Unit trust sales rise
Sales of Hong Kong unit trusts rose in May, recording a total outlay of US$144.5 million (HK$1.13 billion), according to figures released by the Unit Trust Association. However, US$192.3 million (HK$1.5 billion) flooded out of unit trusts as investors re-channelled cash directly into the strong performing stock market.
Sales of unit trusts fell from US$174.7 million (HK$1.36 billion) in January to US$97.3 million (HK$760 million) in February and US$87.9 million (HK$686 million) in March. The month of April saw sales climb to US$113.6 million (HK$886 million).
Central clearing system launched
The central clearing and settlement system (CCASS) was launched to enable the stock exchange to keep up with market developments in the region and have an edge over markets such as London which have yet to institute central clearing. CCASS is being launched on a trade-for-trade basis as the necessary enabling legislation, to allow full centralisation of market risk, is still in the drafting stage. Hang Seng Index stocks will be the first to go on to the system in the phased programme which will take a year to complete.
Reforms for outbound travel industry
The Government has reached agreement with the Travel Industry Council (TIC) and the TIC Reserve Fund (TICRF) on a package of regulatory reforms for the outbound travel industry. A target amount of HK$100 million (US$12.8 million) will be set up for TICRF or its successor at which level the rate of the Fund Levy will be reduced to 0.35 per cent and the rate of ex-gratia compensation for travellers will be increased from 70 per cent to 80 per cent of the outbound package tour fares. The reforms will be implemented by amending the Travel Agents Ordinance.
HKBank wins control of Midland
Hongkong and Shanghai Banking Corporation (HSBC) received acceptances on June 25 from some 44.5 per cent of Midland Bank shareholders. This, added to the bank's own holding gave it a 63.58 per cent controlling interest. The development makes the £3.9 billion (HK$56.5 billion, US$7.24 billion) acquisition the biggest in European banking history. The merged group will have combined assets of £145 billion (HK$2,102 billion, US$270 billion) with 3,300 offices across 68 countries worldwide. It ranks as one of the 10 largest banks in the world.
Dairy Farm and Nestle in HK$1.25b deal
Nestle S.A. of Switzerland and Dairy Farm International Holdings Ltd have signed a letter of intent to establish a joint venture company to manufacture and distribute ice cream and chilled products in Hong Kong and China. To create the joint venture, Nestle will acquire for HK$1.25 billion (US$160 million) the "Dairy Farm" product brand as well as 51 per cent of Dairy Farm's manufacturing interests. Dairy Farm has been the leader in milk, dairy products and ice cream in Hong Kong since 1886. It has established a number of joint ventures in China including China's first foreign joint venture, the Beijing Air Catering Company, in 1980.
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