Hong Kong

Prudential’s threat to quit UK isn’t just hot air

12 Mar 2012

The insurer is reviewing its domicile, citing the burden of European regulation. Upping sticks to Hong Kong wouldn’t protect Pru from all the reforms, and would yield few tax savings. But if the new rules turn out bad, decamping to its main growth market would make sense.

Political flameout shows risks hidden in China

17 Feb 2012

Rising star Bo Xilai has suffered an embarrassing but mysterious setback. Compare that to Hong Kong would-be leader Henry Tang. His problems are as mundane as Bo’s are opaque. When it comes to political risk and transparency, investors in the PRC are basically flying blind.

HK’s dimsum bonds no longer too hot to eat

17 Jan 2012

Yields of yuan bonds in Hong Kong have risen to a year-high, as investors now expect to gain less from the currency. But a less frothy market attracts more quality investors. Development of the swap market helps make dimsums a viable funding alternative for multinationals.

Hong Kong needs to add polish to its IPO crown

9 Dec 2011

Asia’s financial centre is set to cede IPO leadership back to New York. Deal flows from China are strong and global giants like to list close to the world’s biggest growth market. But HK’s listing process may have to be shorter and simpler if it is to quickly regain top spot.

Michael Kors IPO cut from same cloth as Prada’s

6 Dec 2011

The U.S. designer’s eponymous firm is seeking a luxury price tag of up to $3.6 bln in a New York float. It’s an all-American fashion name and the high-end valuation isn’t out of line with Prada’s Hong Kong listing this year. But Kors may struggle to keep up the pace of growth.

PCCW spinoff can’t unwind tycoon discount

23 Nov 2011

Richard Li’s conglomerate snagged a generous $3.8 bln price tag for its Hong Kong telecom business, thanks to a promise of fat dividends. But the spinoff exposes an inconvenient truth: the mogul’s own holding company is valued at almost 40 percent less than the sum of its parts.

Richard Li’s financial alchemy fails to wow

12 Oct 2011

The HK tycoon’s plan to spin off his telecoms business into an innovative trust structure is designed to unwind PCCW’s huge conglomerate discount, while preserving his control. The cost is unnecessary complexity, and potential dilution of minority shareholders.

HK banks’ yuan strategy looks bad for earnings

11 Oct 2011

Taking deposits in the Chinese currency isn’t the opportunity it first seemed for Hong Kong’s lenders. The business is barely profitable, and migration of savings into yuan has exacerbated a HK dollar shortage, pushing up the cost of deposits and threatening to hurt margins.

IMF financial crisis indicator bodes ill for China

21 Sep 2011

The fund has found a measure of credit growth that could predict crunches. It makes the Middle Kingdom look precarious and heralds problems for Turkey and Vietnam. The IMF’s crisis-spotting record is lousy. But overheating nations shouldn’t dismiss what seems a sensible metric.

Ackman’s gamble on Hong Kong unlikely to pay

16 Sep 2011

The activist fund manager is betting Hong Kong will re-peg its currency higher against the dollar. That may make sense given divergent economies, but could hurt the city’s competitiveness and do little to combat inflation. Bets like Ackman’s only encourage authorities to dig in.

StanChart investors should not get carried away

3 Aug 2011

The lender’s income is growing at a double-digit clip and it is hiring, not firing. Even better, costs are under control. But StanChart’s premium valuation leaves little room for error. A first-half hiccup in India is a reminder that emerging market growth is seldom linear.

HSBC supertanker will take time to turn around

1 Aug 2011

CEO Stuart Gulliver wants to make the bank more efficient, but emerging market wage inflation means costs are still rising. Factor in new capital rules, and HSBC’s return on equity is also well below target. It’s no surprise the bank is planning to slash another 25,000 jobs.