopolitical tensions, companies maintain a practical attitude towards expanding their business, rationally choosing Hong Kong as their base to expand their business in Asia. As the only city in the world that combines Chinese and global advantages, Hong Kong will continue to actively play the role of a 'super connector' and 'super value-added person', better 'bringing in and going out', and enhancing the momentum of Hong Kong's economic and trade development." Data shows that among the 9960 companies in Hong Kong, the largest number of companies engaged in import and export trade, wholesale and retail businesses (4730), followed by financial and banking industries (2020), and professional, commercial, and educational services (1530) in 2024. In addition, the results of the "2024 Startup Business Survey" conducted by Invest Hong Kong show that Hong Kong's startup businesses continue to thrive, with a 10% increase to 4694 companies compared to last year, reaching a historic high, proving the attractiveness of Hong Kong to startup founders. These startup businesses employ 17,651 people, a 7% increase from the previous year. These startup businesses cover various industries, including financial technology, information technology, electronics commerce, education and learning, and data analytics. It is worth mentioning that the health and medical, as well as sustainable/green technology industries recorded significant increases of 54% and 82% respectively.

17/12/2024

Hong Kong dollar interbank rate rises for two consecutive months, while overnight rates fall for three consecutive days.

On December 17th, the Hong Kong dollar interbank interest rates showed mixed developments. The overnight rate ended a three-day decline, returning to a level of 3.9%, while the one-month interbank rate related to property loans increased for two consecutive days, reaching 4.47345%. The three-month interbank rate, reflecting the cost of bank funds, slightly rose to 4.35423%, but the six-month rate fell to 4.14452%. The one-year rate remained steady at 4.1%.

17/12/2024

Secretary for Financial Services and the Treasury Paul Chan announced the launch of the consultation on the Hong Kong Budget, aiming to promote economic growth and industry prosperity.

On December 17th, Hong Kong Chief Executive John Lee Ka-chiu attended a meeting before the association and stated that the consultation work on the financial budget had begun. The government will handle financial issues by increasing revenue and cutting expenses to boost overall local economic development, enhance local economic growth, increase government revenue, and benefit every industry. He mentioned that Financial Secretary Paul Chan Mo-po will actively develop some projects in revenue generation and cost-saving, increase economic activities and new growth points. After collecting opinions, the budget will be tailored to the actual situation in Hong Kong. Hong Kong's Gross Domestic Product mainly relies on investment, consumption, and exports. Regarding investment, John Lee Ka-chiu mentioned that the government will continue to ensure an annual investment of around HK$90 billion to sustain long-term economic growth. As for private investment, he noted that the current situation is uncertain, leading to more cautious private investments. The consumption market has also changed, with an increase in mainland visitors since Shenzhen resumed "multiple entries on one visa." This has led to an increase in foot traffic and improved atmosphere in the market, resulting in increased turnover in many industries. He believes that during the Christmas and New Year peak season, the number of visitors to Hong Kong will continue to rise, leading to increased consumption. He urged the industry to capitalize on online shopping opportunities amidst the decline in physical retail. In response to the issue of budget deficit, some have suggested reducing salaries or cutting the civil service establishment. John Lee Ka-chiu responded by welcoming all opinions, stating that each opinion will be carefully studied. The government will consider different opinions and analyze the underlying concepts and data to balance overall interests.

17/12/2024

Breaking records again! Southbound funds are expected to "go on a buying spree" in Hong Kong stocks, with an estimated investment of 750 billion Hong Kong dollars in 2024. After ten years of mutual market access, there is now one-third of the world.

As of December 13th, the cumulative turnover of southbound funds through the Hong Kong Stock Connect has exceeded 10 trillion yuan so far this year, surpassing the total for last year by nearly 50%. According to the latest data from Wind, the annual turnover of the Hang Seng Index has already surpassed 3.1 trillion Hong Kong dollars in 2024. This also means that southbound funds through the Hong Kong Stock Connect account for about one-third of the current Hong Kong stock market turnover, making it a crucial player in the market. The tenth anniversary of the mutual market access program has seen record inflows of southbound funds. As of the time of writing, net purchases of southbound funds for the year have reached 751.819 billion yuan, a year-on-year increase of about 136%, setting a new annual record for inflows. This year marks the tenth consecutive year of net purchases since the program was launched, with no doubt. The 136% annual increase in net inflows also ranks among the top three in history. Especially considering that the accumulated net inflow of southbound funds to the Hong Kong stock market is already around 3.64 trillion Hong Kong dollars, the ability to continue large-scale inflows under such a huge base continues to demonstrate the strong commitment of domestic funds to increase their holdings in Hong Kong stocks. In terms of market trends, the liquidity brought in by southbound funds has played a decisive role in supporting the Hong Kong stock market in 2024. Looking at the trend of inflows, when the Hang Seng Index was hovering below 20,000 points in the second quarter, southbound funds continued to buy strongly in Hong Kong stocks. The average monthly net inflow from March to June exceeded 80 billion Hong Kong dollars. The peak monthly net inflow of southbound funds in 2023 was only about 75.5 billion Hong Kong dollars. It is worth noting that in September, the Hong Kong stock market surged in the short term on expectations of incremental policies, but then experienced continuous pullbacks in October and November. During this period, southbound funds once again provided support by significantly buying about 83.8 billion and 125 billion Hong Kong dollars respectively. The 125 billion Hong Kong dollars in November set a new monthly inflow record in nearly four years. The record inflows of funds are backed by continuously released policy dividends. Among them, the expansion of eligible products for southbound funds through the introduction of ETF connectivity between the two markets has further strengthened the foundation. On April 19, 2024, the China Securities Regulatory Commission announced five optimization measures for the mutual market access, further expanding the range of eligible stock ETF products. On July 22, the Hong Kong Stock Exchange and the Shanghai and Shenzhen Stock Exchanges respectively announced the latest list of ETF connectivity targets according to the new standards, and the expansion of eligible ETFs officially took effect. After the expansion, the Hong Kong Stock Connect added six new ETFs (for a total of 16). The report shows that by the end of November, the total market value of eligible HKEX trading funds (ETFs) exceeded 300 billion Hong Kong dollars. Ashley Alder, the CEO of the Hong Kong Securities and Futures Commission, has stated that the Hong Kong ETF market has achieved several new milestones this year, as eligible ETFs continue to grow steadily under the market connectivity mechanism, and because of the new links established between Hong Kong and the Middle East. Heavy betting on financial and consumer stocks - Alibaba (09988) attracts over 80 billion yuan in investment As of last Friday, in terms of the structure of southbound capital inflows, the financial, non-essential consumer, and energy sectors have been the top three industries in terms of inflows during the year. The inflows amounted to 174.34 billion Hong Kong dollars, 122.624 billion Hong Kong dollars, and 64.925 billion Hong Kong dollars respectively. Unlike the defensive industries of electricity, telecommunications, and energy that were grouped together last year, in 2024, southbound funds have shown more interest in attacking industries with growth potential and cyclical properties. However, for industries like pharmaceuticals and real estate that are still in a cyclical downturn, southbound funds have not "buying on the dip" as much, and the share of holdings in terms of market value has decreased. In terms of individual stocks, there have been some changes in the top ten holdings of southbound funds. Tencent and China Mobile Limited continue to rank in the top two, with net increases of 50.62 million shares and 471 million shares respectively this year. In addition, Bank of China and Alibaba have replaced China Shenhua Energy and Semiconductor Manufacturing International Corporation to become the top ten heavy holdings of southbound funds. On September 10, Alibaba was listed on the Hong Kong Stock Connect and received a net inflow of nearly 8.5 billion Hong Kong dollars on the first trading day, with a total inflow of over 80 billion Hong Kong dollars this year. It is worth pointing out that despite the increasing scale of net inflows of southbound funds year after year, and the trend of further growth, the Hong Kong Stock Connect list still focuses on large market capitalization core technology stocks, heavyweight blue chips, and industry leaders. As of August 31, 2024, there were 544 stocks in the eligible range for southbound trading, accounting for 20.7% of the total number of Hong Kong stocks and 85.9% of the total market value of Hong Kong stocks. As a result, the discussions in the market about the "pricing power" of southbound funds on the Hong Kong stock market mostly focus on individual stocks, and the influence of funds on the overall market and industry trends of Hong Kong stocks still needs to be strengthened. In November, the Hong Kong Stock Exchange announced that several measures to optimize market connectivity are being prepared, including the introduction of block trading in the Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connect programs, the inclusion of Real Estate Investment Trusts (REITs) in the Shanghai-Hong Kong Stock Connect, and the inclusion of Renminbi stock trading counters in the Hong Kong Stock Connect. On December 12, the Hong Kong Securities and Futures Commission published a quarterly report stating that Hong Kong's capital markets have benefited from the successful market connectivity with the mainland since the third quarter. Since the optimization measures were introduced in February, southbound investments under the Cross-Border Wealth Management Connect program have grown by over 60%. Looking ahead, with the advancement of market connectivity between the two regions, the continuing attention of incremental funds brought by policy dividends to the targets of the Hong Kong Stock Connect, the influence of southbound funds in the Hong Kong stock market may rise to a new level. This article was originally published by "Cailian Press" and written by Feng Yi; edited by Huang Xiaodong.

17/12/2024

Liang Anqi: During the Christmas and Lunar New Year holidays, the booking rate of Macau's Wynn Hotel has reached full capacity.

Entering the peak Christmas season, Leong On Kei, the Chairman of the Macau Theme Park Resort under SJM, said in an interview with local media that the hotel reservation rate for SJM during Christmas and the Chinese New Year holiday has reached full capacity. She also believes that the launch of outdoor performance areas in Macau and hosting pre-concerts will help boost the surrounding area's hotel and merchant businesses. SJM will also launch different plans next year to drive hotel business and attract customers. The pre-concert for the outdoor performance area will be held next Saturday (the 28th). Leong On Kei quoted feedback from hotel merchants, saying they are looking forward to the Macau government organizing more performances in the area, as well as different concerts held in Macau. She also mentioned that during the events in the performance area, SJM hotel will cooperate with the government in providing necessary transportation support, assist with dispersing crowds, and hopes that the dining merchants will extend their operating hours.

16/12/2024

Hong Kong Exchanges and Clearing Limited (HKEx): Offshore Clearing Corporation in Hong Kong will start accepting onshore government bonds and policy financial bonds as collateral for swaps from January 13, 2025.

On December 16th, HKEX announced that its Hong Kong Offshore Clearing Company will begin accepting onshore government bonds and policy financial bonds held in the Bond Connect program as collateral for the "Northbound Bond Connect" from January 13th, 2025. The addition of eligible collateral can be used to pay the initial margin for "Northbound Bond Connect" transactions, providing international investors with greater flexibility and improving their capital efficiency. This optimization measure will also help further attract international investors to hold bonds in the Bank of China's bond market, promoting RMB internationalization. As an interconnected mechanism connecting the Hong Kong and Mainland interbank interest rate swap market, the Bond Connect has operated smoothly since its launch in May 2023, with stable growth in trading volume, adding vitality to the financial markets in both regions. HKEX stated that as of the end of November 2024, a total of 71 foreign institutions have participated in the "Northbound Bond Connect." In November 2024, the average daily trading volume of the Bond Connect reached 18.2 billion RMB, a significant increase from around 3 billion RMB in May 2023.

16/12/2024

In October, the overall export volume and import volume of goods in Hong Kong increased by 0.3% and 1.5% compared to the same period last year.

On December 16, the Census and Statistics Department of the Hong Kong Special Administrative Region Government released the 2024 October statistics on the volume and prices of external merchandise trade. Compared with October 2023, the overall export volume and import volume of goods in Hong Kong increased by 0.3% and 1.5% respectively in October 2024. When comparing the first ten months of 2024 with the same period in 2023, the overall export volume and import volume of goods in Hong Kong increased by 5.8% and 3.3% respectively. Seasonally adjusted figures show that for the three months ending in October 2024 compared with the previous three months, the overall export volume of goods and import volume decreased by 4.5% and 0.5% respectively. Compared with October 2023, the overall export prices and import prices of goods increased by 3.4% and 3.0% in October 2024. When comparing the first ten months of 2024 with the same period in 2023, the overall export prices and import prices of goods increased by 3.8% and 3.3% respectively. The trade price ratio index is calculated based on the ratio of the overall export price index to the overall import price index. Compared with the same period in 2023, this index increased by 0.4% in October 2024, and by 0.5% in the first ten months of 2024. Compared with October 2023, the overall export volume to Vietnam (29.9%), Mainland China (4.4%), and the United States (1.0%) recorded an increase. On the other hand, the overall export volume to Taiwan (-3.4%) and India (-34.0%) decreased. At the same time, the overall export prices to the United States (4.4%), Mainland China (4.3%), Taiwan (3.6%), and Vietnam (1.7%) increased. On the other hand, the overall export prices to India decreased by 1.0%. Compared with October 2023, the import volume from Taiwan (11.4%), Singapore (10.5%), Japan (6.3%), and Mainland China (0.7%) recorded an increase in October 2024. On the other hand, the import volume from South Korea decreased by 13.1%. Meanwhile, the import prices from all major supplying countries increased: South Korea (6.8%), Singapore (5.9%), Taiwan (5.1%), Mainland China (2.1%), and Japan (1.0%).

16/12/2024

Two new drugs have been approved for registration in Hong Kong under the "1+" mechanism.

On December 16, a spokesperson for the Hong Kong government announced that two new drugs have been approved for registration in Hong Kong under the "1+" mechanism. These two drugs in different doses are used to treat advanced small cell lung cancer, providing patients with more treatment options and showcasing Hong Kong as a "good drug hub". Since the implementation of the "1+" mechanism, a total of nine new drugs have been approved for registration under this mechanism. In addition, the Department of Health in Hong Kong will continue to promote the reform of the drug and medical device approval mechanism announced in the Chief Executive's Policy Address for 2024, including establishing a timetable for the establishment of the "Hong Kong Drug and Medical Device Regulatory Center" by the first half of 2025, moving towards a "first-layer approval" route, and implementing strategies and measures to support drug research and development. It is reported that the new drugs for the treatment of advanced small cell lung cancer have been approved by the US drug regulatory agency and have submitted registration applications under the "1+" mechanism. After the Registration Committee under the Pharmacy and Poisons Board of Hong Kong reviewed the clinical data and relevant information submitted by the applicants and consulted local experts, it was determined that these new drugs meet the relevant safety, efficacy, and quality standards, and were approved for registration in Hong Kong. The Department of Health in Hong Kong has informed the applicants of the approval results. Public information shows that Hong Kong implemented the "1+" mechanism on November 1, 2023, to facilitate the registration of new drugs for the treatment of severe or rare diseases, and expanded the "1+" mechanism to include all new drugs on November 1 this year, including products and drugs with new active ingredients or biological elements, new indications, vaccines, and advanced therapy products. If new drugs can provide local clinical data that meets the requirements and are approved by local experts, they only need to submit one (instead of the original two) reference drug regulatory agency, and can apply for registration in Hong Kong.

16/12/2024

Chen Maobo: For the first time, the BOC Hong Kong Technology Innovation Award has expanded its nomination scope to include research institutions established by Hong Kong universities within the Greater Bay Area.

Hong Kong Financial Secretary Paul Chan Mo-po attended the BOC HONG KONG Technology Innovation Award Ceremony 2024 today (December 16) and delivered a speech. He mentioned that the BOC HONG KONG Technology Innovation Award recognizes outstanding achievements of researchers and teams, enhances the visibility of excellent research results in Hong Kong, and helps to create a stronger innovation atmosphere in society. This year marks the third edition of the event, and for the first time, the nomination scope has been expanded to include research institutions established by Hong Kong tertiary institutions within the Greater Bay Area, reflecting the increasingly close connection in academia and research within the Greater Bay Area. The national government strongly supports the development of the Hong Kong International Innovation Center, hoping that Hong Kong can leverage its unique advantages to cultivate new productive forces for the country, achieve high-level technological self-reliance, and contribute to the national effort. In order to achieve this, Hong Kong needs to establish a system that supports comprehensive innovation, particularly by efficiently combining upstream basic science with midstream and downstream industries to enhance the innovation and development power. Hong Kong has outstanding basic research capabilities and has attracted top researchers from around the world. Over the past two years, the SAR government has actively promoted closer collaboration between government, industry, academia, research, and investment, encouraging the transformation, commercialization, and industrialization of research results to accelerate the development of a more complete innovation ecosystem. Three key focuses include: First, fully utilizing the advantages of the Hong Kong international financial center to provide comprehensive funding support for the innovation and technology industry. For example, Hong Kong has established the Hong Kong Investment Management Limited, which plays a guiding role with "patient capital" to leverage market funds for investments in related industries. Additionally, this year's Policy Address announced the establishment of a HK$10 billion Innovation and Technology Venture Fund to strengthen the flow of market funds into emerging and future industries. Second, attracting key enterprises to accelerate the development of a vibrant innovation and technology industry while promoting collaboration with upstream research circles, forming a mutually supportive full-chain ecosystem. In this area, Hong Kong has achieved significant results, attracting over 100 companies in the past two years in four key sectors, including artificial intelligence and big data, life and health technology, financial technology, as well as new energy and materials. The total investment of these enterprises in the coming years will exceed HK$50 billion, creating over 17,000 jobs, most of which are in research and management positions. Third, strengthening collaboration with sister cities in the Greater Bay Area to promote interactive development between research and key industries in the region. The Hehua Science and Technology Innovation Cooperation Zone is a good example. At the end of last month, the government issued the "Development Outline" for the Hong Kong Park in the cooperation zone, proposing specific innovative policy measures to promote the flow of people, materials, funds, and data between the Hong Kong and Shenzhen parks, supporting the cooperation zone to become an important source of new productive forces for the country. The most crucial factor in innovation is talent. Over the years, the Hong Kong SAR government has enhanced the STEM education level, encouraged students to study STEM subjects, supported start-up development, and attracted global talent to strengthen and expand Hong Kong's pool of innovation and technology talent. Paul Chan Mo-po expressed his sincere gratitude to the Hong Kong Science and Technology Innovation Alliance and BOC HONG KONG for establishing the Technology Innovation Award, inspiring more researchers and teams to engage in research, especially in exploring and researching cutting-edge technologies, actively responding to government policies, and contributing to a happier and better life for humanity.

16/12/2024

Hong Kong dollar interbank rates are generally rising, with one-month interbank rates slightly rebounding.

On December 16th, Hong Kong dollar interest rates generally rose, with overnight rates falling for three days in a row to 3.85571%, while a one-month rate related to property mortgages also slightly rebounded to 4.47274%. The three-month interbank rate, reflecting the cost of bank funds, also rose to 4.35375%. The six-month rate rose to 4.14524%, while the one-year rate continued to be maintained at 4.1%.

16/12/2024

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