SHK acquired tender land at exceptional low price

With the subdued office leasing and lower contributions from its development business, Hongkong Land’s underlying profit attributable to shareholders went down 20% YoY to $1.045b (US$776m) in 2022.

Its net profit was at $273m (US$203m) in 2022, after including net non-cash losses of US$573 million resulting primarily from lower valuations of Hongkong Land’s investment properties.

To explain, the group’s investment properties were stabilised but there were financial impacts in the retail portfolio from the health restrictions in China in 2022. 

Japan and Korea lifted their travel restrictions on passenger flights from Hong Kong.

Since December 2022, the Japanese Government began to mandate limits on the maximum number of flights each airline carrier can operate while departing from Hong Kong.
    

Last 13 February, Cathay Pacific, the city’s flagship airline, announced that they decreased their number of flights per week into Japan to 72, which is 13-15 flights per week less than what they originally plann

Asian shares rose on Friday on prospects for a steady economic recovery in China, and after Wall Street reversed losses overnight following remarks by the Atlanta Federal Reserve chief that signaled a measured approach raising U.S. interest rates. 

Global markets have been buffeted by a raft of strong U.S. data over recent weeks, including U.S. jobless claims overnight, that suggested the Fed would need to keep rates higher for longer. 

But investors breathed a sigh of relief after Atlanta Federal Reserve President Raphael Bostic said he favored "slow and steady" quarter-point U.S. rate increases to limit risk to the economy. 

Hong Kong’s biggest developer sold hundreds of new apartments in a day, the latest sign that the housing market is recovering from last year’s slump.

Sun Hung Kai Properties Ltd. offloaded all of the 352 homes for sale in its NOVO LAND project on Saturday for more than HK$2 billion (US$255 million), according to the developer. Meanwhile, Wheelock Properties Ltd. sold 304 units in its KOKO ROSSO development in 10 days, accounting for about 99 percent of those available for purchase, the company said.

The reopening of the border with mainland China and the removal of mask mandates in Hong Kong have boosted buyer confidence, said Sammy Po, chief executive officer of the home division at Midland Realty. Po expects new-home sales to surge to about 2,800 this month, the most for March in four years. There were 643 first-hand residential transaction registrations in February.

Hong Kong's Mandatory Provident Fund members each lost HK$10,782 on average last month after a strong January gain, as Hong Kong and China equities retreated, local MPF consultant GUM said.

Although the pension fund recorded a 4.4 percent investment loss in February, each member still saw a growth of HK$3,008 on average in their accounts in the first two months of this year, according to GUM.

The three major fund indexes tracked by GUM all reported a decrease in February, ending a rise for three months in a row.

A security report revealed that phishing activities in Hong Kong rose for three consecutive quarters in 2022, making it a top cyber-attack in the city next to web defacement and botnet command and control centres. 

According to the Hong Kong Security Watch Report by the city’s Computer Emergency Response Team Coordination Centre (HKCERT), the number of phishing attacks has totalled 13,574 in the fourth quarter of the year (Q42022), a 90% increase quarter-on-quarter.

The report also said that 84% of the phishing sites visited were credit card websites, whilst 6% were websites related to telecommunications and 5% to transportation industries.

Hong Kong’s more relaxed COVID restrictions were unable to lift the city’s  real estate investmentsales, data from Savills showed.

According to Savills, the relaxations did not offset the “headwinds from a global economic slowdown and rising interest rates.” 

In Q4, commercial investment volumes across the retail, industrial, office and hotel sectors, excluding land sales and deals worth over US$10m,  contracted by 2.5% QoQ and by 44.3% YoY in Q422.

Savills, however, believes that the border reopening will have a good impact on investment sales moving forward, adding that it will trigger some “office leasing demand from wealth management firms and insurance companies to return in early 2023.”

The rise in residential market transactions will be gradual following the border reopening between Hong Kong and mainland China, according to JLL’s report.

Home prices may have regained ground but transactions continue to be at low levels. In January, residential market sales were 18.7% down from the 2022 monthly average of 3,755.

“Also, purchasing activities by non-local buyers were tepid. Only 34 transactions involving Buyer's Stamp Duty were recorded in January, compared to a monthly average of 53 in 2022,” the report also said.

Norry Lee, Senior Director of Projects Strategy and Consultancy Department at JLL in Hong Kong, said the stamp duty rates may be a positive step but it will be minimal in the residential market. 

Property transactions in the primary market surged 66 percent in February from the previous month as a series of stimuli, including the tax cut on first-time buyers and the full opening of the border continue to prop up the market.

As of February 27, new home sales recorded more than 830 units from about 500 units in January last month. When compared to transactions in February last year, it saw a year-on-year increase of nearly six times.

In terms of value, the amount sold exceeded HK$11 billion last month, up by 12.4 percent from a month earlier. It also recorded a 5.4 times growth when compared with figures of last February.

Hong Kong banks should grab the opportunity from China’s re-opening to deliver better earnings with higher average net interest margins (NIM) and to recover fee incomes for the full fiscal year (FY2023), Fitch Ratings said.

Banks are expected to enjoy higher net interest income and moderate NIM increases in 2023 compared from the previous year. But net margins are unlikely to widen from the fourth quarter of 2022’s (Q42022) level due to increasing funding costs.

Whilst asset quality pressures from mainland China’s commercial real estate (CRE) sector will linger in the first half of 2023, this should gradually improve alongside the recovering economy.

Canadian home prices fell for an 11th straight month as rising interest rates continued to limit what prospective buyers can afford, ramping up pressure on the country's housing market.

The national benchmark price for a home declined 1.9 percent to C$714,700 (HK$4.16 million) in January from December, data released by the Canadian Real Estate Association shows. That is down 15 percent from last year's peak.

The Canadian housing market has seen an abrupt reversal from its frenzied pandemic days as the central bank started raising interest rates last year to combat inflation.

The fast rise in borrowing costs has priced out buyers, squeezing affordability even with prices down.

Only a third of mainland respondents plan to visit Hong Kong this year, a survey by McKinsey shows, as the traditional shopping paradise is challenged by duty-free shops in Hainan and "overseas buyers."

In February McKinsey surveyed more than 3,000 mainland travelers from nine cities in the Greater Bay Area and 1,155 expressed an interest in visiting Hong Kong in the next 12 months for shopping and other services.

Without giving a reason, two-thirds said they had no plan to visit.

McKinsey said 85 percent of the 1,155 potential travelers will come to Hong Kong for sightseeing and shopping following the border reopening in January.