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  • Hang Seng Index Poised for Biggest Overhaul in 51 Years
    Business
    Bloomberg

    Hang Seng Index Poised for Biggest Overhaul in 51 Years

    (Bloomberg) -- Investors will soon discover if Hong Kong’s Hang Seng Index will undertake one of the biggest overhauls in its 51-year history, a move that would impact tens of billions of dollars in funds tracking the stock benchmark.On Monday, Hang Seng Indexes Co. will offer its conclusion after an industry consultation over proposed changes to the city’s stock benchmark, which if approved would increase the number of member constituents, cap weightings of individual companies and fast-track new listings. The announcement is expected shortly before a press briefing that starts at 4:30 p.m. local time.The city’s stock market is already undergoing change at a time when China’s tech giants hold growing sway, forcing the index compiler to act on a staid gauge overstuffed with banks and insurers. Hong Kong has become the preferred venue for a wave of Chinese megacaps to sell shares, including standouts like Kuaishou Technology, which surged 161% at its debut in early February after holding the world’s largest internet initial public offering since Uber Technologies Inc.The announcement will also come on the heels of a record buying frenzy from mainland traders that propelled the HSI past the 30,000 point level in January for the first time since May 2019, led by heavyweights like Tencent Holdings Ltd. and Hong Kong Exchanges & Clearing Ltd. If the wide-ranging changes are approved, analysts say that the HSI, which in 2020 lagged global peers by the most in decades, could have more room to run.“The valuation of the index will be pushed higher as more new economy stocks are expected to join under the changes,” said Dickie Wong, executive director of research at Kingston Securities Ltd. “This could also make the index more volatile.”As part of the proposed changes, Hang Seng Indexes is looking at ensuring that a certain number of benchmark members are classified as Hong Kong firms, which could dilute the influence of some of the largest stocks. The portion of mainland companies in the index by market value was 79% in 2020, according to the December consultation paper.On Friday, Hang Seng Indexes added three companies to its index following its quarterly review, expanding the constituent count to 55 members from 52. The changes are effective March 15. The benchmark index was 1.3% higher as of 10:36 a.m. Monday in Hong Kong, with Meituan and Tencent Holdings Ltd. among leading gainers. Launched in 1969, the Hang Seng Index started out with 33 constituents, rising to 38 in 2007 when it began to include H-share firms. Last year, Hang Seng Indexes added dual class shares and secondary listings to its index in a major revamp, allowing Chinese giants like Alibaba Group Holding Ltd. into the city’s benchmark.(Updates with market moves)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.

  • World
    Reuters

    UPDATE 1-Security tight as crowds gather outside Hong Kong court for subversion hearing

    About 1,000 people gathered outside a Hong Kong court on Monday ahead of the hearing for 47 democracy activists charged with conspiracy to commit subversion, as authorities intensify a crackdown under the city's national security law. The activists are accused of organising and participating in an unofficial primary poll last July aimed at selecting the strongest candidates for a legislative council election that the government later postponed, citing the coronavirus. "This is the most ridiculous arrest in the history of Hong Kong," said Herbert Chow, 57, who was queuing outside the court and wearing a black face mask.

  • Housing Booms in Australia as Prices Surge Most in 17 Years
    Business
    Bloomberg

    Housing Booms in Australia as Prices Surge Most in 17 Years

    (Bloomberg) -- Australia’s housing market is booming again, with the biggest monthly price gain in 17 years dispelling fears of a Covid-induced downturn.Nationwide house values surged 2.1% in February, the largest increase since August 2003, CoreLogic Inc. data released Monday showed. Capital city prices gained 2%, led by Sydney and Melbourne.“Australia’s housing market is in the midst of a broad-based boom,” said Tim Lawless, head of research at CoreLogic. The rapid gains have been “spurred on by a combination of record-low mortgage rates, improving economic conditions, government incentives and low advertised supply levels.”While housing prices are surging from Singapore to Canada and the U.S., a return to boom times in Australia threatens to swell an already worrisome pile of household debt and make it harder for young people to get a foot on the property ladder. Sydney is the world’s third-least affordable housing market, and Melbourne the sixth, according to a report last week.The nation’s property values have taken off again after the central bank slashed interest rates to a record low and said they’ll stay there for at least three years. People are also looking for larger houses with space to work from home, while the rapid price growth has rekindled a fear of missing out, sending buyers flocking to the market. That could see home prices surge 16% over the next two years, according to Commonwealth Bank of Australia, the nation’s largest mortgage lender.“Auction clearance rates are sitting at levels consistent with double-digit dwelling price growth” said Gareth Aird, head of Australian economics at Commonwealth Bank. “History shows people like to buy into a rising market.”An auction for a small, dated two-bedroom house in the inner Sydney suburb of Paddington on a recent Saturday attracted more than 250 people. Bidding began at A$1.4 million ($1.1 million) -- A$150,000 over the reserve and immediately knocking most would-be buyers out of the race. It eventually sold for just shy of A$1.7 million, A$450,000 above the reserve.“We are seeing a significant increase in demand across all price points and all suburbs,” said real estate agent Ben Collier, who handled the Paddington sale. Usually “you see different markets moving at different speeds, whereas it seems to be somewhat more uniformed right now.”In New Zealand, where home prices soared 13% in January from a year earlier, the problem is so acute the government will now require the central bank to consider the impact on housing prices when setting interest rates, a change the bank opposed. The Reserve Bank of New Zealand is also reimposing lending restrictions on property investors in an attempt to cool the market.What Bloomberg Economics says:“While rising house prices are likely to bolster aspects of household consumption via wealth effects and confidence, surging asset prices and loan approvals also present an emerging financial stability challenge for the RBA and APRA. A re-emergence of macroprudential policy constraints is a risk over coming months.”-- James McIntyre, economist.To read the full report, click here.Fears that Australia’s housing market would be flooded by distressed sales as people were thrown out of work by the pandemic have faded as the economy recovers faster than expected, and people resume paying their mortgages after being offered six-month loan holidays last year.Instead, a shortage of supply is helping fuel the price boom. The number of houses advertised for sale in the first three weeks of February was down 26% from a year earlier, CoreLogic said.“Housing inventory is around record lows for this time of the year and buyer demand is well above average,” Lawless said. “These conditions favor sellers. Buyers are likely confronting a sense of FOMO, which limits their ability to negotiate.”In another sign of strength in the housing market, home-loan approvals rose 10.5% in January, Australian Bureau of Statistics data showed Monday.Home prices could rise about 20% over this year and next, according to Westpac Banking Corp.“The upturn is being supported by record low interest rates; the confident expectation amongst borrowers that these rates will remain low for years to come; ample credit supply; and an improving economic backdrop as the roll-out of vaccines promises to bring the pandemic to an end,” the bank’s economists said in a report last week.(Adds home-loan approvals in third-last paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.