LI, Tao @ Hong Kong

Employment gains, as new orders increase for 10th straight month

The growth in the city’s private sector economy accelerated further in April at the fastest pace in three months, thanks to robust growth in new business from the mainland and an improving local job market, according to the latest survey by HSBC on purchasing managers.

The HSBC Hong Kong Purchasing Managers Index rose to 55.3 in April from 54.9 in March, the survey released Wednesday noted.

The April figure signaled an expansion in the private sector economy for the ninth consecutive month.

A reading above 50 signals an expansion in the private sector and improvement in the business conditions, while a reading below 50 indicates deterioration and contraction.

“Hong Kong’s PMI continued to strengthen in April, signaling increased business activity. The mainland is still our major driver of new business with growth in new orders rising to the series’ historical high. This will benefit employment as well as private consumption in the city,” said Mark McCombe, chief executive of HSBC Hong Kong.

Production growth accelerated since March, supported by improving economic conditions which boosted consumer confidence.

New orders increased for the tenth straight month, with new business received from the mainland rising at its fastest pace in the survey’s history.

The city’s employment in the private sector, meanwhile, has increased for the seventh successive month in April, reflecting the sustained rise in new work, which supported another rise in output.

Nevertheless, backlogs of work continued to increase for the past ten successive months, suggesting that pressures on operating capacity persisted in the city’s private sector.

“Since purchases had increased in line with higher output requirements, suppliers’ delivery times subsequently slowed in April, as operating capacity at vendors was tested under the increased demand,” Qu Hongbin, the bank’s chief economist for China, commented in the report.

Overall input costs increased substantially during April, fueled by both higher purchase prices and wages. Output prices, on the other hand, rose at the fastest pace since July 2008, contributing to inflationary pressure.

“While growing demand is causing price pressure to build up, the modest underlying inflation in Hong Kong suggests this is still manageable,” McCombe added.

The HSBC Hong Kong PMI is derived from indexes measuring changes in different aspects of the private sector economy including output, new orders, employment, suppliers’ delivery times and stocks of goods purchased.

China Daily

(HK Edition 05/06/2010 page2)

http://www.chinadaily.com.cn/hkedition/2010-05/06/content_9814675.htm

Journalists read the ruling document of the ATV case outside the the Court of First Instance Friday. The court ruling bars the local broadcaster from issuing low-priced convertible bonds to mainland businessman Wang Zheng. Tan Daming / China News Service

Ruling finds proposed low conversion price violates pre-existing agreement

Mainland businessman Wang Zheng’s attempt to gain a controlling stake in ATV was dealt a setback Friday after a court ruling extended the ban that prevents the local broadcaster from issuing low-priced convertible bonds to him in exchange for much needed fresh capital.

On Friday, the Court of First Instance ruled that the proposed low conversion price of HK$0.28 per share violates an existing shareholder agreement, which forbids the company to issue any shares at a price below HK$2.47 per share. It said the proposed bond issuance – when eventually converted into new ATV shares – will significantly dilute the shareholding of Tsai Eng-meng, Chairman of Want Want China Holdings, and will thwart his attempt to control ATV in the future.

Tsai, who filed a petition to the court against the convertible bond issuance, became a substantial shareholder in ATV late last year with an investment of HK$280 million, with the ultimate aim of gaining control over ATV by buying more shares from Payson Cha, ATV’s major shareholder.

The court, nevertheless, allows Cha to sell his private company, Panfair, which holds a 10.75 percent stake in ATV, to any third party.

The ban on the issuance of conversion bonds has effectively prevented Wang from gaining a controlling stake in ATV through the convertible bonds even if he successfully acquires the 10.75 percent stake that Cha controls through Panfair.

Tsai welcomed the court ruling, and in a prepared statement said, “I am gratified and encouraged by the ruling, and I am looking forward to financing the broadcaster in a fair and equitable way in the future”.

ATV responded with a statement indicating that the management respects the court ruling.

Cha proposed to issue low-priced convertible bonds last November and secured approval from the board. Tsai said the approval was given without his consent. Cha has countered by maintaining that ATV has needed to issue the bonds in order to raise fresh capital to sustain its operation.

Lawyer Ronny Tong said even though the court didn’t stop Cha from selling the stake held by Panfair to Wang, Tsai has won the case, since his interests have been protected with the injunction on the bond issuance.

Earlier this month, reports said Wang was ready to pour about HK$400 million into ATV, which has been in the red and has failed to pay HK$34 million in license fees.

If Wang’s proposed capital injection eventually falls through, the financially-stressed TV station could face the risk of bankruptcy.

ATV’s Chief Executive Nancy Hu subsequently said that although the TV station is still incurring a loss, the loss in the first quarter of 2010 has shrunk by half compared with the same period a year ago.

China Daily

(HK Edition 05/01/2010 page2)

www.chinadaily.com.cn/hkedition/2010-05/01/content_9799596.htm