Govt's Incompetence Fighting Covid-19 Leads to Frustration

Outbreaks in housing estates in Kwai Chung and Ma On Shan

Hongkongers are getting tired of the coronavirus pandemic, and their patience with how the government has handled it is wearing threadbare thin it could snap any day now.

Swimmers are desperate now beaches closed

Starting tomorrow all dining establishments -- with only two per table -- must close by 6pm, while gyms, museums, concert halls, stadiums, beaches, and massage parlours are shut down, and infectious disease experts keep reminding people to stay home, as the number of new cases rose to 104 today.

But people are tired of staying home and it's going to be Christmas in two weeks. 

Restaurant owners, chefs and wait staff are disappointed -- it is during this period in December when they rake in the most money, and considering they've had it tough all year, they were hoping to recoup some of the losses these few weeks but now that's gone.

Does the government really think it can seriously clamp down on the virus by Christmas Eve? Why not just tell us that Christmas is cancelled and be done with it? Fireworks won't be exploding in the sky December 31 anyway.

Now the frustration is turning on the government for mishandling the pandemic. There have been so many missteps from the beginning.

Healthcare workers docked pay for striking

The first is not shutting down borders with the mainland until hundreds of healthcare workers protested for several days and then Chief Executive Carrie Lam Cheng Yuet-ngor relented. And now those same healthcare workers are being punished for striking by docking their pay.

Then there were several loopholes where airline staff were tested at the airport, but didn't have to wait for their results. One airline staff went sight seeing with his luggage on the Peak Tram. Questions were raised and then finally loopholes were tightened.

Also, why do directors of listed companies and those planning their IPOs, get to be exempted from quarantine? It makes absolutely no sense. Everyone needs to take a test, regardless of who they are.

Restaurants desperate for business, now shut at 6pm

And now the main source of the fourth wave with over 600 cases are dancing clubs and why aren't they closed? Why are they allowed to remain open and yet karaoke lounges, entertainment centres and cinemas forced to shut instead?

Finally why has Hong Kong not procured enough Covid vaccines for everyone, and not until late 2021? Not only that, but also the flu jab as well. The government was warned well in advance the winter season would be even more severe, and yet only about 200,000 are available in the city of over 7 million.

Why is it that Hongkongers are forced to pay for the mistakes made by the government?

Gym owners are angry they will be shut again tomorrow, and even though the government stipulates it is for two weeks, the last time gyms were closed, it was at least six weeks later until they were allowed to reopen.

Meanwhile Lam claims she is too busy working to even talk to her husband, and boasts of having piles of cash at home because she can't open a bank account.

How about sparing a thought for the hundreds of thousands of people who have been financially affected by the pandemic and lost their jobs or had to take pay cuts for the foreseeable future? 

Why are dancing clubs still not closed?

Infectious disease experts have hinted many times the government is not moving fast enough to clamp down on the pandemic when time is of the essence.

Two housing estate blocks in Kwai Chung and Ma On Shan have clusters of infections and yet the government has not exercised its powers to lock down those buildings to test everyone; many families have moved out elsewhere, possibly spreading the virus to other areas.

Is this deliberate so that Hong Kong will never be able to reopen its borders with the mainland and Macau again? Or is it because of the sheer incompetence of the government to follow expert advice and make decisive decisions?

Because the number of cases is so high these days, the chances of the travel bubble with Singapore restarting again soon is a far from possible.

Lam is one of the highest paid leaders in the world and yet her performance rating is so low. 

It boggles the mind how Hong Kong ended up with Lam. Do the 777 people who voted for her in 2017 regret doing so?

 

 

Beijing Tempers Jack Ma

Ma's ambition to have the world's largest IPO was deflated

 

Ant Financial is refunding investors who had applied for the record US$39.67 billion IPO after the offering was suspended yesterday. The dual Shanghai and Hong Kong listing, which would have been the world's largest IPO was suspended less than 48 hours before listing because it may not meet listing and disclosure requirements due to changes in the regulatory environment in China.

Ant Financial focuses on small lenders

It's a shocking development for Ant Financial and founder Jack Ma Yun, and one he could not salvage. But it also shows Beijing doesn't want anyone to get bigger or more powerful than the Communist Party and is doing this to temper Ma.

"The party is flexing its muscle," said Victor Shih, associate professor at UC San Diego. "It's saying to Jack Ma, you are going to have the biggest IPO in the world, but that's not a big deal for the CCP, which overseas the world's second-largest economy."

For foreign investors, Bloomberg says the incident raises questions over the viability of Shanghai and Hong Kong as premium financial centres. The suspension of the IPO comes after Chinese President Xi Jinping said China would open up to allow more foreign access and gradually relax controls over the yuan and capital flows.

Maybe "gradual" means glacial gradual.

Xi said China will open up to foreign markets

The conflicting signals will make foreign investors question China's commitment to greater transparency that is needed in modern, open markets.

But there is also the problem of regulating an innovative hi-tech banking giant Ant Financial. 

Ma, who owns 50.5 percent of Ant Financial has said traditional lenders are run like "pawn shops", as banks always demand collateral before lending. In the future, he said, lending decisions should be decided by big data analysis.

Currently it allows people to pay for goods using Alipay, but it can also help clients, particularly small businesses get access to small loans. Ant's strategy is to earn fees by providing a digital platform for banks to reach small borrowers, and more accurately assess the credit risk.  

But perhaps this concept is too risky -- and it does sound risky -- for Beijing. 

Xiao Jianhua was kidnapped from HK in 2017

As a result Ma was summoned to Beijing on Monday for a rare meeting, and the IPO suspended the following day.

Ant Financial is not the first company to be tempered by Beijing. There are numerous previous examples such as Anbang Insurance Group, HNA Group, Tomorrrow Holding (where the founder was kidnapped from the Four Seasons Hong Kong in 2017), and China Evergrande Group.

Will Ma recover from this? He will have to surrender and lick his wounds, but perhaps Ant Financial is too far ahead of its time. Ma may have to bide his time and keep his head down for a while...

Hong Kong's National Security Law Green Lighted

President Xi Jinping votes on the national security law

The deal is done.

This afternoon the National People's Congress voted to authorize the Standing Committee to tailor make a national security law for Hong Kong.

Matthew Cheung was on CNN today

How did the vote go down? 2,878 for, one against -- wonder who that was -- and six abstentions.

So now the Standing Committee will draft the law, as early as June, that will prohibit acts of secession, subversion, terrorism or conspiring with foreign influences in Hong Kong. It will also allow mainland agencies, like the secret police to legally operate in the city.

What the law will look like is anyone's guess, but it has apparently included the phrase: any actsthat "seriously endanger national security", an umbrella term for... anything.

Meanwhile Chief Secretary Matthew Cheung Kin-chung was on CNN trying to reassure viewers that life will be the same in Hong Kong for 99.99 percent of the people, but could not provide any specifics or guarantees this would be the case.

Carrie Lam signed her name supporting the law

He kept saying the law was being drafted and that the concerns and aspirations of people would be passed on to the Standing Committee...

Chief Executive Carrie Lam Cheng Yuet-ngor was also seen on the streets of North Point, saying how so many people supported the national security law.

Are they trying to convince themselves? Because they aren't doing a good job of convincing the rest of us.

But at the same time, China still needs Hong Kong as a legitimate financial hub.

According to stats from Refinitiv, since the handover Hong Kong has handled 356 Chinese companies' IPOs, which exceeds 281 in Shanghai, 59 in the New York Stock Exchange, 22 on the Nasdaq, and 4.8 in London.

Graph showing HK's importance for China IPOs

If Beijing wants Chinese companies to continue having legit IPOs then Hong Kong's freedoms need to remain. Once those freedoms are threatened, Beijing can kiss those IPOs good-bye.

Late last night word came down that US Secretary of State Mike Pompeo said Hong Kong was not sufficiently autonomous from the mainland to warrant its special trade status, and that sanctions could be imposed.

China reacted with furious words, describing the US as having "gangster logic", saying it was "utterly imperious, unreasonable and shameless for some in the US to stigmatize and demonize China's just and legitimate measures to plug the loopholes in national security, and even threaten with sanctions based on their domestic law," adding that the US went "all out to reinforce their own national security legal system".

Mike Pompeo says Hong Kong not autonomous

The Hong Kong Human Rights and Democracy Act was approved by the US Congress and signed into law by President Donald Trump in November. It requires the State Department to certify at least once a year that the city retains enough autonomy to justify favourable trading terms. It also specifies that officials responsible for human rights violations in the city could be subject to sanctions, including visa bans and asset freezes.

This seems like a stronger threat to Beijing, though the implications for American businesses in Hong Kong will be murky.

At least it was a stronger signal than the joint statement from Canada, the US, UK and Australia expressing concern, but not much else. Does Beijing care? Words sadly won't be enough to move Beijing to take the moral high ground. Instead it will consider these four countries as meddling in Hong Kong's affairs and will be determined to enact the law as soon as possible.

Will Tobacco IPO Light Up?

Cheap cigarettes are easily available everywhere in China

The world's largest cigarette company is filing its IPO in Hong Kong -- China National Tobacco.

I raised my eyebrows when I found out.

To clarify, it's the Chinese state-owned tobacco monopoly's international subsidiary, China Tobacco International, is planning the listing. Its revenues were HK$5.1 billion (US$651 million) from January to September last year, according to documents filed with the Hong Kong stock exchange.

The state-owned monopoly filed an IPO in Hong Kong

China National Tobacco buys leaves from overseas markets such as Brazil and the United States, and then sells them to domestic cigarette manufacturers at a 6 percent mark-up.

The Chinese company also has a monopoly on all tobacco exports from China, which largely caters to Chinese tourists in duty-free outlets across Asia -- a very small market.

China National Tobacco doesn't publish data on its accounts, but Bloomberg News said a rare release of financial data in 2012 suggests the state-owned enterprise's earned profits were on par with HSBC and Walmart.

It's intriguing the application for the listing is being made now, at a time when everyone knows smoking is harmful to your health -- and who will invest in this IPO? Sounds like a test of investors' ethics.

According to the World Health Organization, 7 million deaths last year were attributed from cancer and other lung diseases, or 1 in 10 deaths worldwide, 1 million in China alone.

The country produces the most cigarettes in the world

The Chinese government puts out feeble public service announcements about the harmful effects of smoking on health, but in reality it makes a lot of money from holding the monopoly on selling tobacco...

In Hong Kong where smoking rates fell 10 percent in 2017, we'll have to see if people have the appetite to encourage others to light up...

Xiaomi Caught in the Middle

Xiaomi's founder, chairman and CEO Lei Jun poses with the gong on July 9

Xiaomi, the world's fourth-largest smartphone maker, has had a heck of a time on the Hong Kong stock exchange after it launched its initial public offering on July 9.

While the stock price fell after opening day, there was belief it would be buoyed by hopes that investors on the mainland would be able to buy the Xiaomi stock through a program called Stock Connect that was supposed to start for the stock on July 23.

Hong Kong Exchanges and Clearing Limited expected this program would be a routine formality to start on time.

HKEX head Charles Li has rushed to Beijing

It assumed wrong.

On July 14, the Shanghai and Shenzhen bourses announced Xiaomi's stock would not be included in the Stock Connect pool, potentially preventing billions of yuan from being invested in the company, thus denying Chinese investors the chance in investing in a company's stock that is projected to rise significantly.

The announcement was not only a big setback for HKEX, but also Hong Kong Chief Executive Carrie Lam Cheng Yuet-ngor, who had thought Stock Connect was a done deal. It's also a question of her how good her guanxi is with Beijing.

She and Financial Secretary Paul Chan Mo-po hastily met with HKEX officials after learning about the announcement and on Monday night, Charles Li Xiaojia, head of HKEX flew to Beijing to see if he could smooth things over...

Carrie Lam was caught off guard by the announcement

As a result of Saturday's statement, Xiaomi's stock fell almost 10 percent in trading but managed to climb back up to close the day with a 1 percent loss. This just shows how much politics is still meddling in China's and Hong Kong's stock markets.

China's stock markets are in bear territory, falling 23 percent in Shanghai, 22 percent in Shenzhen since January. And so the opportunity for mainlanders to invest in Xiaomi would have potentially led to major capital flight, which the government is anxiously trying to stem the flow.

Stock Connect has been around since 2014, to allow international and mainland investors to trade securities in each other's markets. More than 2,000 equities in Shanghai, Shenzhen and Hong Kong are now included in the scheme.

Turnover for Hong Kong stocks in the program have been growing steadily, accounting for around 7 percent of the Hong Kong market's total turnover. Last year, it was around 6 percent, up 3 percent from 2016.

In the meantime the chances of clearing this impasse seems slim, as the mainland bourses seem keen on dragging Hong Kong's stocks -- and the HKEX's reputation -- down with them.