Hong Kong unemployment rate falls to 5.5%
Hong Kong’s unemployment rate dropped to 5.5 percent for the three-month period ending in June, reaching a level not seen in more than a year as the economy recovers amid relaxed social-distancing rules and low COVID-19 case numbers. The figure, revealed by the Census and Statistics Department on 20 July, is down from 5.9 percent seen during the March to May period and the record 7.2 percent high seen between December 2020 and February this year, the worst figure since 2004. The underemployment rate also decreased from 2.8 percent to 2.5 percent. The economy will continue to recover, bolstered by the HK$5,000 consumption voucher scheme, according to Secretary for Labour and Welfare Law Chi-kwong.
HKEX to launch new digital platform to speed up IPO process
The Hong Kong Stock Exchange (HKEX) will launch a new digital platform next year to speed up the initial public offering (IPO) process and to ensure the bourse remains a global leader for new listings. The Fast Interface for New Issuance (FINI) will supersede current paper subscriptions and slash the IPO process to two business days, down from five. The move was announced on 6 July and follows a consultation process that took place last November, with 90 percent of respondents supporting FINI, which will be introduced in the fourth quarter of 2022. The new platform will “shorten the cycle between IPO pricing and the start of trading, driving market efficiency and reinforcing Hong Kong’s position as the world’s premier IPO market,” according to HKEX Chief Executive Officer Nicolas Aguzin.
Accountants anticipate growth during second half of the year
Accountants are confident the global economy will recover and reach pre-pandemic levels during the second half of the year, according to Global Economic Conditions Survey Report: Q2, 2021, a quarterly survey by the Association of Chartered Certified Accountants and the Institute of Management Accountants. The study was released on 13 July and polled over 1,000 senior accountants and finance professionals. Despite seeing a slight dip in confidence in the second quarter, the survey found that continued vaccinations worldwide will be key to growth during the remainder of the year. Factors such as inflation, the persistence of the coronavirus and the spreading Delta variant, however, have dampened confidence this quarter, compared to the first quarter.
KPMG scrutinized by U.K. watchdog for substandard bank audits
The Financial Reporting Council (FRC) in the United Kingdom has criticized KPMG for failing to meet required standards in its audits of banks. KPMG was singled out among the other Big Four firms and mid-sized competitors such as BDO and Mazars, with only 59 percent of the firm’s audits meeting requirements, according to the FRC’s annual review of audit quality. The regulator found “significant weaknesses” in the firm’s audit procedures for companies’ expected credit losses, valuation of financial instruments and the testing of settlement and clearing accounts. “While these results show some improvement on last year’s results, this improvement is marginal and significant change still needs to happen to meaningfully improve audit quality,” said Sir Jon Thompson, Chief Executive Officer of the FRC.
Former HKEX chief joins bond-trading platform based in the U.S.
Charles Li, the former chief executive officer of HKEX has joined MarketAxess, a bond-trading platform listed in the United States, as a non-executive director. Li told the South China Morning Post that he started his new role on 13 July and will join board meetings to give advice to the Nasdaq-listed fixed-asset trading platform. The new role, which is his first since stepping down from HKEX last December, comes as Mainland China is expected to announce the launch of the southbound leg of the Bond Connect scheme, which will allow those in Mainland China to invest in international bonds via Hong Kong. “Ever since my involvement with the launch of Bond Connect, I have closely followed the development of the leading global fixed-income trading platforms, such as MarketAxess, and believe that they will play important roles in the internationalization of the Asian bond markets,” Li told the SCMP.
Li Auto to list in Hong Kong
Li Auto, the Chinese electric-vehicle (EV) maker, received approval from the HKEX for a listing in the city, following its debut in New York a year ago. The Beijing-based start-up will join XPeng, the first Chinese EV company to list in Hong Kong via a dual primary listing following its US$1.8 billion fundraising this month. Li Auto, which raised US$1.1 billion from its Nasdaq initial public offering last July, could raise US$1 billion to US$2 billion in the listing, according to Bloomberg News, which cited people with knowledge of the matter. Li Auto has been public for less than two years, meaning it can’t pursue a secondary listing like other Chinese companies that have completed so-called homecoming share sales. As of June, Li Auto had delivered over 63,000 Li One SUVs, its first and only production model.
Wealth management connect to generate US$700 million in fees for lenders
The cross-boundary Wealth Management Connect scheme will generate US$700 million in fee-based income a year for banks in Hong Kong and Mainland China, according to Bank of China Hong Kong, the South China Morning Post reported. The scheme, announced last year, will allow residents of Hong Kong and Macau to invest in wealth management products distributed by Mainland banks in the Greater Bay Area (GBA), and residents of cities in the GBA to invest in wealth management products distributed by banks in Hong Kong and Macau.
U.K. financial watchdog pushes to increase female directors
The Financial Conduct Authority in the United Kingdom has put in place proposals to ensure women hold at least 40 percent of board seats, amid growing interest among investors in broadening representation on listed company boards. The watchdog said that at least one senior board position, including chief executive or chief financial officer, should be held by a woman. Under the new plans, companies will need to either “comply or explain” why they have missed new board diversity targets. While the targets are not mandatory, they will provide a way to measure companies’ success in bringing greater diversity to their senior management, the Financial Times reported.
Apple, Alphabet and Microsoft see profits surge
The three U.S.-based tech giants – Apple, Alphabet and Microsoft – raked in combined after-tax profits of US$56.8 billion during the latest quarter, almost double the year before and 30 percent more than some Wall Street observers had predicted. The earnings, announced on 27 July, signals the continued demand for digital services and gadgets. It also showed that the digital boom sparked by lockdowns during the pandemic would continue long after the crisis had passed, according to tech executives and investors, the Financial Times reported. “I think the takeaway is, all the digital habits that we picked up over the past 12 months, they’re going to stick with us when we come out of this,” Jim Tierney, a portfolio manager at AllianceBernstein, told the FT.
EU proposes world’s first carbon border tax
The European Commission (EU) this month outlined plans to impose a Carbon Border Adjustment Mechanism, or CO2 tariff, on polluting goods, forcing some companies importing into the European Union to pay carbon costs at the border on carbon-intensive products such as steel, aluminium, cement, fertilizers and electricity. The border levy will be phased in from 2026, the EU said. Under the proposal, importers will be required to monitor and report their emissions during a transitional phase from 2023-25. They will also need to buy digital certificates representing the tonnage of carbon dioxide emissions embedded in the goods they import. “If importers can prove, based on verified information from third country producers, that a carbon price has already been paid during the production of the imported goods, the corresponding amount can be deducted from their final bill,” the EU said in a factsheet.