HKMA takes first step in exploring digital currency
The Hong Kong Monetary Authority (HKMA) has sought feedback from academics and the finance profession after issuing a 50-page white paper entitled e-HKD: A technical perspective on 4 October, in a move seen as the HKMA’s first step towards introducing a digital currency in the city. The white paper lists seven major areas and explores potential architecture and design options for the digital currency. It will collect comments by the end of the year, according to the South China Morning Post. The city’s central bank reaffirmed that it had not decided to launch the e-HKD and wanted to collect views before making a decision next year. “The knowledge gained from this research, together with the experience we acquired from other central bank digital currency projects, would help inform further consideration and deliberation on the technical design of the e-HKD,” said Eddie Yue, Chief Executive of the HKMA.
Exchange Fund loses HK$13.2 billion
Hong Kong’s Exchange Fund has lost HK$13.2 billion in the third quarter as a result of a decline in the local stock market. The decrease, which follows gains of HK$51.3 billion and HK$51.4 billion seen during the first and second quarters respectively, compares to the HK$81.2 billion gain seen during the July to September period in 2020. The lacklustre stock market performance is attributed to the regulatory crackdown by Mainland authorities on the tech and private tutoring sector, leading the Hang Seng Index to drop by 15 percent during the third quarter, according to Howard Lee, Deputy Chief Executive of the HKMA, who announced the Exchange Fund’s performance during a Legislative Council meeting on 18 October.
IESBA appoints new president
The International Ethics Standards Board for Accountants (IESBA) has appointed Gabriela Figueiredo Dias to be its new chairwoman. Figueiredo Dias will be the IESBA’s first female chairwoman when she takes office on 1 January 2022. She succeeds Stavros Thomadakis, who has led the IESBA since 2015. She is currently President of the Portuguese Securities Market Commission, the authority responsible for regulating and supervising the markets of financial instruments, which covers listed companies, asset managers, auditors and investment firms. “I am honoured to be selected as the next IESBA chair during this critical time of transition for the board and the profession,” Figueiredo Dias said in a statement on 6 October.
PwC U.S. offers permanent remote work to employees
PwC in the United States is offering its 40,000 employees the opportunity to permanently work virtually and live anywhere they want, making the firm one of the biggest employers to embrace remote work in the U.S. amid the ongoing COVID-19 pandemic. Employees who choose to work remotely on a permanent basis will still have to come into the office a maximum of three days a month for in-person appointments such as critical team meetings, client visits and learning sessions, according to PwC’s Deputy People Leader Yolanda Seals-Coffield, who added that the firm was the first in the industry to allow full-time remote work to workers. Other firms such as Deloitte and KPMG have also been giving employees more choice to work remotely, Reuters reports.
Wealth Management Connect sees hot demand following launch
The Wealth Management Connect saw a warm response from both Hong Kong and Mainland China customers following its launch on 19 October. The scheme enables residents in Hong Kong and Macau to invest in wealth management products distributed by Mainland banks in the Greater Bay Area and vice versa. The HKMA approved 16 lenders on launch day to sell products in the city and in Mainland China. Banks such as Bank of China (Hong Kong), HSBC and Standard Chartered and 10 other lenders all indicated a positive reaction from customers, with many of them purchasing investment products across the border, according to the South China Morning Post.
Tesla valued at US$1 trillion
Tesla’s market capitalization hit just over US$1 trillion on 26 October, making it the sixth company ever in United States history to be worth US$1 trillion. Its value soared after Hertz, an American car rental group, announced plans to add 100,000 Tesla vehicles to its fleets in North America and Europe. Tesla’s shares went up by 12.6 percent and closed at US$1,025, bringing year-to-date gains above 40 percent. It took 12 years for Tesla to reach the US$1 trillion mark after its IPO, making it the second-fastest company after Facebook to do so following an IPO. Tesla is now one of six companies with a trillion-dollar value in the U.S., joining Apple, Amazon, Alphabet, Facebook and Microsoft. Founder Elon Musk’s stake in the company is now valued at US$ 172 billion.
Financial industry group warns quarantine measures threaten Hong Kong’s standing
The Asia Securities Industry and Financial Markets Association (ASIFMA) has warned that Hong Kong’s strict quarantine requirements are threatening the city’s status as an international financial hub. The lobby group, which represents 155 of the largest banks and professional services firms in the region, addressed a letter on 25 October to Hong Kong Financial Secretary Paul Chan calling on the government to produce a timeline for relaxing travel restrictions. Visitors to Hong Kong from 25 countries must still quarantine in a hotel at their own expense for three weeks, while travellers from elsewhere are subject to a two-week hotel quarantine. Authorities have failed to offer any timeline for relaxing the rules. The letter stems from growing frustration among the city’s business community as the rest of the region, such as Singapore, reopens.
FRC amendment bill passed: Regulatory reform moves ahead
The Financial Reporting Council (Amendment) Bill 2021 was passed by the Legislative Council on 22 October. Under the new bill, the Financial Reporting Council (FRC) will assume functions from the Hong Kong Institute of CPAs such as the issuance of practising certificates to CPAs, registration and inspection of practice units, investigation of all CPAs and practice units and overseeing the remaining statutory functions of the Institute. The new legislation will take effect on a date to be appointed by the Secretary for Financial Services and the Treasury. Subsidiary legislation will be introduced to provide for the transitional arrangements and other remaining technical details. The Institute will continue to engage with the FRC as it prepares for the implementation of the new regime.
FRC investigating PwC’s Evergrande audit
The FRC in Hong Kong announced on 25 October that it was probing China Evergrande Group’s accounts from 2020 over inadequate reporting on the company’s operating risks and its audit by PwC of their accounts for the full year of 2020 and the first half of 2021. The announcement said PwC “expressed an unmodified audit opinion in its auditor’s report of China Evergrande’s 2020 annual accounts but made no reference to going concern material uncertainties.” China Evergrande Group, the nation’s second-largest property developer, is faced with more than US$300 billion in debt and has been divesting assets in a bid to repay creditors. It has also missed three rounds of interest payments on its international bonds.
More than 200 IPOs planned, says HKEX
Hong Kong Stock Exchange (HKEX) has over 200 initial public offering (IPO) applications as of the end of September, according to Chief Executive Officer of HKEX Nicolas Aguzin this month, signalling a positive outlook for the city’s IPO market for the last quarter of the year. During the first nine months of the year, 73 companies listed, raising a combined US$35.9 billion from IPOs and secondary listings, the most ever netted since records began in 1980, reports the South China Morning Post, using data from Refinitiv. “The IPO market in the third quarter reflects the cautious sentiment amid the regulatory development in Mainland China. However, the pipeline of IPOs in Hong Kong remains solid,” said Aguzin during a post-earnings conference.