Posts Tagged ‘Hong Kong’

Zarsha Leo’s Hong Kong branch is especially successful thanks to its traditional American menu. It offers popular American dishes including hot dogs, burgers, onion rings and French fries, attracting both tourist and locals.

“Our classic menu is a sort of novelty in the area,” explains Zarsha Leo CEO Evan Burschkopf.

“We attract American tourists as well as Hong Kong residents with our All-American atmosphere, great music and live sports broadcasts.”

Hong Kong’s hedge fund world is fast taking center stage on the financial scene. In December of 2007 at the 5th Annual Hedge Funds Conference, Secretary for Financial Services & the Treasury, Professor KC Chan said that he thinks Hong Kong is becoming the hedge fund hub of Asia. He quoted figures that showed that the hedge fund presence in Hong Kong has moved from about 160 funds in 2001 to about 1240 in the first half of 2007.

As he said, “Hong Kong got the largest number of new Asia Pacific hedge funds launched in 2006 as well as in the first half of 2007, ahead of Singapore, Japan and Australia. We have adopted various tax measures to promote the growth of the industry. Since 2006, offshore funds have been exempted from profits tax. This brings us in line with other major financial centres such as New York and London. More importantly, the measure helps attract new offshore funds to come to Hong Kong and encourages existing offshore funds to continue to invest in Hong Kong.”

As he continued, “We have also abolished estate duty since last year to encourage local and overseas investors to invest in Hong Kong. To further enhance our competitiveness, the Chief Executive announced in his Policy Address in October this year that our profits tax will be reduced from 17.5% to 16.5% in 2008-09. Given our already low and simple tax regime, these measures will further enhance our attractiveness to overseas fund managers.”

Hong Kong is, today, one of the top financial markets in the world. In 2011, they took the number one spot on the World Economic Forum’s 2011 index of financial market development. And they were the first Asian financial center ever to do so.

The report looks at 60 of the world’s leading financial systems with over 100 variables evaluated. Hong Kong jumped from its previous fourth place status with concerns swirling about the financial stability in the United States and lower scores in the UK for their IPO activity. Certainly, this is great news for business people in the area. This includes entrepreneurs like Daniel Lam, CEOs like Andrew Brandler, and hedge fund managers like Seth Fischer, Hong Kong business people who will all benefit from this news.

The top 10 list remained relatively unchanged, other than the dramatic shift for Hong Kong; although Belgium did fall out of the top 10. It was replaced by Norway. The top ten, in order included:

1. Hong Kong

2. United States

3. United Kingdom

4. Singapore

5. Australia

6. Canada

7. Netherlands

8. Japan

9. Switzerland

10. Norway

As Kevin Steinberg, COO of World Economic Forum USA said in a statement that accompanied the report, “Hong Kong’s ascent to the top of our index marks a major milestone, the first time in the report’s history that the United Kingdom or the US didn’t come out on top.”

Hong Kong has increasingly become a power house in the financial world, and with good reason. Many hedge fund managers, like Seth Fischer Oasis Investments Limited, use Hong Kong as their base of activity.

A survey released by the Securities and Futures Commission (SFC) in March 2011 confirmed this growth of activity. Entitled “Report of the Survey on Hedge Fund Activities of SFC-licensed Managers/Advisers,” it shows that assets under management or advisory in Hong Kong increased 14% from March 2009 to September 2010. The number of hedge funds that are managed by SFC-licensed hedge fund managers in Hong Kong also grew tremendously. While it stood at 538 in September of 2010, it was five times the level in 2004.

By September 2010, the survey pinpointed that 66.1% of the total assets under management were invested in the Asia Pacific markets and 92% of the investors were from overseas.

As Martin Wheatley, the SFC’s Chief Executive Officer explained, “Closer scrutiny of the hedge fund industry is a global trend. We will continue to maintain a balanced approach to regulation with a view to allowing room for industry development and growth without compromising investor protection.”

Asian stocks have fallen for three days as Greece’s referendum plan heightens concerns that the debt crisis will not be contained. Hong Kong stocks reconvened as a result of beliefs that China will now act to stimulate its economy.

The MSCI Asia Pacific Index fell 0.6% to 118.41 in Tokyo, while three stocks fell for every two that rose. Meanwhile, banks like the Industrial and Commercial Bank of China, as well as developer and infrastructure companies rallied with hopes of an economic boost from the government.

“A loosening of monetary policy in China could support the stock market,” said Michiya Tomita, who helps oversee billions of dollars for Mitsubishi UFJ Asset Management Co. “Any gains may not be sustainable as uncertainties in Europe persist. Investors are taking a wait-and –see attitude.”

Though the debt crisis has struck the U.S. and EU with fervor, Asian markets have seen some major hits recently as well. The selloff is a result of global recession concerns, as well as worries regarding the financial fragility and cash crunch.

“The way markets are trading, people are anticipating some kind of falling off the cliff,” said Wendy Liu, head of China research for Royal Bank of Scotland. “These valuations don’t come every year.”

Hong Kong’s Hang Seng Index has fallen 23% over the past year, which includes a 12% drop just this month. The MSCI AC Asia ex Japan Index, which tracks all markets throughout Asia, has seen a decrease of 24% this year.

Despite the drawbacks, the Asian economies have recorded solid growth. Until quite recently, central banks were raising interest rates in an effort to lessen inflation.

According to Markus Rosgen, head of Asia Pacific Equity Strategy at Citigroup in Hong Kon, “Markets in Asia are telling you there is going to be global recession.” He added that stocks are pricing in an approximately 33% drop in corporate earnings.

Ewen Cameron Watt of BlackRock backed this, stating “The degree of selloff in emerging-market debt and equities and currencies suggest there is something more than a concern about slowing economies at play here.”

Looking into various parts of Asia, one might not want to seek out a new home there just right now.  Property prices are going through the roof, excuse the pun, and wealthy Thailand is taking advantage.  According to an article in the Bangkok Post, a property developer from Thailand, Pace Development, just recently “launched sales of its luxury Bangkok project MahaNakhon to Hong Kong buyers.”  Records over a mere three days show of “sales worth 350 million baht.”

On the flip side, for those who have something to sell, now is the time.  According to executive director for investment and project marketing of property consultant CB Richard Ellis, Rebecca Shum, now is “the best time to sell property to Hong Kong buyers as prices there were very high.”  The prices for property in Hong Kong are really high these days.  Indeed, they have gone up around 20 percent in the last year and just haven’t come down at all.  Hong Kong and Chinese investors are seeking out properties in other parts.

Hong Kong Prices Peak

Indeed, Hong Kong prices are these days five times more than for the same size in Bangkok.  New units are approximately 1.2m baht per sq m.  Hong Kong and mainland China investors these days therefore seem to prefer “buying property as an investment as the interest rate for deposits was only 2%, which is unattractive to those who refuse to carry cash.”

Bangkok Boom

The truth is, as Shum has noted, “Bangkok is still a top-two destination for lifestyle in the eyes of investors in Hong Kong. Their interest in luxury Thai property is driven by a lift in optimism about the overall political and economic environment in Thailand.”  In addition, the new government has promised to put policies in practice that with “stimulate economic growth immediately.’  This will result in the progression of “major infrastructure projects,” as well as “provide long-term support to economic expansion and be reflected in asset price appreciation, particularly for luxury properties.”

Chinese NZ Investment

New Zealand is becoming an increasingly more attractive to investors. This has been especially evident in China which has been purchasing more NZ bonds than ever. Recent reports show that investments from China could amount to $6b which will have an impact on the kiwi dollar that could increase to 81 cents (which would be a three year peak) “against the greenback.” According to Craigs Investment Partners market analyst Peter McIntyre, “there have been reports that the Chinese foreign exchange reserves are looking to diversify around about 1.5 percent of their assets into New Zealand denominated assets like government bonds, companies and dairy farms.”

Nice New Zealand

That is one way of describing the country. Nice. New Zealand is definitely “nice” for investors since in terms of financial security, it is very stable. There is also a “high domestic inflation rate” with large returns too. It seems to be the whole region is finding New Zealand attractive, most notably Singapore and Hong Kong which are looking into government bonds.

These changes have been happening for a few years now. Countries in Asia are boasting “very large reserves.” There is likely to be additional investments ahead too. China will see an increase in investment from BUD, the Brazilian-Belgium owned Anheuser-Busch InBev and intends to establish a “brewery to make Budweiser in the mainland by the third quarter,” according to Carlos Brito, CEO of the company. The intention is to put in “several hundred million dollars this year.”

Better Beer

The three “top-priority markets” set to “drive the volume growth of the global beer industry,” are: Brazil, China and the USA. Indeed, China alone drinks around 30 liters of beer per annum, rendering it “responsible for around 25 percent of global beer consumption.” Just last week the first brewery was launched by AB InBev in Sichuan, a southwest China province, which according to the company’s Asia Pacific president Miguel Patricio, “aims to better serve the 200 million consumers in the region.” So if you happen to be visiting the Great Wall, consider quenching your thirst with a barrel of beer.

Stable Singapore Stakes

Is it true that things (financially-speaking) are that good in Singapore these days? Is that what is making the area so attractive for hedge funds, financiers and investors? Indeed the answer should be a resounding yes. The country is for sure facilitating things for these financiers as “setting up shop” is now deemed as much easier in Singapore than in any other Asian city.

If you just take a look at Hong Kong you will see just how much harder it is for such financiers to work. Indeed, managers of hedge funds alone are doing it tough, being forced to engage in the “same licensing requirements as mutual-fund managers.” Small funds in Singapore will be able to continue operating without having a license at all. Since it is today Singapore and Hong Kong which are the countries that have the most operation of hedge funds, of course these financiers would choose the former over the latter.

Seductive Singapore Taxes

The taxes haven’t always been so attractive in Singapore. But today they are, given what is going on in the UK. Currently the highest taxes for individuals reaches 20 percent in Singapore but the UK recently put their top rate up to a staggering 50 percent. In addition, the whole of Europe – as well as America – in general works on “tougher rules.”

So it makes sense that hedge funds in Singapore saw a significant development, reaching $48bn at the end of 2009 which was a jump of $10bn from just four years earlier. In 2001 there were only 20 hedge funds; two years ago that figure had escalated to 320 hedge fund managers. All predictors are pointing to a continued hedge fund interest looking to “tap Asia as a source of funds as well as a source of excess returns,” over the next year.

Singapore Squeeze?

While this is great for the country, is it so good for the people and the businesses already in existence there? Apparently there is the fear that “the increasing number of global hedge funds is unlikely to crowd out smaller Singapore-based managers.” There will however, be space for “large and niche players” as long as they keep adding “value to investors.” There is now more focus on “transparency and risk management by investors post-crisis,” also, which will lead to hedge fund managers around the world developing their “mid-bank office infrastructure.”

It’s great that Singapore is providing such an attractive environment for financiers around the world and that for sure will help the country’s economy. But at the same time, it has to ensure it looks after its own.

Asia’s economy is a bit of a mess.  Actually it's a  big mess.  And it doesn’t look like this situation is about to improve any time soon either.  Inflation looks set to continue; capital flows are extremely volatile.  But the fact that China has been trying to liberalize its currency exchange rate could be good news for economies in the region, enabling them to move away from trade settlement within the current global economic climate.  It’s a shame Pridiyathorn Devakula is somewhat removed from the political scene these days though.  Thailand’s previous Deputy Prime Minister is quite well-to-do these days.  His wife has a staggering Bt258 million to enjoy while their daughter isn’t too badly off either at Bt7 million.  Perhaps if the family shares some of its wealth it can pull the region out of its financial hole.

Yuan Goes International

But even if the Devakula family decides to keep their wealth to themselves (giving them near-billionaire status), the yuan need not suffer.  It seems like the government of China is moving toward the possibility of internationalizing this currency alongside the Euro and the dollar.  As well, plans are set for Hong Kong to become the traing center for yuan-denominated assets enabling foreign companies to “issue yuan-denominated assets in Hong Kong” which will also mean the Bank of China NY branch will be able to open yuan deposits.  The hope is that investment abroad will increase too.  As well, if they adopt Devakula’s idea of “co-operation among regional economies” to establish a benchmark currency, then the region’s economy could potentially peak.