Narrow Results

In this note, I document the change in correlation between Hong Kong, Singapore and the US financial market indexes using Geweke Measures after the handover of Hong Kong to China. The results show that these relationships have changed significantly. While the feedback relationship between Hong Kong, Singapore and the US markets increase after the handover of Hong Kong, the increases in feedback relationship between Singapore and the US markets is relatively higher compared to the change between Hong Kong and the US markets.

Based on a small, open-economy IS-LM prototype model, this paper examines the sources of macroeconomic instabilities in Hong Kong and Singapore operating under two different currency board arrangements. The empirical findings suggest that in general, both external and internal factors contribute to the macroeconomic volatilities observed in the two economies. There is evidence of a tradeoff between exchange rate and interest rate targeting for the stability of money supply in Singapore. Our findings have important implications for Mainland China's monetary authorities in the transition from a hard-peg exchange rate regime like Hong Kong to a basket-link system like the one in Singapore.

This paper first provides a brief review of the global financial tsunami. It then explains why the quantitative easing in the US and the unique characteristics of the Asian property markets have contributed to the formation of property bubbles in some Asian economies. Thereafter, it discusses the possibility of a bursting of property bubbles in Hong Kong, Singapore or another Asian economy a few years from now, and highlights that the bursting of the property bubble in that economy could trigger severe corrections of property prices in this region through the contagion effect. After pointing out that the implied crisis could be more severe than that during the Asian Financial Crisis, it (i) discusses policies that could mitigate the damages of the potential crisis and (ii) draws important lessons and conclusions that could pre-empt similar disasters in the future.

This paper aims to investigate the role of a consumer satisfaction index (CSI) for financial investments in the Hong Kong market. Using yearly data for Hong Kong consumer satisfaction index (HKCSI) to compile a CSI at company level, the effect of consumer satisfaction on company market value is identified. A hypothesized investment portfolio based only on CSI at company level is created, and its return compares with a widely used index measuring stock market performance in Hong Kong. A formal statistical test on the outperformance of portfolios that load on consumer satisfaction is conducted. Using the Capital Asset Pricing Model (CAPM), the beta risk of the entire time period is evaluated, and shows that the portfolio risk based on company level CSI is not significantly different than the market risk. This paper concludes therefore that consumer satisfaction can be incorporated into financial models and applied for formulating investment portfolios with better performance than the market rate in Hong Kong.

In this paper, the results of a survey on capital structure decisions of Hong Kong listed firms are reported. It is found that Hong Kong firms conformed more to the "pecking order" principle than a target long term debt-equity mix in their financing decisions. Financial managers' preferences over alternative capital raising instruments are also investigated. The degree of information asymmetry and firm size are found to have impacts on the ranking of some factors governing capital structure decisions. However, signaling motivation does not play a role in managers' financing decisions.

This paper studies the extent to which real estate prices impact common stock prices in Hong Kong. Real estate-related firms account for over 30 percent of Hong Kong's stock market capitalization. The real estate markets are therefore major determinants of changes in common stock prices. This study, using data during the 1974-1998 period, not only supports empirically that both unexpected changes in residential and office property prices are important determinants of the change in stock prices for Hong Kong, it also finds that the property and stock price series are cointegrated. Impulse response function based on an error-correction VAR model is used to examine the dynamic relationships between real estate and common stock prices.

Chinese listed companies issue Class A, B and H shares to Chinese, foreign and Hong Kong investors, respectively. Entitled to exactly the same rights and obligations, the three classes of shares are, however, traded at significantly different prices. The valuation differential is attributable to the different responses to the country-specific risk related to the emerging Chinese stock market by the three categories of investors. The country risk of China can be decomposed into political risk, exchange rate risk, interest rate risk and market risk. Empirical tests provide strong evidence to support the decomposition model. Compared with Chinese investors of A-shares, foreign investors would require a higher rate of return for B-shares to adjust for the political risk of China, reflecting a differential in the risk premium required on the world capital market. In comparison, the Hong Kong investors, who have greater tolerance of the political risk involved in H-shares as a result of the increasing integration between the Hong Kong and Chinese markets under "one country and two systems", are willing to pay a higher price for H-shares relative to B-shares.

The least effective working capital management and poor corporate governance resulted in the 2008 global financial crisis besides various other factors as highlighted by the prior studies. So far, the existing literature reveals that WCM and CG affect firm performance (FP) on an individual basis. However, the collective effect of working capital management and corporate governance on firm performance has been paid the least attention. This study investigates the collective effect of working capital management and corporate governance on firm performance for Australia and Hong Kong markets, being the top two markets in the Pacific region. For this purpose, a system generalized method of moments based on two steps is applied to address the endogeneity issue. The results establish that working capital management and corporate governance affect firm performance on an individual basis and then these individual effect results compliment the collective effect results. The limitation of the study is that it did not consider two stages of Least Squares Regression due to difficulty in the identification of instrumental variables for both explanatory variables. As a policy implication, firm manager may take the benefit of the findings of this study while devising financial policies to enhance firm performance. Future investors may use the findings of this study to make an informed decision on future investment in both markets.

Since the Global Financial Crisis, the notion of securitization has become familiar to urban scholars, though research has been limited to mortgage-backed securities. This paper attempts to delineate the distinctive urban outcomes of securitization techniques applied to real estate, taking Hong Kong REITs (H-REITs) as a case study. It examines the way through which liquid H-REIT capital anchors into the built environment, and how this process impacts the life of local communities. The study shows that the urban dynamics of REIT investment contrast with the corporate environment and asset management objectives of the initiator/sponsor groups of H-REIT structures, a set of characteristics that are captured by the notion of “management styles.” Amongst the three management styles identified in the paper, those developed by the Hong Kong family-based groups have not been sufficiently active to produce significant effects on the built environment. In contrast, the Link REIT has an aggressive value enhancement strategy that has reconfigured the social geographies of retail consumption across the whole territory, to the detriment of social housing estate residents. These results support the recognition that the financialization of the built environment tends to exacerbate social polarization and to trigger political conflicts, but they must be weighed against the contingent conditions in which real estate securitization take place.

Twenty years after the return of Hong Kong from British to Chinese sovereignty in 1997, this paper examines the UK’s policy toward Hong Kong over the last decade, with a particular focus on its approach toward the ongoing and intensifying political and constitutional debates in Hong Kong, which have partial origins in the British colonial legacy. The paper argues that the UK has been attempting a delicate balancing act in relation to Hong Kong between a number of factors: the growing importance of relations with China as a whole, the particular opportunities offered by UK–Hong Kong links, the changing and more contested political landscape in Hong Kong, the occasional intervention of British politics, and the agreements on Hong Kong’s future to which the UK was party in the 1980s. These reflect tensions between pragmatism and idealism, and in conclusion, the paper discusses what the case of Hong Kong says more broadly about the making of British foreign policy.

This paper investigates the increasing use of cyber coercion by the People’s Republic of China (PRC) among its core interests: Taiwan, Hong Kong, and the South China Sea. It argues that the PRC’s deployment of sophisticated attacks in the form of cyber coercion continues to be part of its geostrategic playbook to exert its influence and prosecute its wider interests as a rising power in the Indo-Pacific region. However, it observes that cyber coercion will be employed by the PRC in concert with all the other tools — diplomatic, economic, and the political — across the spectrum. The paper has two broad goals: first to unpack the trends or patterns in the PRC-sponsored cyber coercion by accentuating contextual and operational dimensions using Taiwan, Hong Kong, and the South China Sea as analytical case studies; second, to highlight the opportunities and limitations of using cyber coercion as an asymmetrical capability in the changing threat landscape. The paper concludes that the PRC’s cyber coercion is characterized by blurring the distinction on what constitutes compellence and deterrence. The boundaries are not clear cut, and to a certain degree both are even mutually reinforcing. The in-depth analysis of the case studies reveals the growing prominence of disinformation campaigns in close coordination with cyber operations (malware, phishing, and DDoS attack). This emboldens the PRC with a myriad of coercive strategies in shaping its external environment and realizing its ambition of national rejuvenation across Taiwan, Hong Kong, and the South China Sea.

Social movements occur not only because of political opportunities but also due to a perceived threat to citizens. Popular contention has remained an important mode of political participation in Hong Kong since 1997 when its sovereignty was handed over to China. Many influential collective actions in Hong Kong occurred when residents felt a threat had arisen from policies made by the city government or Beijing. By examining the Anti-Extradition-Bill movement in Hong Kong, this paper explores how threat triggers and sustains social movements. It finds that threat both facilitates the mobilization of social movements and sustains them. Threat strengthens solidarity among movement supporters because of their shared concerns and goals. It sustains a movement when government responses confirm participants’ belief in the continual existence of the threat. The Anti-Extradition-Bill movement deepened the distrust between local residents and Beijing, resulting in the promulgation of the National Security Law by Beijing in May 2020.

This paper takes the social unrest in 2019 as a case study and identifies three factors that contributed to the radicalization of social protests in Hong Kong: globalization, digitalization and the U.S. meddling in Hong Kong affairs. First, with the deepening of globalization, the worsening of social-economic conditions had bred populism among the youth. Second, digital technologies and social media platforms also made it easy for young people in Hong Kong to protest in a more covert and radical way. Third, the U.S. support for the Hong Kong opposition leaders added fuel to the radicalization of youth protesters. All these factors finally led to radicalized social protests in Hong Kong. Nevertheless, following the implementation of the National Security Law in Hong Kong SAR, violent activities were largely stopped and social order was gradually restored.

The author, a British academic who was President of the University of Hong Kong between 2014 and 2018, discusses the Belt and Road initiative and the Greater Bay Area plan, particularly focusing on the possible implications for the higher education sector in China and beyond.

The newly released “Outline Development Plan for the Guangdong–Hong Kong–Macao Greater Bay Area (GBA)” shows that the roles of the Guangdong–Hong Kong–Macao GBA have gone beyond its original emphasis on regional economic development and now serves higher purposes in fostering the ongoing process of deepening reforms in China, and in meeting the challenges in the Chinese-led “Belt and Road Initiative”. Whereas earlier policy on cross-border collaborations and the previous literature often emphasize “harmonization” and “integration” of the diverse institutions and practices of the constituent cities into one economy, this paper suggests an alternative perspective highlighting the utility of institutional contradictions and diversity contained in the “one country, two system” framework within the GBA. Leveraging the advantages of its more internationalized special administrative regions of Hong Kong and Macao, the GBA plan would not only benefit this coastal megalopolis, but also stimulate a dynamic mechanism of reform in the whole country.

Many discussions on Hong Kong’s social movements rightfully focus on the internal and external political factors that are influential in shaping the recent political events. This paper examines selective important political deve-lopments related to the subject matter and does not pretend to be comprehensive on the subject matter. While contextualizing Hong Kong’s recent unrest in political events, we are simultaneously also interested to de-privilege political factors as the sole explanation for the social movements and highlight a functional and highly utilitarian reason for the social turmoil, which is that of high housing prices and social disenfranchisement. It was the twin impacts of political changes as well as housing grievances (along with other bread and butter issues) that became a volatile cocktail in concocting the social unrest and public expressions of discontent. The central and local HK governments cannot homogenize a single uniform response to the challenges of globalization, in terms of both clamoring for democratization and economic egalitarianism. This paper therefore argues that there is a differential effectiveness of China’s/HK’s responses to economic globalization’s inequities and addressing the pro-democrat demands.

To understand various ideas/concepts/views about the Sino-Hong Kong (HK) relations, this paper utilizes the case study of their bilateral cooperation in coping with the COVID-19 fourth wave to study the various collaborative strategies applied in managing common challenges like a recurring wave of pandemic outbreak in the setting of Hong Kong. The materials utilized for the paper are updated secondary resources from the mass media due to the ongoing nature of the pandemic at the point of writing. Utilizing interpretive work, this paper compares some features of Sino-HK cooperation with the different schools of thought to suggest different priorities at play when forging bilateral cooperation to meet a common challenge. It also highlights the constant navigation of interests between Lam’s administration and Beijing. Some contours of such bilateral cooperation may even be indicative of how the two governments may cooperate in the future, especially in the issues of common interests and of no-detriment nature.

This paper examines the case studies of three East Asian entities (Thailand, Myanmar and Hong Kong) battling both the COVID-19 coronavirus pandemic as well as socio-political unrest simultaneously. While Thailand/Myanmar and Hong Kong are different in geographical/demographic sizes and the former two are sovereign states while the latter is a Special Administrative Region (SAR), they have similar challenges in experiencing cosmopolitan pro-democracy movements (made up of young activists) pitted against the governments determined to maintain control in what political scientists may characterize as illiberal political systems. While Thailand and Myanmar may be much larger in terms of geographical/demographic sizes, much of the recent political activism occurred in the capital city of Bangkok (a city of about 8 million people) and Yangon (also having about 7 million in population and being the former capital of Myanmar before the military elites had moved the capital to Naypyidaw in anticipation of political unrests). In the case of Myanmar, the demonstration and protests have effectively spread nationwide. Both cities are similar in size to Hong Kong that is with approximately 7 million inhabitants. Both Bangkok and Hong Kong are also cosmopolitan cities with high exposure to global commerce, ideas and tourism while Yangon is a fast-developing urban commercial capital city. In terms of ideologies and political systems, both Bangkok and Hong Kong have nominal liberal democratic systems that have limits imposed on political freedoms while Myanmar was liberalizing and democratizing before the military coup on February 1, 2020. These similarities make them suitable candidates for comparative studies, including analyzing their differences in managing the political challenges.

Chinese grand infrastructure projects in the Belt and Road Initiative (BRI) program are instrumental for Myanmar to bridge the voluminous bottlenecks in transportation and energy infrastructure essential for economic development. However, the high project costs as well as the project design and execution have raised skepticism over their benefits for Myanmar, in particular the economic viability and disruptive impacts for the local ecology and culture. The military coup in February 2021 in Myanmar deepened the skepticism to the Chinese and even outright hostilities to some projects. This paper reviews the broader context of the local receptions to the Chinese investment, drawing upon in-depth fieldwork in Myanmar, and suggests the potentials of leveraging Hong Kong’s managerial and professional experience in enhancing responsible investment in the BRI.

Sitting in the middle of the Indian Ocean and major international maritime routes, Sri Lanka’s strategic geographic location has brought both opportunities and complications to its economic development. In view of the mixed outcome and perceptions of the Chinese investment projects in Sri Lanka, this paper investigates the nuances of both successful and failed experiences in Chinese investment, and the management approach the Chinese project managers have sought to adapt to improve their community engagements and secure public support. While these efforts have not, largely, been effective, we also find little evidence that China has conspired to dominate Sri Lanka. By refuting the sweeping debt-trap argument, we further seek to reflect upon Hong Kong’s possible role in addressing the critical managerial and capacity issues in Sri Lankan investment.