China has called on its biggest state firms to take a more active role in Hong Kong, including stepping up investment and asserting more control of companies in the financial hub, executives familiar with the matter said, as Beijing attempts to calm months of unrest in the city.
At a meeting this week in Shenzhen, the city bordering Hong Kong, senior representatives from nearly 100 of China’s largest state-run companies were urged to do their part to help cool China’s biggest political crisis in years, three executives, including one who was present, told Reuters.
At the meeting, the state-owned enterprises (SOEs) pledged to invest more in key Hong Kong industries including real estate and tourism in a bid to create jobs for local citizens and stabilize financial markets, two of the executives said, speaking on condition of anonymity to discuss internal deliberations. No specific investments were discussed or agreed upon, they said.
Story continues below advertisement
The SOEs in attendance included oil giant China Petroleum & Chemical Corp., or Sinopec, and conglomerate China Merchants Group, one of the sources said.
The meeting was organized by the State-owned Assets Supervision and Administration Commission (SASAC), the powerful central body that oversees China’s sprawling state sector, which includes some of the world’s biggest companies in industries such as steel, energy, shipping and telecoms.
SASAC did not respond to a faxed request for comment. Officials at Sinopec and China Merchants Group did not respond to e-mailed requests for comment and calls to the two companies went unanswered.
Instead of simply holding stakes in Hong Kong companies, the Chinese SOEs were also urged to look to control companies and have decision-making power in them, one of the people familiar with the meeting said.
“The business elites in Hong Kong are certainly not doing enough. Most of them are just not one of us,” the SOE executive who was at the meeting told Reuters.
SASAC’s Communist Party chief, Hao Peng, appeared in Hong Kong on Wednesday at a forum for the Belt and Road infrastructure initiative and said that SOEs were looking for ways to co-operate in major projects in the city, according to a SASAC news release.
Mr. Hao, who was accompanied by a group of SOE executives, also met with Carrie Lam, the city’s Chief Executive.
Story continues below advertisement
While China’s big state firms are for-profit enterprises and many are publicly traded, they have long been expected to do national service, including maintaining high levels of employment and helping Beijing execute initiatives such as its big Belt & Road infrastructure plan.
Months of huge and often-violent protests in Hong Kong were triggered by planned legislation that would have allowed suspects to be extradited to mainland courts. The protests have been fuelled by what is seen by many in Hong Kong as creeping Chinese influence that is eroding the “one country, two system” model under which China has ruled Hong Kong since its handover from Britain in 1997.
Widening mainland influence in Hong Kong has included the purchase of corporate assets and real estate.
The Hong Kong economy was once dominated by British trading houses with roots in the 19th century. Local tycoons started to take over many of the businesses in the latter part of the 20th century, creating huge conglomerates such as Li Ka-shing’s CK Hutchison Holdings Ltd.
Beijing has been willing to put pressure on Hong Kong businesses to be more patriotic, expressing unhappiness during an August meeting with the city’s business elites that they weren’t doing enough to quiet the protests, according to a report at the time by the state-run Xinhua news agency.
In the meeting last month with about 500 business leaders and pro-Beijing politicians from Hong Kong, Chinese authorities urged that they should “have no fears and stand up” to stop violence in the city, Xinhua reported.
Story continues below advertisement
Cathay Pacific Airways Ltd., a legacy of Hong Kong’s colonial era, has become the biggest corporate casualty of the protests after Beijing demanded it suspend staff who support the demonstrations. Its chairman announced plans to step down in November, less than three weeks after chief executive officer Rupert Hogg left amid mounting regulatory scrutiny.
Hong Kong subway operator MTR Corp. also bowed to pressure in August to get tough on anti-government protesters after Chinese state media expressed dismay at the firm for its perceived facilitation of the spread of violence by protesters.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
