CONSULATE GENERAL OF SWITZERLAND IN HONG KONG
|A condensed press review prepared
the Consulate General of Switzerland in Hong Kong
Economy + Finance
Budget surplus edges up to HK$123.5b: The budget surplus rose to HK$123.5 billion by the end of February, raising hopes the 2007-08 surplus might surpass the HK$115.6 billion forecast by the financial secretary four weeks ago. But room for John Tsang to grant more tax relief in light of the rising surplus would be limited, according to a tax expert.
World Bank backs cross-strait links: Implementing the three direct links between the mainland and Taiwan will allow better communication and economic development between the two economies, the World Bank's newly appointed senior economist, Justin Lin, said. "With the direct links of postal services, trade and transportation to be recognised, overall trading costs across the Taiwan Straits will be dramatically reduced in the long term," Mr Lin said. "Taiwan enterprises will be able to finish their upgrades on industries or businesses more quickly and put their products on the mainland's huge market faster." The founding director of the China Centre for Economic Research at Beijing University said even with the three links in place, HK would retain its status as Asia's leading logistics centre, although in the short term it might need to "adjust" to cope with the change. "From a long-term perspective, HK will also be a beneficiary of the three links as the mainland's economy gets stronger," he said.
HKMA chief pledges to stick with dollar peg: HK Monetary Authority chief executive Joseph Yam has vowed not to change the linked rate system, saying the peg was not the only reason for rising inflation - and soaring labour costs were a bigger factor. It was his first comment defending the peg since the release of several recent investment bank reports speculating that the de facto central bank may be forced to abandon the 24-year-old peg to crack down on inflation. While in the past, he has defended the peg's importance in maintaining exchange rate stability, this was the first time Mr Yam has used an HKMA study to show that there was little relationship between the exchange rate and prices. The HKMA study showed that a 10% depreciation of the US dollar against all currencies would cause HK domestic prices to increase by 0.82% in the short run and 1.61% in the medium run.
Property prices drop 5pc as deals cut by half: The residential property market fell substantially last month as investors were reluctant to wade in amid soaring flat prices and stocks volatility. Compared to January, transaction volume in March slumped 50%. Sale prices also declined 3 to 5%, Centaline Property Agency executive director Louis Chan told The Standard.
Luxury imports take hit from weak dollar: Retailers, manufacturers and consumers of luxury items are beginning to feel the pinch of the weakening HK dollar as the yuan continues to rise against the US dollar. Retailers are being forced to push up the price of luxury items - mostly imported from Japan and Europe - to cushion losses from the falling local currency. Some manufacturers, who convert semi-finished goods such as leather from Australia and Europe into products in the mainland, have been suffering losses of up to 20%. Soaring food prices have already hit the low-income group, but now it seems rising prices will also affect middle-class buying habits.
Unemployment up as inflation bites: Rising inflation has pushed unemployment up by 0.1 percentage point to 3.4%, as some employers cut staff to try to control soaring business costs. The jobless rate increased from 3.3% between December and February to 3.4% from January to March, while the underemployment rate remained stable at 1.9% in both periods.
Soaring food prices push inflation rate to a 10-year high: Fast-rising food prices pushed HK's underlying inflation rate to a 10-year high of 5.3% last month. The real inflation rate - the figure after the effect of the property rates concession for the first quarter is excluded - was the highest since January 1998, when 5.4% was recorded. It was also a fifth of a percentage point higher than February's rate.
Yam warns of volatility risk: HK's financial market will become more volatile if the mainland government further tightens monetary policy amid the risk of slower economic growth, the head of HK's de facto central bank has warned. "The mainland's growth was strong in the fourth quarter last year, but it may weaken this year because of the rapidly deteriorating external environment.”
Yam warns investors of potential yuan risk: Investors should beware of risks in yuan investment although the Chinese currency has jumped more than 4% in the first quarter, warned the head of HK's de facto central bank and a senior banker. "No currency will move in one direction only. The yuan will not continue appreciating without a stop," said HK Monetary Authority chief executive Joseph Yam.
Exchange Fund posts HK$14.6b quarterly loss: The Exchange Fund, which is used to back the HK dollar, recorded its first quarterly loss since 2005 in the first three months of the year as its investments were hit by slumping global equities markets. The HK$1.5 trillion fund recorded an investment loss of HK$14.6 billion, sparking calls from some lawmakers for it to diversify its holdings. Equities, including HK and overseas stocks, accounted for 19.14% of the fund at the end of last month, while bonds comprised 71.69%. Joseph Yam, the chief executive of the HK Monetary Authority, said the fund returned to profit this month, more than offsetting losses in the first quarter. The HKMA manages the fund.
Democracy takes time to digest: Beijing could not allow full democracy in HK before at least 2017 because the government and businesses needed time to adjust to the new political game, a leading mainland legal expert has said. Wang Zhenmin, a member of the Basic Law Committee and vice-dean of Tsinghua University's School of Law, said universal suffrage would erode the power of the elite as the grass roots gained more power and benefits via the ballot box. "Because the business community in particular will have to 'sacrifice' more income, it will need to adjust its business models and political representation methods," the academic said.
HK not hungry enough for more democracy, says Eldon: The conditions which lead to strident demands for democracy do not exist in HK, according to former HK General Chamber of Commerce chairman David Eldon. "Many democracies were born as a result of injustice as well as poor social and economic conditions, but I do not see these elements in HK." Eldon said the National People's Congress Standing Committee's decisions on universal suffrage in relation to the chief executive election in 2017 and the Legislative Council in 2020 have removed a lot of uncertainty. As a result, he said, discussions concerning the elections in 2012 might not arouse too much interest from the public.
HK needs affordable welfare system: HK had to balance assisting low-income people against ensuring the social security system was affordable, Secretary for Labour and Welfare Matthew Cheung said. Addressing the Legislative Council Special Finance Committee Meeting on welfare spending and additional support for needy groups – such as the elderly – Mr Cheung said government spending on social welfare had risen steadily in HK over the past decade. Statistics tabled in Legco showed welfare had become one of the government's biggest expenditure items.
New curbs on travel to the mainland: New visa restrictions have been imposed without warning on travel to the mainland by the central government - causing fresh consternation among business leaders and travel agents in HK. Travel agents say all travellers - including those taking trips to Shenzhen - must show return travel tickets and hotel vouchers to get a visa; that visitors from 33 countries can no longer get visas in HK but must apply in their home countries; and that a new visa has replaced the short-stop visa for Shenzhen.
Europeans seek talks over visa restrictions: Leaders of HK's European business community have called for urgent talks with the central government to sort out the difficulties foreign businesspeople now face in travelling to the mainland. The European Chamber of Commerce wrote to the Commissioner's Office of the Foreign Ministry in HK seeking a meeting with senior officials to thrash out solutions to the travel problems. It also sent a letter to the HK government about the issue.
Foreign Office asks Beijing to clarify changes to visa rules: Concerns about newly imposed restrictions on visas for travel to the mainland have been taken up at the diplomatic level, Britain's top representative in HK said yesterday. But so far, China had provided no answers, said Andrew Seaton. Exasperation has been growing among foreign businesspeople and chambers of commerce at the restrictions and at the dearth of official information about them.
Legal affairs and human rights
Judge rejects passport rule on birth country: Foreign-born Chinese citizens in HK may not have to list the country where they were born on their passports for much longer as a result of a court decision. In the Court of First Instance, Mr Justice Michael Hartmann ruled the Immigration Department's guideline that says naturalised citizens had to state their country of birth on their travel document was incorrect.
Adapt to new labour law, HK firms urged: Labour officials in Guangdong have urged HK businessmen to adapt to the controversial Labour Contract Law by upgrading their labour-intensive businesses in the province. Zhang Fengqi, deputy chief of the Social Labour and Security Bureau of Guangdong, called on entrepreneurs to improve their management and internal regulations to deal with the challenges brought by the new law. The law, in effect since January, has caused controversy across the country as it requires bosses to sign long-term contracts with their workers, makes clear restrictions on overtime and boosts welfare provisions in employees' favour.
Fight over touchstone of HK's free economy: The labour market has long been one of the biggest jewels in the laissez-faire economic crown that rests upon HK's head. But for how much longer? The deadline for the government to decide whether to introduce HK's first minimum wage law is fast approaching, and trade unions - sensing victory on the horizon - are massing their artillery for the big fight. October marks the end of the implementation period for the "wage protection movement", introduced by Chief Executive Donald Tsang in his policy address in 2006. The voluntary scheme was intended to ensure people in two of the lowest-paid occupations - cleaners and security guards - are paid at least the median wage for their sectors. Statistics show the scheme is failing - just over 1,000 companies, covering about 30,000 of the city's estimated 150,000 cleaners and security guards, have signed up.
Unions savage wage campaign as 'utter failure': The HK Confederation of Trade Unions described the government's voluntary wage movement an utter failure, saying a poll it conducted showed 90% of cleaning staff earned less than the market rate. In order to protect cleaning workers and security guards from further exploitation, the confederation called on the government to admit the voluntary movement was a failure and to legislate on a minimum wage without waiting for the promised review in October.
Tsang wants 'clean and green' HK: Improving HK's environment was his top priority, Chief Executive Donald Tsang told a regional forum. "Improving the environment sits at the top of my policy agenda. If we want to compete for talent and brainpower, if we want to retain our homegrown human capital, if we want to develop our services sector, then providing a clean and green environment is vital," he told the annual Boao Forum for Asia. He said the city's greenhouse gas emissions were comparatively low. In 2005 they were about 6.5 tonnes per head, compared to 24 tonnes in the United States, 11 tonnes in Britain and Japan and 9 tonnes in Singapore.
Culture and Education
Green features planned for HKU extension: Wind turbines, solar panels, rooftop gardens and more than 400 extra trees are among eco-friendly features planned for the University of HK's HK$2.5 billion campus extension. Detailed plans of the Centennial Campus that include a raft of energy-saving and greening measures have been unveiled by university chiefs and architects Wong and Ouyang (HK), who are jointly designing the project with Sasaki Associates.
More smart talk call on universities: HK needs to follow the world trend of establishing more private universities, but discussion is needed on the government role. Speaking at Radio Television HK's City Forum, Principal Assistant Secretary of Education Daniel Cheng said in many countries it was the private sector that provided the bulk of higher education.
PolyU picks US-based professor as president: A US-based scientist was appointed Polytechnic University's next president after a unanimous vote by the 20 members of its governing council. Timothy Tong, 55, has been dean of the engineering and applied science school at George Washington University since 2000.
Macau told not to tag along with HK on universal suffrage: Leading mainland experts on the mini-constitutions of HK and Macau have warned against any rush to bring universal suffrage to the former Portuguese enclave. The experts cited no mention of universal suffrage in Macau's Basic Law - a major point of difference between the two mini-constitutions - at a Basic Law forum in Macau. Lu Ping, former director of the HK and Macau Affairs Office, said Macau must stick to its Basic Law instead of copying from HK's universal suffrage timetable.
Macau seeks views of residents with an eye on social reform: Macau officials are listening to the public's complaints in a far-reaching consultation campaign. The consultation covers more than a dozen social issues, from electoral reforms to transport policies and housing subsidies. Critics have welcomed the move as a step towards introducing social changes they say are long overdue. "To a large extent, the government is doing its overdue homework - trying to deliver on promises made over the years," political commentator Larry So said. He said the results would be shared with Macau residents and Beijing.
Macau casino revenues surge 62% in quarter: Macau gaming revenues surged 62% in the first quarter as casinos in the city hauled in more winnings than Las Vegas Strip and Atlantic City combined. Benefiting from frenzied expansion, the territory took in 29.82 billion patacas in the first three months of the year, representing faster growth than the previous quarter's 46% increase. Macau overtook the Las Vegas Strip in 2006 to become the world's largest casino market. Macau casinos generated more than double the gaming revenues on the Las Vegas Strip during the first two months of the year, official figures from both jurisdictions show.
Macau to curb casino growth: Macau has imposed a freeze on its gaming industry in an effort to check runaway growth that threatens the city's economic and social stability. A series of tough measures, including a decision not to grant more land for casino development, was announced to rein in the world's most lucrative casino market. Chief Executive Edmund Ho told the legislature the action was being taken to ensure "sustainable and balanced" growth of the gaming sector - and Macau.
Investors back taming of Macau: Investors appear to have welcomed measures to control Macau's surging casino growth with gaming company shares rocketing. Chief Executive Edmund Ho announced that no new land for casino development or new slot machines and gambling tables will be approved "in the foreseeable future." Analysts agreed the measures would boost sentiment for casino players as they address the market's biggest concern that overcapacity will erode profit margins.
Casino curbs a stroke of luck for locals: Macau's citizens have largely welcomed a government decision to rein in the breakneck growth of the city's casinos, but analysts say it will be some time before the aggressive gaming sector is slowed. Since Macau liberalized its gaming sector in 2002, a blitz of new Las Vegas-style casinos has transformed the economic and social fabric of the once sleepy Portuguese colony and made it the world's top gambling hub by revenue. But the casino glut has also festered deep public discontent, with citizens hailing the government's decision to halt grants of land for new casinos and to freeze the number of gaming tables and licenses.
HK police may use force to protect torch relay: The Olympic flame looks set to fire up HK, with an array of festive activities to mark the torch relay and angry protests over Tibet expected. A member of the HK Olympic committee said police might have to use force to protect the torch-bearer if any protesters posed a threat. A 100-day countdown to the Beijing Olympics will begin on April 30 with a variety show at the HK Coliseum - two days before a leg of the torch relay kicks off in the city.
HK braces for its turn in spotlight: A tight security cordon is expected to surround the Olympic flame when it passes through HK on May 2. Noisy protesters attempted to grab the torch and extinguish the flame in London, and forced police officers in Paris to interrupt the relay. Phil Curlewis, chief executive of security consultancy Abate Risk, said he expected the relay in HK to be met by demonstrations and protesters.
Collapse lands bitter blow: The travel plans of an estimated 30,000 people were thrown into chaos when Oasis HK said it was going into liquidation.
HK is world's priciest city for expats to rent: HK remains the world's most expensive city for expatriates to rent a high-end three bedroom apartment, an international study shows. The study by human resources consultancy ECA International compared rents in September in 92 locations worldwide. It found the average rent for a three-bedroom flat in popular areas such as Happy Valley, Mid-Levels, The Peak or Repulse Bay was US$9,734 a month. The figure was up 13% from US$8,592 in 2006, and was 15% higher than Moscow, the second priciest place for an equivalent apartment. New York remained third.
Torch protest trio denied entry to HK: Three human rights activists who flew into HK intending to protest during the Olympic torch relay were refused entry to the city. After almost six hours of questioning at the airport by immigration officials, the three were escorted onto a London-bound flight by heavily armed police, said one of the three, Jens Galschiot, the Danish sculptor of the Pillar of Shame at HK University which commemorates the 1989 Tiananmen crackdown. The decision to ban the three from HK is the first sign the government is serious about cracking down on protesters ahead of the torch relay.
'Pillar of Shame' sculptor claims SAR barred entry: A Danish sculptor said HK's international image as a place that respects the freedom of expression has been damaged following the refusal of immigration authorities to allow him and his two sons into the city. The three were stopped at HK International Airport when they arrived and expelled after a six-hour interrogation during which they claimed they were denied access to lawyers.
Mainlanders take top spot on spending list: Mainlanders are the city's biggest shoppers, spending 70% and 30% more than HKers and other tourists, respectively, according to a Polytechnic University study. Mainland shoppers spend an average of HK$2,862 per transaction at the retail level, compared with HK$1,682 for locals and HK$2,145 for other tourists, according to the university's Asian Centre for Brand Management.
Press articles related to Switzerland and Swiss matters
Swiss financiers deny banking sector crisis (SCMP, 7.4.2008): Swiss ministers and financiers are striving to reassure markets and citizens there is no banking crisis even as once-mighty UBS totters after losing billions of dollars in subprime mortgage exposure. UBS, Switzerland's biggest bank and once a byword for safe, reliable investments, now has the dubious distinction of being the world's biggest subprime loser after fresh write-downs this week drove its total damage to US$37.4 billion. But politicians and senior banking officials have been at pains to stress that UBS' woes are not symptomatic of a wider malaise affecting the whole financial system. Finance Minister Hans-Rudolf Merz has repeatedly said in recent weeks that there is no need to panic despite the vast losses at UBS and similar - if less extensive - write-downs at rival Credit Suisse.
Swiss lenders rethink strategy after credit crisis (SCMP, 28.4.2008): Switzerland's banking sector, once synonymous with stability and secrecy, is now under intense scrutiny and undergoing serious soul-searching after its two biggest banks got caught in the subprime crisis. Industry leaders and the authorities, who until recently had stressed that the situation was under control, appear to have changed their tune as the country's biggest bank UBS has taken write-downs of more than US$37 billion, earning the dubious distinction of being the world's worst-hit group. The country's second-biggest bank, Credit Suisse, tumbled into the red in the first quarter as it too was badly hit, promising a more cautious approach in the future as some observers called for radical reforms in a system "rotten to the core".
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