CONSULATE GENERAL OF SWITZERLAND IN HONG KONG
|A condensed press review prepared
the Consulate General of Switzerland in Hong Kong
Economy + Finance
Yam warning as Exchange Fund takes $35b hit: HK's HK$1.4 trillion Exchange Fund reported a firsthalf investment loss of HK$35 billion, its biggest since data started being released in 1997, the HK Monetary Authority said. "We are clearly not out of the woods yet," HKMA chief executive Joseph Yam said. "We should all be prepared for more rough times to come."
Healthy SAR rating despite deficit: The HK government posted a HK$16.5 billion fiscal deficit in the first quarter of the current financial year after reporting a record surplus last year. But Standard & Poor's has raised HK's sovereign rating to "AA+" - the city's highest ever - due to it maintaining a healthy fiscal performance. From April to June this year, government expenditures amounted to HK$59.7 billion, wiping out HK$43.2 billion in income from the government's coffers. A government spokesman said the deficit was due to some major revenue items being received towards the end of the financial year. Underpinned by the economic rebound of the past few years, HK reported a record HK$123.7 billion surplus for the last fiscal year.
HSBC warns of tough times as profit tumbles: HSBC Holdings executives said that the global economy could get worse before it got better, adding that the banking group, which reported a 29% plunge in net profit for the first half, might have to write off more bad debt. The bank's net profit dropped to US$7.72 billion - the first decline in interim earnings in six years - from US$10.9 billion a year ago. "Ultimately, the real economy will recover from this crisis, although it may get worse before it gets better," Mr Green said. He said any further provisions or write-downs depended on the United States economy, which was still weak, and the employment situation.
Cathay Pacific books loss of HK$663m: Cathay Pacific Airways, Asia's No.3 carrier, reported a net loss for the first-half as soaring fuel prices and a one-off fine more-than offset robust passenger growth. Cathay, which owns regional carrier Dragonair and has an 18.1% stake in mainland carrier Air China, last month issued a profit warning and said its average jet kerosene price rose 60% in the first half from the same period last year. The carrier also said the most recent market prices for jet fuel, which have soared this year alongside skyrocketing crude oil, were nearly double what it paid last year. HK's largest carrier posted net loss of HK$663 million for the January-June period, versus HK$2.58 billion in profit a year earlier.
Yam warns of slowdown: HK's economic growth may slow down in the second half due to inflation risks and downside pressures on US growth, according to HK Monetary Authority chief executive Joseph Yam. "I do not rule out the possibility of seeing a slowdown of HK economic growth in the second half," Yam said. The US property market needs a longer time to adjust, so it will continue to affect the American economy as a whole. There are signs the slowdown in the US economy has affected Asia, including HK, he added.
Consumer confidence falls on rising inflation: Hongkongers are tightening their purse strings as consumer confidence has plunged to a near three-year low amid rising inflation, a survey indicates. Although personal income has increased by 9% this year to a median HK$11,000, people have become more selective about buying, results of the AC Nielsen poll show.
Guangdong loses 3,618 toymakers as higher costs hit smaller players: The hostile operating environment and fragile consumer confidence have hit about 3,600 toymakers in Guangdong in the first seven months of the year, according to state statistics. Official figures showed the province had 3,618 fewer toy exporters shipping overseas, a 77.8% decline. The plunge in the number of exporters, mainly processing trade factories, reflected the adverse impact of soaring raw material and fuel prices, higher wages and environmental control expenses, the strength of the yuan and fragile consumer confidence in the United States and Europe.
Jobless rate hits decade low 3.2pc: HK's unemployment rate unexpectedly dropped to a new decade low of 3.2% in the May-July period, according to official statistics. But a warning has been issued that the jobless count will gradually increase for the rest of the year. Economists had forecast that the unemployment rate for May to July would remain unchanged at 3.3%. "A surprise fall in the jobless rate to a new decade low of 3.2% disguises the easing labor market," said Citi economist Joe Lo. "The lower jobless rate is due to a lower-than-expected increase in labor supply," he added.
Investors still hope through-train will arrive: The mainland authorities unveiled the much-vaunted "through-train" scheme one year ago, and while the train has long been stuck in the siding, investors still believe it can one day power the local stock market to a much-needed rebound. The Hang Seng Index surged to a record high following the announcement of the plan, which would allow mainlanders to invest directly in local stocks. It bounded upwards more than 10,000 points in just over two months. But since then, the benchmark has been gripped by volatility and has steadily given up all of its gains, falling 7,328.28 points or 26.35% this year alone.
July inflation equals 10-year high: The government said inflation accelerated unexpectedly last month, equalling February's 10-year high of 6.3%, mainly due to rising food prices and rent. The increase compared with one of 6.1% in June. Basic food price inflation year-on-year remained elevated at 19.7% last month. And private residential rents in June were up 8.8% from 8.4% a year earlier. "The prime driver for inflation this year is still rising imported inflation, on the back of high global commodity prices," said Goldman Sachs economist Enoch Fung.
Tsang hits a new performance low on getting the job done well: The number of people who consider that Chief Executive Donald Tsang is doing a good job has plunged to a historic low, a survey shows. The latest figure is worse than that of his predecessor Tung Chee-hwa before the July 1 march in 2003, when 500,000 people took to the streets. Observers said the latest figure, which followed a series of government blunders, was the clearest warning yet for the administration, which had failed to regain its popularity despite unveiling an HK$11 billion anti-inflation package last month.
Conflicts could harm city's stability, Beijing official warns: Conflicts among interest groups may threaten HK's stability if not properly handled, one of Beijing's top officials in HK has warned. "HK is a highly free society and it is normal for various classes, sectors and individuals to voice all sorts of demands," central government liaison office deputy director Li Guikang said. "But when different opinions are mishandled, it can lead to strife in society." His remarks came amid controversy over former housing chief Leung Chin-man's job with developer New World and as Chief Executive Donald Tsang Yam's performance rating dropped to a new low.
Livelihoods key in policy address: The need to improve people's livelihoods and address inflation would be the key message in the October policy address, Chief Executive Donald Tsang said. With his popularity rating falling following a series of policy blunders, Mr Tsang also promised to tackle public demands for the introduction of a minimum wage and a fair competition law in his policy blueprint.
Election campaigns to be ratcheted up as Games wind down and race nears end: Political parties will switch their electioneering machinery into full gear after the Olympic Games end in the hope of refocusing attention on the Legislative Council election. But one candidate admitted the relative lack of interest in the poll had less to do with the Olympics than the lack of big issues to galvanise voters.
Olympics steal show from poll's independent candidates: Independent candidates with neither the support of political parties nor the renown of incumbent lawmakers say they have struggled to attract significant media coverage because of the Olympics. Televised debates have been moved to non-prime time slots, later than in previous years. Some candidates have also complained that newspapers are forgoing mentioning the less familiar candidates to make room for extensive Olympics coverage.
Confidence in government must be restored, Tsang says: It was vital for the government to regain HKers' confidence in its policy work, Donald Tsang said, after a survey revealed his approval ratings had hit a new low. The chief executive said the speech would touch on people's confidence in the government. "Following several recent incidents, I feel there is a need to enhance people's confidence in the government and our values. I believe this will be touched on in the address," Mr Tsang said, without saying which incidents he was referring to.
Bridging the divide: The massive HK-Zhuhai-Macau Bridge is finally to get off the ground with Beijing set to pour billions into financing the long-awaited project. Guangdong and the central government will put 7 billion yuan toward the 37.45 billion yuan bill, HK 6.75 billion yuan and Macau 1.98 billion yuan, according to Chief Executive Donald Tsang, who unveiled financing details during the 11th HK-Guangdong Cooperation Joint Conference. The remaining 21.72 billion yuan for the project will come from loans.
Free-trade deal benefits professionals: Town planners, architects, surveyors, social workers, language teachers, headhunters and doctors are major beneficiaries of the 11 supplementary agreements signed between HK and Guangdong on how to implement the latest phase of the Cepa free-trade pact. In order to facilitate the implementation of the Closer Economic Partnership Arrangement, the two governments vowed to streamline and simplify application and vetting procedures and establish new guidelines. Scores of HKowned factories and manufacturing companies in Guangdong will also get a helping hand to upgrade their facilities instead of being forced to close or move.
Legal affairs and human rights
Buddhist monk denied entry to HK: A Buddhist monk who has visited HK many times and last year toured the mainland has become the latest person to be refused entry to the city without explanation. Pemba Sherpa, an Indian citizen, arrived at Chek Lap Kok airport aboard a flight from Calcutta via Singapore. He had intended to spend two days in HK while obtaining a visa to visit Taiwan. No reason was given.
SAR block on two Chinese activists: Two prominent Chinese activists were blocked from entering HK amid a tightening of the territory's immigration and security measures days before Olympic equestrian events are held. Authorities have in recent months seemingly capitulated to pressure from Beijing and barred activists planning peaceful pre-Olympics protests, which critics say has tarnished the SAR's image as a free and open Asian hub.
UK minimum wage model not right for us: Executive Councillor Cheng Yiu-tong said he is opposed to the British minimum wage model which could see cleaners and security guards getting even less than some people on the dole. The British minimum wage model, proposed by the business sector, is set at 40% of the monthly median wage of the workforce. With the current median in HK at about HK$10,000, this would set the minimum monthly wage at HK$4,000. Cheng said he did not think the business sector was trying to delay or derail the implementation of a minimum wage. In fact, four major chambers of commerce, excluding the Federation of HK Industries, have said they would like to see a minimum wage applied to all sectors.
Practitioner of Falun Gong denied entry: A Chinese Falun Gong practitioner who has a British passport was denied entry to HK hours before the Games closing ceremony was to begin. Shao Li, 44, a professor of De Montfort University in Britain, arrived from London. Professor Shao was detained by the Immigration Department and told he would be deported. A government spokesman declined to comment.
Asylum seekers complain about strip searches: Seven asylum seekers have complained to the Ombudsman about strip searches undertaken by Correctional Services, Immigration and the police. The Society for Community Organisation arranged for them to meet officers from the Office of the Ombudsman, requesting a direct investigation of each case.
TDC seeking cut of Asia medical tourism: HK has a good chance of capturing a major share of Asia's medical tourism, which is expected to be worth HK$34 billion by 2012, the Trade Development Council said. "HK's medical services excel in Asia and I believe HK can provide high-quality medical services," said the council's assistant executive director, Raymond Yip. HK's big advantage, according to the council, lies in its medical professionals being fluent in Putonghua and English and able to communicate with mainlanders and foreigners.
Delta-wide green zone gets the nod: HK and Guangdong have agreed to set up a green zone to improve the quality of life in the Greater Pearl River Delta and pledged to redouble their efforts to meet air quality standards set for 2010. The new pact also calls for closer cooperation on recycling, nature conservation, the rehabilitation of the Pearl River, the development of clean energy, and the introduction of cleaner technology and improved management techniques.
Candidates want tough controls over power plant emissions: A large majority of the would-be legislators who responded to a Greenpeace survey said they would seek tougher controls on power plant emissions of greenhouse gases if elected. The poll, conducted by the environmental group, also showed that all candidates described the government's performance in addressing climate change as no more than fair.
Culture and education
New HKU campus to be green and grand: HK University unveiled plans for a new campus housing the Faculty of Arts, Social Sciences and Law. Adorning the exhibition, which celebrates the university's 121-year history, are models of three academic buildings and a 6,000-square-meter interactive learning space named Learning Commons that are set to rise soon. The territory's oldest university has set a 2012 deadline for its 21st century Centennial Campus. "The expansion will provide a new learning experience of the 21st century to students through the design of state-of-the-art teaching and learning spaces, greening and sustainability features," a university spokesman said.
Macau chief warns of tougher times ahead: Macau's Chief Executive Edmund Ho called on companies not to lay off staff and to refrain from raising prices despite rising inflation and the global economic downturn. The chief executive warned Macau legislators in his annual question-and-answer session that inflation will last for some time. He said the administration will implement inflation relief measures, especially for the grassroots. But unlike HK's Chief Executive Donald Tsang, who delivered a HK$11 billion relief package, Ho did not announce any specific measures. "Macau's economy is all import-based. What we can do is limited in the face of high global inflation," Ho said. "The administration is still financially sound and will not reduce investment in public works."
Casino shares drop on talk of Macau visa cutbacks: Shares of casino operators fell sharply amid concerns that the mainland government may act to curtail visits by mainlanders to Macau, the only place in China where gambling is legal. Shares of Las Vegas Sands were down more than 11%, MGM Mirage fell by about the same amount and Wynn Resorts fell 6.5%. Portuguese news agency Lusa, quoting unnamed sources, reported that the mainland government may tighten individual visas to Macau to one visit every six months from the current limit of one every two months.
Protesters urge Beijing to keep promises on human rights: Human rights activists and trade unionists took to the streets on both sides of Victoria Harbour to call on the central government and the International Olympic Committee to ensure that Beijing keeps the promises it made when bidding for the Games. But dozens of protesters from three different groups were rebuffed when they tried to deliver petitions - seeking the release of dissidents in the mainland - to the Central Government Liaison Office.
China snubs Zen, invites deputy: Beijing Olympics organizers have snubbed outspoken HK Archbishop Joseph Zen, inviting his deputy Bishop John Tong Hon to the Games instead, the Vatican newspaper Osservatore Romano reported. Tong told the paper he had accepted the invitation ''with ambivalent feelings'' because Zen was not on the guest list. Zen, the top Chinese figure in the Roman Catholic hierarchy, is an outspoken critic of constraints on religious freedoms in China, where the communist regime has no formal relations with the Vatican.
New freedom ratings to be unveiled in HK: A prestigious free-market think-tank that has consistently rated HK's as the freest economy in the world will unveil its latest world rating table in the city for the first time next month. The Canada-based Fraser Institute will present its Economic Freedom of the World report at a symposium on economic freedom and China's future on September 16.
Quality of life in HK found to be sliding: The quality of life among HK people, who have been enjoying improved levels every year since 2002, has been taking some turns for the worse, according to a study by the Chinese University of HK. The university's Centre for Quality of Life director Alex Kwan expects a big plunge in three to four of the indicators, "which will drag down the 2008 figures." The economic sub-index - one of three sub-indices with social and environmental - declined in 2007 due partially to higher housing costs.
HK ages faster as it loses appeal: Census chiefs are to review their population projections amid concerns that falling numbers of mainlanders migrating under the one-way permit system could accelerate the ageing of HK's population. The number of migrants under the scheme in recent years has remained well below the daily quota of 150, and the proportion of young arrivals has fallen from more than 30% in 2002 to less than 25%. The trend has brought a call from a population expert for quotas under the scheme to be revised to bring in people HK really needs - the young, educated and skilled.
Press articles related to Switzerland and Swiss matters
UBS losses lead to split in wealth, investment units (SCMP, 13.8.2008): Switzerland's biggest bank plans to split its investment banking and wealth management units after a fourth consecutive quarterly loss and the second-biggest bank in the United States warns it will write down mortgage-backed assets by at least US$1.5 billion. UBS chairman Peter Kurer is abandoning his predecessor Marcel Ospel's push to integrate the divisions after record losses at the securities unit led to net withdrawals from the private bank for the first time in almost eight years.
UBS chiefs knew of tax rule breach (SCMP, 14.8.2008): Top executives at Swiss bank UBS were aware in 2006 of potential problems over offshore services provided to United States clients, long before a US tax-evasion probe began, the bank's chairman says. UBS confirmed a report in the Financial Times that Peter Kurer, UBS chairman and the-then general counsel at the bank, in May 2006 wrote to the banker now on trial for helping wealthy American clients evade US taxes.
Swiss authorities raid Alstom unit in bribery probe (SCMP, 23.8.2008): Alstom had offices of a Swiss unit raided as an investigation into alleged corruption and contract bribes at the French power-plant maker widens. One person, strongly suspected of abusing duties, had been arrested, Switzerland's attorney general said.
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