Likely Link bonus adds sweetener to week of double happiness
For small retail investors the move by the People's Bank of China to revalue the yuan on Thursday was but icing on the cake prepared for them earlier in the week by Hong Kong's top court.
Celebrations were first called for on Thursday after the Court of Final Appeal gave the go-ahead for the Housing Authority's Link real estate investment trust (reit).
The $30 billion Link Reit, originally slated for last December, would have been the largest privatisation project in the world had it not been derailed by a legal challenge by public housing tenant Lo Siu-lan, who accused the vendor, the Housing Authority, of violating its statutory duty to tenants.
The authority was forced to shelve the project pending the outcome of its appeal, but thanks to the court's decision can re-launch it as early as October.
Luckily for potential Link investors, recent interest-rate increases have fundamentally altered the investment equation on which the Reit was initially presented.
The authority now looks to have no choice but to offer more attractive terms by either raising the return or lowering the price.
The improved terms are also essential to prevent investors from flocking to other similar investment opportunities such as upcoming share offerings in mainland property trusts.
Yuan, two, three ...
And how about the savvy small investors who have, to quote one retail bank executive, turned up at branches almost every week to exchange dollars for yuan since Hong Kong lenders were permitted to conduct yuan banking in late 2003?
Monetary statistics show that as of the end of May almost 20 billion yuan had been deposited into personal accounts at Hong Kong's banks.
This week's effective 2 per cent or so revaluation of the yuan against the dollar does not represent a windfall profit, but is still far better than the paltry deposit rates offered by Hong Kong banks.
So should banks be stocking up more yuan notes in anticipation of even more customers clamouring for yuan?
Not necessarily, according to Liu Chong Hing Bank senior manager Brian Cheung Nam-chung, who told MoneyWeek yesterday that activity at the bank's branches had so far been 'just as usual'. 'If I'm advising my customers, I'd tell them not to bet on any more revaluations over the next 12 months,' said the often outspoken Mr Cheung.
'From my point of view [Beijing] is simply doing this to shut some people up. We have waited four years for a 2 per cent revaluation and who knows whether we'll have to wait another four years for the next round.'
HSBC cover runneth over
A week before the government launched its medical reform proposals, HSBC announced it was putting applications for its outpatient cover insurance plan online.
'We are seeing growing interest in medical insurance as lengthening queues and rising medical costs at public health-care facilities are prompting people to turn to private medical services,' said Ann Pearce, head of insurance products at HSBC.
The government estimates its proposal would raise the share of hospital services provided by private hospitals from 8 to 20 per cent.
