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03-10-2019, 08:54 PM
(This post was last modified: 03-10-2019, 08:56 PM by dreamybear.)
Back to the question I asked in my earlier post, what will happen when the land in HK expire in 2047 assuming no policy intervention ? Will all property values be 0 ? If so, HK property stocks and HK REITS will be affected.
For retailers, personally I prefer those with significant exposure to mainland China coz I wld assume HK will eventually be just another chinese city like Guangzhou, Shenzhen, Chongqing, etc after the 2 systems ended.
Thus, imho, one of the "safest" long term HK play bets wld be BOC HK. 
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The fate of HK's land tenure after 2047 will probably depend on the fate of HK's legal system at that time. Will it still be one country, two systems?
HK may be integrated into the mainland, and follow their land tenure system. Or the Greater Bay Area, where HK is a part of, may be de-regulated to allow for greater capital freedom.
Though, I think if an investor has to speculate about what is going to happen decades later, it might be better to hold off on the idea. At least, that would be my approach.
It does not make sense to me to make bets with unknown odds. Though, if I should do so, I would keep the bet small, to minimise a loss that is very likely to happen.
I try to follow the 20 punch card rule to keep myself from committing fatal errors.
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(03-10-2019, 06:36 PM)weijian Wrote: From value investing standpoint, there are really only 2 ways to "play" the current macro situation at HK now.
The first is along the lines of "buying a fair asset overly beaten down via a great price". The 2nd would be "buying a great asset at fair prices which would continue to eventually appreciate and assuming the macro situstion doesnt change its long term fundamentals.
For the former, these could be those retailers or transportation providers. Those dependent on tourists and luxury demand with high local (hk) concentration are great candidates.
The latter could be some of the property owners/developers with hard assets, and in the short run, the impact of protests isnt going to impact their earnings or asset value much. Of course, there is then the question of whether things will return to the norm after everything has passed.
I find the market -- particularly those stocks that large enough to be bought by institutions -- to be pretty efficient.
The companies that are at risk -- retailers, transportation providers, property-related companies, and also, manufacturers (due to trade war) -- are seeing their market prices falling.
The ones that are expected to have stable businesses -- such as food-related businesses -- are only marginally cheaper. I would much prefer to buy these. So I wouldn't have to crack my head and ponder over whether tourists will return, whether land tentures will be extended, whether Chinese manufacturing will still be competitive. These are hard questions, and that is why the stocks which require you to answer them are cheap.
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While I do think that sales in Hong Kong will rebound after the protest ends.
I believe there will be fundamental changes to Hong Kong retail business.
Mainlanders dislike Hong Kongers for their perceived superiority and arrogance towards Mainlanders, as well as Hong Kongers push for "independence". The current protest incident has further reinforce this mindset. I read from several sources that numerous Mainlanders declare that they will not contribute to Hong Kong's economy by avoiding travelling to HK / investments in HK etc.
Furthermore, how would the Hong Kongers treat Mainlanders? Would you enjoy being in a place where you are not welcome by the locals?
On the other hand, businesses where there are existing price/ product safety arbitrage between Mainland and Hong Kong will recover faster than others.
Another issue to ponder is, after this incident settles, most likely HK will lose more autonomy. What are the implications to the businesses there?
My gut feel is HK's economy might not recover as quickly as most people think they would, in real terms.
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10-10-2019, 04:43 PM
(This post was last modified: 10-10-2019, 04:44 PM by dreamybear.)
Hong Kong is sinking into a recession with no recovery in sight
Published 9 hours ago
HONG KONG (BLOOMBERG) - Hong Kong is facing its first recession since the global financial crisis, with little prospect of an immediate recovery as the city confronts its most violent protests in decades......
A variety of key economic indicators have rapidly turned south in the past few months: Retail sales by value plunged a record 23 per cent in August from a year earlier as demand for luxury goods such as jewellery and watches plummeted.
Tourism arrivals declined almost 40 per cent in August from a year earlier to about 3.6 million visitors, the worst performance since the 2003 Sars epidemic, according to data from the Hong Kong Tourism Board......
At a press conference on Tuesday, Mrs Lam said visitor arrivals fell by more than half from Oct 1-6, the "Golden Week" when mainland tourists usually flood Hong Kong's shops to snap up luxury goods. Along with likely confirmation of a recession, advance third-quarter gross domestic product figures due on Oct 31 may indicate even weaker growth forecasts for the rest of the year.
Hong Kong has had severe economic challenges before. In the early 2000s, the Sars epidemic shut down the city amid fears of contracting the deadly virus. Once the all-clear came, though, visitor arrivals and business confidence bounced back. The difference now is that there is little expectation of a rapid resolution, as positions harden on either side of the barricades......
https://www.straitstimes.com/asia/east-a...y-in-sight
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Thousands lose jobs as eateries close
10 Oct 2019
The first wave of retail closures has hit Hong Kong, with about 100 restaurants shutting and 2,000 workers losing their jobs in the past month, a catering group says.
Henry Ma Kin-leong, vice chairman of the Institution of Dining Art, said to reduce costs, many restaurants have started to lay off part-time workers and requested full-time workers to take unpaid leave.
He expected the wave of business closures to continue as income cannot cover the rent.
Ma said restaurants in tourist areas including Causeway Bay and the Yau Tsim Mong District have been seriously affected, as well as those in shopping malls, many of which closed during the protests.
He also said many closed restaurants have not been taken over by new owners due to the business environment.
His association and the Hong Kong Retail Management Association are calling on the government for more relief measures and for mall owners to reduce rents.
Most shopping malls have refused to lower rents, including those under the Link REIT and MTR Corp, the groups said.
Annie Tse Yau On-yee, chairwoman of the Hong Kong Retail Management Association, said some landlords have offered to cut rent by 10 to 30 percent for several months, while Swire Properties and Hysan Place have offered support measures to their tenants. But most shopping malls have insisted on maintaining rents.
She said retail sales in August plunged 23 percent. Business in high-end consumer goods like watches and jewelry dropped almost 50 percent, while sales of clothes, footwear and cosmetics fell 30 percent...........
http://www.thestandard.com.hk/section-ne...422&sid=11
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More than 40 per cent of Hongkongers want to emigrate amid ongoing protests, survey finds
10 Oct, 2019
- According to Chinese University survey, 42.3 per cent respondents want to move abroad permanently, compared with 34 per cent in December last year
- Most people want to move to Canada, Australia or Taiwan citing factors such as ‘political disputes’ and ‘lack of democracy’...............
https://www.scmp.com/news/hong-kong/hong...grate-amid
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HKers - 食碗麵返碗底
"... but quitting while you're ahead is not the same as quitting." - Quote from the movie American Gangster
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President Donald Trump said in an Oval Office meeting with China’s vice premier that he thinks protests in Hong Kong are winding down and that a partial trade accord the two leaders reached on Friday will be a “great deal” for the city’s residents.
https://www.bloomberg.com/news/articles/...tself-soon
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There is a HK Democracy Act that will be passed soon in the US Govt, and this Act will remove HK from having special treatment as a trading nation to The US. Looks to me like the protestors are going after the approval of this Act. That's what they want.
What harm does the Act do to HK ? Anybody has a deeper perspective ? Economic Sanctions ?,... just like to Iran and soon-to-be to Turkey too ??
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As demonstrators vandalize subway stations and other businesses perceived to be in league with communist authorities, the anger is discouraging mainland Chinese from visiting the territory.
In addition, it has been rumored that Hong Kongers regard speakers of Putonghua -- standard spoken Chinese based on a Beijing dialect -- as being pro-China. As a result, mainlanders now consider whether they really want to travel someplace where they will be thought of as the enemy. Cantonese is the most commonly spoken dialect in Hong Kong.
https://asia.nikkei.com/Spotlight/Hong-K...tion-plan2
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