Business

Business

Pop Mart wins as blind box mania sweeps through Chinese youths

  • The Young Reporter
  • By: Zhu Zijin Cora 朱子槿、Zhou Yichen Gloria 周奕辰Edited by: Alison Leung
  • 2021-02-27

Anna Wang Kai-cen, a 27-year-old wealth manager, is one of the beneficiaries in China’s mystery or blind box craze by snapping up the toys and shares of Pop Mart International Group Ltd. (9992), the most famous blind box retailer in China. "I first entered the Pop Mart shop in Beijing two years ago, just out of curiosity why my friends bought so many of their toys," said Ms Wang. Twenty minutes later, she got her own toy, a vinyl doll dressed in a yellow suit with big blue eyes called Molly. Since then, apart from buying toys, Ms Wang started to pay attention to the designer toymaker and seller behind, Pop Mart, which went public in Hong Kong on Dec. 11 last year. The young wealth manager is among hundreds of thousands of investors betting their money on this Chinese largest designer toymaker, setting eyes on the behind “new economy” growth opportunities.  Within one day after IPO,  Ms Wang earned more than HK$70,000 by selling her some 2,000 new shares of Pop Mart, thanks to the blind box mania, which is taking over China by storm. Shares of Pop Mart jumped to a high of HK$89.60 in December, more than doubling its initial public offering price of HK$38.50, boosting the total market value of the company to more than HK$120 billion. The stock closed at HK$89.9 on Friday. "Of course I know its toys are popular among us young generation, but I didn’t expect their stocks are also that popular in public," Ms Wang said.  The "first blind box stock" Pop Mart is famous for its blind box selling strategy. Customers will not know what the toy looks like until they unpack it, sharing the same nature with toys in a capsule called Gashapon, or “niu dan'' in Hong Kong.  …

Business

Standard Chartered restores dividend while yearly profit more than halved

  • The Young Reporter
  • By: Zhou Yichen Gloria 周奕辰Edited by: Zhu Zijin Cora 朱子槿
  • 2021-02-26

Standard Chartered PLC (2888) reported on Thursday a 68% decrease in net profit in 2020, due to lower interest rates and higher credit impairments under the COVID-19 pandemic.  The net profit of the London-based bank fell to $751 million (HK$ 5.8 billion) in 2020. But the company would pay a $0.09 (HK$ 0.7) per share dividend and restarted a $254 million (HK$ 1.97 billion) share buyback scheme. Standard Chartered's Hong Kong shares fell more than 5% after trading opened on Friday, and closed at HK$51.05. "The resumption of dividends was announced in December last year, which was good news at the time and made the company's stock rise," said Jacky Luo, partner and director of several companies. "After the release of the 2020 results, the decline in the bank income and the similar forecast of this year's income to last year, will make some investors feel not so positive, adjust their expectations, and make corresponding judgments on changes." The bank, which does most business in Asia, reported a 57% pre-tax profit drop to $1.61 billion (HK$ 12.5 billion) in 2020 from $3.71 billion (HK$ 28.8 billion) in the previous year, due to a total charge of $895 million (HK$ 6.9 billion) related to restructuring, goodwill impairment, and other items. The operating income slipped by 4% to $14.75 billion (HK$ 114 billion), with net interest income declining 11% to $6.88 billion (HK$ 53.4 billion). The credit impairments of the bank in 2020 surged more than double to $2.29 billion (HK$ 53.4 billion), with the majority booked in the first half of the year. Despite profit decline, Chief Executive Officer Bill Winters was confident that the company would recover from the epidemic. "We are weathering the health crisis and geopolitical tensions very well," he said in a company statement. “Our strategic transformation …

Business

Budget Address 2021: tax concession reduced by half

Hong Kong’s Financial Secretary Paul Chan Mo-po on Wednesday announced salaries tax breaks of up to HK$10,000 while raising stamp duties on stock transfers from 0.1% to 0.13%.  With 1.87 million Hongkongers benefiting from the tax break, government revenue will be reduced by HK$11.4 billion due to the waivers, said Mr Chan.  Last year’s tax waiver was capped at HK$20,000.  Meanwhile, the stamp duty increase will be applied to both buyers and sellers. This is the first increase since 1993, provoking complaints from the securities industry.  After the announcement, Hong Kong Exchanges and Clearing’s share price recorded a 9% drop The Hang Seng Index faced its biggest drop of nearly 3% since May last year.  Cheung Tsz Wai, a 33 year old Uber driver, said he is disappointed in the budget. “It is no help to citizens like me,” Mr Cheung said.  “During the pandemic, everyone faced a financial crisis,” Mr Cheung said. “Not only the government did not distribute welfare this year, but they even reduced all kinds of allowance and subsidies.” Agnes Cheung, director and head of Tax of BDO Limited, said the budget was “as expected” and “shortsighted”. Ms Cheung said BDO had wanted a tax deduction for rental expenses, but the budget did not address the item this year.  “There are only “sweeteners” for the property owner from Home Loan Interest Deduction, but nothing for the rental paying group,” said Ms Cheung. “It just focuses on the current year measures, saving expenses, but didn’t take a broader approach to target Hong Kong long term economy growth.” Webster Ng, president of the Taxation Institute of Hong Kong, said the measures were normal. “Additional revenue from stamp duty will make room for tax relief,” he said.  “In this year, everybody including the government is suffering, we are all …

Business

Budget Address 2021: Effects of unemployment loan in doubt

  • The Young Reporter
  • By: Zhu Zijin Cora 朱子槿、Kwok Chiu Tung 郭昭彤Edited by: Zhou Yichen Gloria 周奕辰
  • 2021-02-24

Hong Kong's Financial Secretary Paul Chan Mo-po said on Wednesday unemployed citizens can apply for government-backed low interest personal loans of up to HK$80,000 but citizens cast doubt on its effectiveness because some fear that they cannot repay the loan. The one-off loan at an interest rate of 1% per annum is part of the government’s relief measures announced by the Financial Secretary in his budget speech amid the city’s unemployment rate hitting a 17-year high of  7% in January, with more than 250,000 people unemployed. “The labour market deteriorated sharply,” said Mr Chan in the speech. “This prolonged economic downturn has plunged some people into financial difficulties.” As an extra financing option for the unemployed, eligible individuals can pay interest only in the first year, and then repay the principal plus interest within the next five years. People who repay on time will get the interest back at the end. “I think the budget is reasonable and fair, especially in giving low interest rate loans to the unemployed,” said Teresa Tong, 65, former Partner at Ernst & Young Hong Kong. “ It’s a new idea for this year and it’s pretty innovative. It’s the right way to support the poor and unemployed rather than just offer them money.” “But some people are reluctant to borrow from the government”, said Kwok Man-ho, district councillor Tin Shui Wai. He has received comments from about a dozen of residents and none of them planned to apply for the loan as they were not sure if they were able to repay later. Besides, Mr Kwok also said the amount of the loan was too small, especially for people who were not living in public housing. “Since the unemployed have no idea when they can find jobs, most of them prefer direct unemployment grants …

Business

Budget Address 2021: Deficit hits record high Forecasts economy return to growth this year

  • The Young Reporter
  • By: Zhou Yichen Gloria 周奕辰、Cai Chuchu 蔡礎礎Edited by: Zhu Zijin Cora 朱子槿
  • 2021-02-24

Hong Kong government's fiscal deficit would hit a record of HK$257.6 billion this financial year, Financial Secretary Paul Chan Mo-po said in his budget speech on Wednesday. The deficit was expected to narrow a bit to HK$101.6 billion in 2021/22, accounting for 3.6% of GDP as a series of supporting measures and the continued increase in recurrent expenditure.  Mr Chan also forecasted the city's economy would return to growth of between 3.5% to 5.5% this year, due to an expected recovery in the global economy and the effect of local stimulus measures. The Financial Secretary delivered his budget speech at a Legislative Council meeting today with a focus on “stabilising the economy and relieving people's burden”. He said the economy would still face significant challenges in the first half of the year, but "economic recovery will likely gain a stronger momentum in the second half of the year in tandem with an expected rebound in the global economy." However, he also said, “With the epidemic still lingering, our economy is yet to come out of recession.” “As the social distancing restrictions are relaxed and more people are vaccinated, confidence among investors and citizens will increase, and there will be corresponding economic activities to help the economy recover,” said Billy Mak, associate professor from the Department of Finance and Decision Sciences of Hong Kong Baptist University. “But the recovery process may take three or four years, and the economy this year will still be difficult.” Mr Chan also alerted that Hong Kong would record a deficit for a number of years after achieving a surplus for 15 years. Despite this, the government still decided not to cut spending that affects people's livelihood, especially resources for education, social welfare and healthcare, in order to protect people's livelihood and maintain public confidence. By …

Society

Budget Address 2021: No cash handout amid recession; $5,000 e-vouchers for eligible residents

Financial Secretary Paul Chan Mo-po announced in his budget speech Wednesday there will be no cash handout for this financial year. But electronic vouchers of HK$5,000 will be issued in instalments to each Hong Kong permanent resident and new arrival aged 18 or above to encourage local consumption. The measure, which involves about HK$36 billion, is expected to benefit more than 7.2 million people, Mr Chan said.  The government has not said yet where the vouchers can be spent or how they will be given out. “The HK$5,000 e-voucher cannot tackle the current situation and provides limited support to citizens who have been struggling throughout the pandemic,” said Owan Li, Tai Kok Tsui North district councilor.  The numbers have been grim. Under the global sweep of the coronavirus, Hong Kong’s economy has shrunk by 6.1% for two consecutive years, hitting the highest annual decline on record.  The unemployment rate surged to 7% in the fourth quarter of 2020, reaching a 17-year high.  Tourism-related sectors are hard hit as they reached the highest jobless rate since SARS in 2003.  Retail, accommodation and food services sectors have suffered a surge in the unemployment rate to 11.3%. Tourism sectors have frozen with extensive global travel restrictions, and the export travel service plummeted by 90.5% “I actually agree with the government decision to not launch another cash handout since it has not been effective,” said Angus Chan, an employee dismissed from the InterContinental Hotel during the pandemic and now works in the Rosewood Hotel.  He has one to two no-pay leave days per week at the new job, and some of his shifts are cut, he said.  As the world continues to restrict travel, the hospitality industry is uncertain about when it will recuperate from the pandemic. Small and medium enterprises are hoping the …

Business

Budget Address 2021: Hong Kong sees 2021 positive GDP growth at 3.5% - 5.5%

  • The Young Reporter
  • By: Zhu Zijin Cora 朱子槿、Zhou Yichen Gloria 周奕辰Edited by: Alison Leung
  • 2021-02-24

Hong Kong's Financial Secretary Paul Chan Mo-po said in his budget speech on Wednesday that the city’s economy is expected to return to positive growth this year after experiencing two consecutive years of recession. Hong Kong's economy will face significant challenges in the first half amid COVID-19 while the economy is expected to recover in the second half on a rebound in the global economy, Chan said. He forecasts the economy to grow by 3.5-5.5% in real-term this year on back of the stimulus effect of the fiscal measures. But Chan also said, "The progress of economic recovery will hinge on the development of the epidemic." From 2022 to 2025, he expected the city's economy will grow by an average of 3.3% per annum in real terms, with the underlying inflation rate forecasted to average 2%.    The Financial Secretary expected the government to post a budget deficit of HK$101.6 billion in 2021/22, accounting for 3.6% of GDP due to the relief measures and the continued increase in recurrent expenditure. The government also announced several one-off measures including cutting personal salaries tax and personal assessment tax by 100% with a ceiling of HK$10,000. Enterprises will also be eligible for 100% reduced profits tax with a limit of HK$10,000. Unemployed citizens can apply for a government-backed personal loan capped at HK$80,000 at an interest of 1% per year, said Chan.  In addition, to stimulate domestic consumption, every Hong Kong permanent resident and new arrivals aged 18 or above will receive HK$5,000 electronic consumption vouchers, which will involve about 7.2 million people with a total of HK$36 billion.

Business

Hong Kong strives to achieve carbon neutrality goal, long-term decarbonisation strategy expected mid-2021

  • The Young Reporter
  • By: Kwok Chiu Tung 郭昭彤Edited by: Zhu Zijin Cora 朱子槿
  • 2021-02-19

The 2021 Budget Plan will be released next Wednesday in which global climate change is expected to be a topic in concern while the Financial Secretary Paul Chan Mo-po has said that a long-term decarbonisation strategy, including the promotion of using electric vehicles, will be announced in the middle of this year. The Financial Secretary said in his blog on Feb. 7 that the government will promote the use of electric vehicles by creating more EV charging stations and phase out existing high-emission Euro IV diesel commercial vehicles before 2027. The government would strive to achieve carbon neutrality before 2050, Chief Executive Carrie Lam Cheng Yuet-ngor said in the 2020 Policy Address. However, the development of electric vehicles in Hong Kong is still slow, said Wong Chun-sing, 32, who would like to buy an electric vehicle but stopped by government measures. “The electric vehicles charging stations are not enough, I wanted to buy an electric car but I think it is hard to charge electric cars in Hong Kong,” said Mr Wong.  When compared with Singapore, Hong Kong is still lagging behind in terms of green infrastructures. Singapore announced on Tuesday in its budget that it will create 60,000 EV charging points before 2030, or more than 30 times of what they have now. "I think the development progress of Hong Kong is way behind Singapore,” Mr Wong said.  As of December 2020, Hong Kong had 3,351 electric vehicles charging points, according to data provided by the Environmental Protection Department.  Hong Kong also released certain policies to promote green technology for reducing air pollution by vehicles and ferries in last year’s budget. The government has earmarked HK$80 million for launching electric public light buses and HK$2 billion to subsidise the installation of EV charging stations for residential buildings and to …

Society

“No experience, no technology, no talent”: how poor supervision of tech investment in China lead to a waste of funds

  • The Young Reporter
  • By: CAO Jingyi、Li Shiwen、Mereen Santirad、Wang ZiweiEdited by: Janice Lo
  • 2021-02-17

Hongxing Semiconductor Manufacturing Company (HSMC), a government-backed manufacturing project in Wuhan, has gone belly-up. The 128 billion yuan (HK$153 billion) project is now just an abandoned construction site. The weeds have grown over what is supposed to be the floor of the factory. Local authorities reported that the project was stagnant due to “poor planning and shortage of funds”. The semiconductor business in China has a history of fraudulent players. Two decades ago, the much-hyped Hanxin microchip project, also known as “heart of the Han” processor was later discovered to be a scam. Workers at the plant were simply replacing Motorola brand chips with the Hanxin logo.The developer, a university professor from Jiaotong University in Shanghai, was found to have stolen the technology from Motorola. He was later found guilty of fraud and banned from state funded projects. In July 2020, Dekema (Nanjing) Semiconductor Technology Co. Ltd declared bankruptcy due to “financial difficulties”, leaving behind 19 billion yuan (HKD$23 billion) in unpaid debt and wages. China’s state council set a goal to become a global leader in the semiconductor industry by 2030 and aims to produce 70% of the semiconductor by 2025. The central government put up about 764 billion yuan (HK$465 billion) in the industry over the five years, including 388 billion yuan (HK$465 billion) from provincial and municipal governments, according to the report by the Central for Strategic and International Studies. However, the plan to create a domestic semiconductor industry was just a little successful due to “no experience, no technology, and no talent” of the semiconductor industry, for instance, HSMC.  The company received 15.3 billion yuan (HK$18.3 billion) funding for the operation in 2019, according to the Wuhan Municipal and Reform Commission.  By July 2020, HSMC was already in trouble. Construction of the factory had stalled since …

Society

Hotel workers call for recognition of their efforts during COVID-19

Local hotel workers are demanding a one-off subsidy in recognition of their contribution in fighting the Covid-19 pandemic. They also want priority in vaccination because of the risks they have to take. The Hong Kong Housekeeping Employers Association and Hotels, Food & Beverage Employees Association said in a press conference today that the government should provide a one-off subsidy of $3,000 for each worker. They urged the government to increase the capacity of banquets from 20 to 80 people and set up an Emergency Relief Fund for hotel workers who lost their jobs. “Housekeepers have to put on personal protective equipment when cleaning the rooms used for quarantine. But the equipment limits their movements, and cleaning time has increased from 30 minutes to almost two hours,” said Hector Ngai Chee-keung, the membership affairs officer of the Hong Kong Housekeeping Employers Association. He said housekeepers now have an increased workload because of strict hygiene standards for both staycation and quarantine guests. “Housekeepers need one to one-and-a-half hours to clean each room because they find red wine stains on carpet, rotten fruit and peanuts shells in the rooms,” said Mr Ngai. By providing a one-off subsidy of $3,000 for each worker, Mr Ngai said it could reward those who have maintained professionalism amid the pandemic. Nerine Yip Lau-ching, Secretary-general of the Hotels, Food & Beverage Employees Association said that it is crucial for hotel workers to get vaccinated first because they face a high risk of catching COVID-19 when serving food. “By allowing us to have a higher priority for vaccination and encouraging the public to get vaccinated, it could prevent a fifth wave of the pandemic from hitting Hong Kong,” added Cheung Tsz-yeung, director of the Hotels, Food & Beverage Employees Association. Food and Health Secretary Sophia Chan Shiu-chee announced today …