LI, Tao @ Hong Kong

A security guard stands outside a China Telecom Corp branch office in Beijing in March, 2010. The company said Tuesday that it will invest about HK$200 million to build internet data centers in Hong Kong and Singapore. Adam Dean / Bloomberg News

Firm looking to diversify its business, expand global footprint

China Telecom Corp, the country’s largest fixed-line carrier, said Tuesday it will invest about HK$200 million to build internet data centers (IDCs) in Hong Kong and Singapore. The company is looking to diversify its business and grow its international presence.

“The launch of IDCs in both of these Asia Pacific gateway cities marks an important milestone in China Telecom’s globalization,” said Deng Xiaofeng, chief executive officer of China Telecom’s international arm. “We can now offer an unrivalled IDC network and integration with a wide range of information and communication technology (ICT) application extensions to our clients.”

China Telecom will also look for opportunities to build more data centers in other developed, open markets – such as Japan and Australia – to further extend its global coverage, he said.

Deng added that these first steps outside China Telecom’s home market will enhance opportunities not only for Asian companies expanding their reach, but also for Western companies to grow in Asia.

An IDC industry study in 2009 showed that despite the global economic downturn, China’s IDC market maintained strong growth figures.

The total size of China’s IDC market size reached $667 million last year, an increase of 23 percent from 2008 and is expected to reach $1.9 billion by 2014 – a five-year compound growth rate of 24 percent per year.

China Telecom, which currently owns five data bases in Beijing, Shanghai, Guangzhou, Xi’an and Chengdu, and over 260 data centers across the country, is the smallest of China’s three wireless carriers, trailing China Mobile Ltd and China Unicom (Hong Kong) Ltd.

Because of escalating competition and huge marketing expenses, all three carriers are looking for diversified business opportunities to fuel growth.

China Telecom’s first-half net profit ended June 30 rose just 0.9 percent to 9.08 billion yuan compared with 9 billion a year earlier. The number of its fixed-line accounts fell a further 4 percent from the end of 2009 to 181 million as of June 30 this year.

The company plans to lift capital spending to 44.0 billion yuan this year from its March forecast of 39.00 billion yuan to enhance coverage of its broadband business. It expects to add more than 10 million broadband internet users this year to counter its shrinking fixed-line business.

China Daily

(HK Edition 09/29/2010 page2)

http://www.chinadaily.com.cn/hkedition/2010-09/29/content_11361356.htm

The HSBC headquarters in Central. Analysts said reports of the resignation of chief executive Michael Geoghegan would not cause a fundamental change in the bank’s management. Mike Clarke / AFP

CEO’s departure to have no effect on ops: Analysts

Despite the biggest management shakeup in decades, analysts believe that it will have little effect on the business operations of UK-based HSBC Holdings. Opinion inside the boardroom was allegedly split on its choice of a new chairman.

Citing sources, reports Friday said that Douglas Flint, HSBC finance director, will replace Stephen Green as chairman of Europe’s biggest bank. Current chief executive Michael Geoghegan is also expected to leave his job at the end of the year and be replaced by the head of investment banking, Stuart Gulliver. The reports come just two weeks after Green announced he was stepping down to become the UK’s trade minister.

“HSBC is so huge that it almost runs by itself,” said Chong Tai-leung, a professor of economics at the Chinese University of Hong Kong. “Despite the unprecedented firefight for the chairman’s role at the bank being worrying, I don’t believe it will affect the bank’s stability or its business – even if two crucial boardroom posts were replaced at the same time.”

General manager of Fullbright Securities, Francis Lun, said Geoghegan would have been expecting to be elevated to the chairman’s post as the bank traditionally hands the position to its chief executive.

He believes Green’s unanticipated resignation upset the bank’s traditional management succession and led to boardroom upheaval.

Lun holds the view that the episode is “a shame” and that the lack of unity in the management team will leave a shadow of doubt to investors that the board is looking out for its own interests rather than that of its shareholders.

“However, unlike American banks where individualism on the board prevails, UK banks including HSBC are more group-led, which guarantees a smooth transition when there are important changes on the board,” said Lun.

Paul Lee, an analyst with Taifook Securities, admits to being puzzled with the rumored appointment of Flint as chairman, believing him to be unqualified both in standing as well as experience .

“If Flint becomes the chairman, it will be a very rare case of a senior finance director leapfrogging the chief executive to be appointed as chairman ,” said Lee. “Moreover, the chairman’s role is primarily about socializing. I doubt that a financial expert in treasury and investment banks such as Flint is a good choice for the position”.

However, Lee does agree that operations within the bank will remain basically the same if the new chairman and chief executive are promoted from within the company.

The Financial Times earlier reported that there were two main contenders for the post, Geoghegan and former Goldman Sachs executive John Thornton, but the prospect of being passed over for a non-executive director agitated Geoghegan so much that he threatened to resign if it happened.

HSBC has rebutted that report as “offensive” and “nonsense”.

Geoghegan will be replaced by the 51-year-old Gulliver, who runs a division that doubled its operating profit between 2005 and 2009 to become HSBC’s biggest earner, according to a Bloomberg report.

The management restructuring still needs approval from the HSBC board, which is due to meet in Shanghai next Wednesday. HSBC closed Friday 0.60 percent lower at HK$80.60.

China Daily

(HK Edition 09/25/2010 page2)

http://www.chinadaily.com.cn/hkedition/2010-09/25/content_11342063.htm

Construction workers gather outside a building site at the Central and Wan Chai Reclamation project, Hong Kong. The government said Thursday the city’s jobless rate fell to 4.2 percent in the June-August period, the lowest in the past 20 months. Jerome Favre / Bloomberg News

Underemployment rate drops to 1.9% in June-August

Hong Kong’s jobless rate fell to 4.2 percent during the June to August period, the lowest since January 2009, as new hires successfully absorbed the increase in the labor supply, the government said Thursday.

Unemployment dropped 0.1 percentage point from 4.3 percent in the previous reporting period from May to July, data released by the Census and Statistics Department showed. The city’s labor force also increased by around 125,000 during June-August compared with the previous three months.

The underemployment rate also declined 0.1 percentage point to 1.9 percent from the preceding three months.

“It demonstrates that overall labor market conditions continue to improve,” said Matthew Cheung Kin-chung, the Secretary for Labour and Welfare.

The number of private sector vacancies posted by the Labour Department in August increased by 42 percent to 74,905 over the same period last year, and up 12.2 percent compared with the preceding three months.

New jobs were mainly seen in postal and courier services, arts, entertainment and recreation, as well as the construction and financial sectors.

Youth unemployment in the June-August period worsened, however, up by 1.3 percentage points to 14.5 percent in the 15-24 age group. Cheung, however, was sanguine about the figures.

“In fact, the total employment showed a significant increase of 12,400, indicating that the market was able to absorb the new batch of fresh graduates and school leavers entering the labor market during the summer,” Cheung said.

He also forecast the labor supply to drop in the near term as some of the youngsters who joined the workforce in the summer would go back to school when the new academic year begins in September, therefore easing the pressure from unemployment.

However, Hang Seng Bank Senior Economist Irina Fan, while remaining cautiously optimistic about the outlook for the Hong Kong labor market, doesn’t see much upside from here as the pace of economic growth begins to slow.

“The 4.2 percent unemployment rate has probably reached bottom this year as employment has lagged economic growth,” Fan said. As the economy cools, Fan expects unemployment rates to stay in a tight band between 4.2 and 4.3 percent in the coming months.

China Daily

(HK Edition 09/17/2010 page3)

http://www.chinadaily.com.cn/hkedition/2010-09/17/content_11314601.htm

Residential towers rise above Government House in Hong Kong. Despite the government’s efforts to cool down the city’s housing prices, international property consultants are optimistic about the market, forecasting considerable rises in the fourth quarter and in 2011. Dennis Owen / Bloomberg News

Property consultants see further growth in Q4 and 2011

Despite government efforts to cool down the city’s housing market, international property consultants remain decidedly bullish.

DTZ is forecasting another 5-10 percent rise in the fourth quarter of 2010, while Knight Frank LLP sees a jump of 12 percent next year.

“Low unemployment rates, ample liquidity, low interest rates as well as tight supply have all supported the market, which shows no sign of abating,” said Alva To, Head of Consulting at international property advisor DTZ, at a media briefing Tuesday.

“While the greater restriction on mortgage loans may affect the purchasing power of some buyers, the residential market should be able to ride on strong fundamentals and expect further growth in prices before year end, from around 5 percent for mass residential and 10 percent for luxury residential,” To added.

The Hong Kong government has announced a series of tightening measures to stabilize the city’s buoyant property market since April. These include measures such as raising down payment ratios as well as pledging more land made available for housing developments.

However, home prices in Hong Kong have risen about 47 percent since the beginning of 2009, fast approaching 1997 highs, after which the property bubble burst.

“As of August, the price of luxury residential surpassed the historical peak in 1997 and the upward trend is likely to be sustainable in the long term,” said To, adding that the rise in that particular segment will spread to mass residential estates.

Sales have been brisk as well, with the total number of transactions in the city reaching 78,000 in the first half of 2010 alone, the highest level for a corresponding period since 1998, according to DTZ. Hong Kong homes sales have also surpassed 10,000 per month for the past 18 months.

According to a report released by London-based real estate broker Knight Frank LLP, growth in the Hong Kong property market will reach 12 percent in 2011. And, despite those figures being a slowdown from 18 percent this year as efforts to rein in property prices have some effect, it is still expected to be the fastest growing property market in the world.

“In almost all cases, the leading Asian housing markets are substantially higher than the levels seen before the credit crisis,” Knight Frank’s head of residential research Liam Bailey said in a statement.

DTZ’s To said other underlying factors will also aid Hong Kong’s property market. This includes the mainland’s promising economic prospects and its spin-off effects on Hong Kong, and low mortgage rates that are not expected to rise any time soon due to a weak US economy.

For the first three quarters, the number of transactions valued over HK$100 million hovered steadily around 60 to 70 deals per quarter, according to DTZ Co-head of Investment Alvin Yip.

China Daily

(HK Edition 09/15/2010 page2)

http://www.chinadaily.com.cn/hkedition/2010-09/15/content_11302772.htm

The strongest growth in the global timepiece market in 2011 is to take place in China, according to the majority of exhibitors taking part in a survey Friday at the Hong Kong Watch and Clock Fair.

Held at the Hong Kong Convention and Exhibition Centre (HKCEC) and sponsored by the Hong Kong Trade Development Council (HKTDC) this past week, 62 percent of exhibitors and buyers said the fastest rate of growth will take place in China. This was followed by 21 percent who believed it would be the United States and 18 percent who vouched for India.

China’s large population and fast economic growth means timepiece consumption on the mainland will reach all segments of the market, said Joseph Chu, chairman of the Federation of Hong Kong Watch Trades & Industries.

The survey, commissioned by the HKTDC, gathered opinions from 405 exhibitors and 700 buyers during the event .

The US, Germany and Japan are the exhibitors’ top three timepiece export markets according to the survey. Market research firm Actrium Solution’s Managing Consultant Christine Kwok said the mainland’s current low timepiece consumption provides ample room for watch and clock manufacturers as well as distributors to explore.

Though more than 60 percent of exhibitors interviewed have – or are planning to develop – sales channels to the mainland market, the remainder said they still are hesitant about such a move .

“It is largely because they still lack knowledge about the mainland market or have yet to find suitable distributors to help them expand their business there,” said Kwok, adding that the fair has provided a platform for these exhibitors to explore business potential as much as establishing brands and launching new products.

China Daily

(HK Edition 09/11/2010 page3)

http://www.chinadaily.com.cn/hkedition/2010-09/11/content_11288194.htm