LI, Tao @ Hong Kong

Asia is set to play a bigger role at the International Monetary Fund (IMF) in view of its buoyant economies, particularly as the global economy is haunted by the deepening debt crisis, a top executive of the IMF, which is tasked to stabilize the global monetary system, said on Monday.

Speaking at the Fifth Asian Financial Forum in Hong Kong, David Lipton, first deputy managing director of the IMF, said the fund is looking to work ever more closely with Asian economies to lessen the impact of the global economic turbulence as well as to promote stronger growth ties globally.

“As Asia goes forward, the IMF stands ready to be a partner,” Lipton said.

Lipton recognized that the region’s strong economies had emerged from the 2008 financial crisis and are showing great promise these days — partly due to these countries’ courageous reforms — a lesson these Asian countries had learned from the previous downturns.

“But now it is problems in the rest of the world, Europe in particular, that pose a risk to Asian prosperity. (So), Asia has a stake in seeing Europe solve its problems and even playing a role in that process,” said Lipton.

He added that the IMF had also learned from Asia’s experience and it was now applying those lessons to programs across the globe, including Europe.

Given its rise as an economic powerhouse, Lipton said it is natural that Asia’s voice in the IMF should become increasingly influential.

Consensus has been made since 2010 that Asian members would play an increasingly important role within the IMF. Japan and China are now the second- and third-largest shareholders in the organization while India was also among the top 10, according to the deputy managing director.

Asia’s links with the IMF are being strengthened also through the selection of key IMF personnel from the region. Zhu Min from China and Naoyuki Shinohara from Japan have been appointed as the deputy managing directors of the Fund in 2011 and 2010, respectively.

Asian nationals now account for 40 percent of the IMF’s management team, according to Lipton. Singapore’s Deputy Prime Minister and Minister for Finance Tharman Shanmugaratnam had also become the International Monetary and Financial Committee chairman in 2011.
Despite the region’s economies showing strong growth momentums today, problems in the rest of the world, particularly in Europe, have become a threat to Asia’s prosperity, Lipton said.

Given today’s interconnected global economy, no country or region will be immune from that catastrophe, which is especially true for Asia, Lipton said, citing the region’s tight trade and close financial links with Europe.

Lipton also warns that Asia still has its own challenges, both in the near and longer term. However, “by working together more and better than in the past, Asia and the IMF can help ensure stability and prosperity for the region and for the world”, he said. IMF will also adopt sharper economic and financial surveillance to prevent a crisis, and will strengthen the global financial safety net to enhance protection of interests of the Asian economies, according to Lipton.

http://www.cdeclips.com/en/hongkong/fullstory.html?id=71578

As negative factors, including a sagging economy, rising mortgage rates, increasing land supply and tightening government measures are in play, Hong Kong’s property market is likely to be grim in 2012, agencies and analysts believe.

Property consulting firm DTZ on Tuesday forecast the city’s mass flat prices will drop by around 5 to 10 percent this year while luxury homes will face a correction limited to below 5 percent due to the purchasing powers of the rich.

“The slow market was apparently due to the global economic downturn, which resulted in buyers remaining cautious even though the unemployment rate was low and the local economy was buoyant,” Alva To, DTZ’s head of consulting, said during a media briefing on Tuesday.

Unlike the robust 2010 which saw booming residential transactions, the city’s property sales were subdued since the beginning of 2011, with home transactions in the first half of 2011 declining by around 8.6 percent to 71,868, from 78,649 in the same period a year earlier, data provided by DTZ shows.

After home prices started retreating in mid-2011, the government’s anti-speculation measures, particularly the special stamp duty (SSD) which capped short-term reselling showing effect, the transaction numbers further slumped to only 39,702 in the second half last year, representing a 54.3 percent decrease from 2010.

To said he expects the existing borrowing costs and the increased interest spread to continue in the short term. Potential home buyers may continue to wait for possible downward adjustment particularly when property prices had risen by a steep margin last year — pushing the city’s average affordability ratio 24 percentage points higher over 2010.

Yannis Kuo, a property analyst from Daiwa Securities Capital Markets Co, also estimates that average home prices will continue its downward trend this year, given that the decline in 2011 had only achieved half of the estimated target.

“We forecasted that prices will tumble around 10 percent from the peak,” Kuo told China Daily. “As home prices only declined about 5 percent in 2011, we believe the descending momentum will continue in 2012 but do not expect a great correction,” she added.

But a number of property outlook reports released last month expect an even bigger market adjustment. Standard Chartered Plc on Dec 13 indicated that Hong Kong home prices may need to fall as much as 10 percent in 2012 before buyers are lured back. Knight Frank in mid-December said the city’s home prices are set to fall by 10 to 15 percent in 2012.

But none of these is as pessimistic as Barclays Capital Asia, which expects Hong Kong’s residential market to slump 25 to 30 percent, head of its property sector research Andrew Lawrence said on Dec 19.

Developers are holding a similar but more positive view. Henry Cheng, managing director of New World Development Co is convinced that the prices glissade will be limited within 10 percent as the Hong Kong government is regulating the supply and demand through the land supply in a bid to avoid large market fluctuations.

“I believe the government is striving to achieve long-term healthy and stable development of the property market.” Cheng said.

According to the city’s largest real estate broker Centaline, home prices in Hong Kong gained more than 70 percent since early 2009 and peaked in June 2011, surpassing the previous high in 1997.

It, nevertheless, started declining afterwards, as the multiple government measures took effect and gloomier economic outlook for the year stymied investors’ appetite for the market.

The government’s vow to maintain a relatively fast pace of increasing land supply in Hong Kong also contributed to stabilize the city’s home prices last year. Adding the ongoing and upcoming land tenders, the government has sold 22 pieces of land during the first three quarters of this fiscal year which will end on March 31, 2012. The land is estimated to provide 7,400 units of residential flats.

Together with the estimated 14,000 units from the railway-linked property projects, the city has already provided more than 20,000 units this year — a target to ensure the annual supply of 20,000 apartments set by Chief Executive Donald Tsang during his Policy Address in October 2010 is reached.

The Hong Kong government nowadays is more flexible in operating the market through the effective adjustment of the land supply pace, according to Daiwa’s Kuo, who added that the government is also less willing to witness property prices slump in Hong Kong as opposed to skyrocketing prices.

“Property is the major asset that Hong Kong people own. For the sake of the society’s stability, the government is not willing to see a substantial devaluation of homes’ values in the city,” said Kuo.

Vincent Cheung, Cushman & Wakefield’s national director for valuation and advisory services, told China Daily that Hong Kong people these days are more mature in coping with market fluctuation after several previous collapses.

“As long as Hong Kong’s unemployment rate remains high while interest rate stands at current low level, most people in Hong Kong will hardly hurry to axe prices to sell homes as they’ve seen the market’s ups and downs,” said Cheung.

“But transaction volume in Hong Kong will stay low in 2012 due to the prices deadlock, which, will at the most decline by 15 percent in the mass market,” Cheung added.

litao@chinadailyhk.com
http://www.chinadailyapac.com/article/property-market-face-grim-year

HONG KONG – Even as they continued to benefit from the mainland’s robust economic growth, Hong Kong’s richest people saw their wealth shrink last year in tandem with the sagging stock market, Forbes magazine said on Friday.

The combined wealth of the city’s top 40 richest people fell 7.4 percent to $151 billion last year from 2010 as the benchmark Hang Seng index slumped by more than 20 percent, said Forbes.

Property developers, who have featured on the magazine’s “Rich List” for many years, suffered the most.
Li Ka-shing, chairman of Cheung Kong (Holdings) Ltd, remained at the top of the list, but his personal wealth shrank by 8.3 percent to an estimated $22 billion.

Lee Shau-kee of Henderson Land Development Ltd replaced the Kwok family of Sun Hung Kai Properties Ltd to become Hong Kong’s second-wealthiest resident, with a personal fortune estimated at $17 billion, down by 13 percent from 2010. The Kwok family saw its wealth fall by almost 25 percent to $15.4 billion, according to the magazine.

Kenny Tang, a Hong Kong-based analyst from AMTD Financial Planning Ltd, said most developers saw their wealth shrink last year because their stocks had underperformed the benchmark index, which registered an average slump of 25 percent in 2011.

“But they are unlikely to post such a dismal performance again this year – although I am neutral on the market – given that the fundamentals of these developers are basically sound,” said Tang.

Cheng Yu-tung, the chairman of New World Development Co Ltd, was the biggest gainer on the 2011 list. His personal wealth jumped to $15 billion from $9 billion in 2010, thanks to the successful IPO of his luxury-goods retailing flagship Chow Tai Fook Jewellery Group Ltd in December.

Hong Kong’s wealthiest people have been “some of the world’s biggest beneficiaries” of the economic rise of the Chinese mainland during the past three decades, Forbes said.

That’s because most of them either have heavy business exposure on the mainland, or they sell goods to the ever-growing number of visitors from the mainland.

“Now that the mainland is being pinched by the global slowdown and tighter interest rates to tame inflation, Hong Kong’s wealthiest are feeling the squeeze,” said Russell Flannery, an editor at Forbes.

As an example, Choy Kam-lok, who previously ranked No 27, fell out of the list this time. Choy’s wealth declined after the share price of his company, United Laboratories International Holdings Ltd, a pharmaceutical manufacturer, slumped almost 72 percent in 2011 after the mainland authorities capped drug prices.

In contrast, Hong Kong’s retailers have benefited from the boom in mainland outbound tourism, and have continued to do well despite a rocky ride for the Hong Kong stock market recently.

Simon and Eleanor Kwok at Sa Sa International Holdings Ltd ranked 35 on the list, with a fortune of $1.09 billion.

China Daily
http://www.chinadaily.com.cn/cndy/2012-01/07/content_14397413.htm

Wyndham Hotel Group, which claims to be the world’s largest hotel company operating 15 diverse hotel brands, plans to continue expansion on the mainland to tap the growth of new travelers from both domestically and from abroad.

Ken Greene, president and managing director, Asia Pacific of Wyndham Hotel Group, said although the lackluster global economy may haunt the hotel sectors, Wyndham’s ambitious mainland expansion plan will remain unchanged, driven by the government’s effort in infrastructure development as well as the booming growth of both the inbound and domestic travelers.

“Our chairman made a statement earlier that we are aiming to develop as many properties on the Chinese mainland as we have in the United States, although our group currently operates about 6,200 hotels in the US and only around 400 on the mainland,” Greene told China Daily.

“We do not have a timetable to achieve this target, but our presence on the mainland will definitely double in five years,” he added.

Wyndham Hotel Group, which operates 15 hotel brands including the flagship Wyndham, Ramada, Howard Johnson, Days Inn and Super 8, opened 141 new hotels in the Asia Pacific region in the last 12 months as of Sept 30, 2011, with 131 of them on the Chinese mainland.

Super 8, its largest brand on the mainland, competes with other domestic budget economy hotels, including the US-listed 7 Days Inns and Home Inns & Hotels, which has seen the fastest growth. In the third quarter of 2011 alone, 36 more Super 8 hotels were opened on the mainland, bringing the total number to 275.

Greene said the mainland continues to be the most important growth engine for the company as its domestic market. With a population of 1.3 billion people, China is mature in the travel sector, where ordinary people are also willing to spend a couple of nights in hotels like those in the developed economies.

Greene is confident that Wyndham and its sub-brands will also attract foreign travelers benefiting its heavy exposure abroad, along with the boom of inbound travel on the mainland.

The mainland reported further strong growth in its domestic and outbound tourism sector during the first three quarters of 2011, China Tourism Academy (CTA) said in mid-October. The total number of trips in the first three quarters reached 2.08 billion, an increase of 12 percent over the same period in 2010.

However, in contrast with the booming outbound tourism which has become a lucrative business as enormous numbers of Chinese heavy spenders went abroad, inbound tourism growth to the territory is still lagging behind, CTA noted.

The mainland’s hotel market is also expected to overtake the US market to become the world’s largest in 2025, according to a report issued by InterContinental Hotels Group (IHG). It estimates the territory will have 6.1 million hotel rooms by that time, on par with that in the US, China Daily reported last month.

In the meantime, almost four out of 10 hotel rooms on the mainland are currently empty this year due to low demand after the rapid expansion of international hotel chains, including Hilton Worldwide and Hyatt Hotels, according to data provided by STR Global.

It indicated that the mainland’s occupancy rate stood at merely 61 percent in the first nine months of 2011, compared with the same period a year earlier, and the lowest in Asia after India among 15 economies tracked by STR Global.

Shanghai, in particular, recorded only filling up about half of the hotel rooms, compared with more than 80 percent for Singapore and Hong Kong, according to the hotel data provider.

Greene said that while the group’s two flagship-brand Wyndham hotels in Shanghai have a low occupancy rate, the rest of the group’s brands, especially the lower-end Super 8, were making quite a fortune at the moment.

The managing director is also not perturbed with the company’s cash flow despite the gloomy global economy which is expected to have adverse affects on the travel and hotel sector inevitably, as Wyndham operates most of its hotels via franchise agreements.

“We have a lot of cash in hand and we need to find ways to spend it,” Greene said, adding these high-end hotel brands may encounter temporary difficulties but the rest of the brands will still survive as demand is still buoyant, particularly in economies like the Chinese mainland.

A Deloitte survey released on Nov 16 showed that the hospitality sector remains robust despite ongoing European economic turmoil, as over half of the senior hospitality industry executives surveyed by the accounting firm said their current situation is better than expected and they will continue to invest in luxury hotel assets despite the mixed outlook for 2012.

litao@chinadailyhk.com
http://www.chinadaily.com.cn/hkedition/2011-12/24/content_14321564.htm

But city also sees record employment rise in last three months by 11,000

Hong Kong’s unemployment rate rose for two consecutive reporting periods, reaching 3.4 percent for the three months to November, according to government data released on Monday.

The latest reading represents a rebound from the 13-year low of 3.2 percent between July and September and the 3.3 percent unemployment rate recorded from August to October, according to the Census and Statistics Department.

The underemployment rate dipped by 0.1 percentage point to 1.5 percent through November 30 from the previous three months.

Commenting on the latest figures, Secretary for Labour and Welfare Matthew Cheung Kin-chung said total employment in the city rose by about 11,000 in the past three months to a new record of 3.65 million, partly due to a seasonal rise in labor demand as a series of holidays are approaching.

New jobs were mainly seen in construction industry, as well as in warehousing and support activities for transportation sectors, said the government.

Despite the uncertain external environment stemming from the evolving eurozone debt crisis and lackluster performance of advanced economies, Cheung believes the prevailing strength of domestic demand and inbound tourism should render some cushion to upward pressure on the overall jobless rate in the near term, especially with the seasonal surge in consumption in the run-up to Christmas and New Year.

“Although Hong Kong’s unemployment rate went up, it is still sitting well below its long-term average trend of 4.2 percent (1990-2010),” Donna Kwok, Greater China economist with HSBC, wrote in a report, adding that the unemployment rate will end the year between 3 to 3.5 percent – hardly a level that would put consumption spending at risk.

Nicholas Kwan, regional head of research from Standard Chartered Bank, also said that although Hong Kong’s unemployment data seemingly reflected a worsening situation, it was still at a very low level despite standing below a 3 percent level before 1997.

“But the city’s economic structure is different from a decade ago. A continued rise in the jobless rate is expected as economic growth in Hong Kong is coming to a bottleneck in this economic cycle,” Kwan told China Daily.

Hong Kong’s economy narrowly missed a technical recession in the third quarter, inching up 0.1 percent during the period. But the figure still pointed to an overall slowdown due to external volatility, and the export sector, in particular, is expected to remain gloomy for the rest of 2011 and will extend into the beginning of 2012, Government Economist Helen Chan said in November.

The implementation of the statutory minimum wage is also impacting the city’s job market as the number of private sector vacancies recorded by the government has stayed at a high level of more than 3,000 per working day on average since the legislation came into effect in May.

Total number of private sector vacancies recorded in November increased by 20.3 percent from some 85,700 in October 2011 to an all-time high of 103,100 – a surge of 46.1 percent over the same period last year.
Cheung noted that this level has also been maintained so far this month.

litao@chinadailyhk.com
China Daily
(HK Edition 12/20/2011 page2)
http://www.chinadaily.com.cn/hkedition/2011-12/20/content_14290170.htm