HKMA exploring digital currency in new fintech plan
The Hong Kong Monetary Authority (HKMA) will investigate the practicability of introducing a digital currency in the city over the next 12 months. The move, part of the HKMA’s plan to stay up to speed with other global central banks considering digital currencies, was announced by Eddie Yue, Chief Executive of the HKMA, during the launch of “Fintech 2025,” its four year plan, on 8 June. The study will look at concerns surrounding users’ privacy, security and anti-money laundering. “Hong Kong people, nowadays, are more willing to use digital banking services. In addition, many overseas central banks have studied digital currencies. It is the right time for the HKMA to explore if we should have an e-Hong Kong dollar,” said Yue.
U.K. audit reforms for public interest entities could backfire, say accountants
Accountants have warned that new proposals by the United Kingdom government to drastically increase the number of companies subject to stricter governance standards could push audit firms and their regulator to breaking point. The U.K. government has proposed widening the definition of public interest entities (PIE) to include entities such as companies listed on the Alternative Investment Market, a sub-market of the London Stock Exchange, private companies, universities and charities. The move would double the number of entities and would make it difficult for smaller companies to find auditors, even if smaller firms are hired to audit PIEs. “From a regulator’s point of view and from a market point of view, I think this will be strained to the point of falling over,” Iain Wright, Managing Director at the Institute of Chartered Accountants in England and Wales, told the Financial Times.
Workers more optimistic about the future, according to PwC report
Workers worldwide are more optimistic this year about the future world of work a year into the pandemic, but expressed job security concerns, according to PwC’s Hopes & Fears 2021 report released last month. The study surveyed 32,517 people during the period of 26 January to 8 February, including business owners, full-time and part-time workers, contract workers and students across 19 countries. While 50 percent of respondents indicated having a positive outlook of the future and 64 percent said that technology will provide opportunities, 60 percent noted that automation is putting jobs at risk. The study surveyed 503 people in Hong Kong and found similar results, with 56 percent considering income to be the most important factor of a job, compared to 54 percent globally.
Sales of ESG bond funds hit US$54 billion in first five months
Investors have put US$54 billion into environmental, social and governance (ESG) bond funds globally in the first five months of the year, according to financial services company Morningstar. The figure is expected to surpass the almost US$68 billion invested in all of 2020 this year. The rising demand is driven partially by millennial and young investors hoping to see their money do good and generate returns, according to Bryn Jones, Fund Manager at Rathbone Brothers Plc, which runs the Rathbone Ethical Bond Fund, one of the oldest and largest ESG fixed income funds, reports the Financial Times. Demand for ESG bond funds is mainly centred in Europe, but other regions such as the United States were starting to see interest, according to Jose Garcia-Zarate, Associate Director at Morningstar. In the U.S., sales of ESG bond funds stood at US$4.75 billion in the first five months of 2021, compared with US$5.92 billion in the whole of last year.
Listed companies must have at least one female board member
Hong Kong-listed companies must appoint at least one female director by 2025 or face penalties, under a new proposal put forward by the Hong Kong Stock Exchange (HKEX) in a bid to catch up with progress in gender diversity efforts internationally. The new ruling, effective 1 January 2022, will provide existing listed entities with a three-year window to comply, and would require all new listing candidates to have a woman on their boards at the time of listing. Penalties can include a public reprimand, a denial of access to fundraising facilities, training, suspension of trading and a delisting. The proposal, which has been met with both support and opposition, comes as the city sees almost a third of all listed companies consisting of an all-male board as of the end of last year, according to HKEX data.
FWD Group applies for U.S. IPO
Hong Kong-based insurer FWD Group has applied for an initial public offering (IPO) in the United States, in what could be one of the year’s biggest listings by a Hong Kong company. The insurance group, which was founded in 2013 by the son of business magnate Li Ka-shing, Richard Li, said on 17 June that the IPO price range and number of American depositary shares had not yet been determined, and that the timing of the listing was subject to approval by the U.S. Securities and Exchange Commission (SEC). FWD’s holding company PCGI Intermediate Holdings said it had made a confidential filing with the U.S. SEC for the listing. The IPO application comes after rumours that the insurer was listing had been circulating in the market for over two years.
U.K. regulator bans crypto exchange Binance
The Financial Conduct Authority (FCA) has banned Binance, one of the world’s largest cryptocurrency exchanges, from conducting any regulated activity in the U.K. The move comes as regulators continue cracking down on the cryptocurrency industry amid concerns relating to its role in illicit activities such as money laundering, fraud and often lacklustre customer protection. In a notice, which came on 25 June, the U.K.’s financial watchdog also issued a warning to consumers about the platform and its London-based affiliate, Binance Markets Limited. The trading of cryptocurrencies is not directly regulated in the U.K., but other related activities such as selling derivatives do acquire approval. The U.K. ban comes after Japanese regulators sent a warning to Binance on 24 June, noting the platform may be operating in the country without proper authorization.
Chinese tech listings down 60% globally in value in second quarter
Listed Chinese technology companies have seen their stock market value fall by 60 percent on exchanges worldwide in the second quarter of the year as Mainland regulators clamp down on the sector, according to the Financial Times. Initial public offerings (IPOs) by Chinese tech companies have raised just US$6 billion on bourses worldwide since April, a figure down by two-thirds from the first quarter. The downturn comes as regulators on the Mainland tighten their grip on Chinese tech groups, with the delay of Ant Group’s US$37 billion IPO in November 2020 also signalling a push by Mainland authorities to reprimand tech groups for what they believe to be monopolistic practices.
Xpeng hoping to raise US$2.3 billion in Hong Kong IPO
Chinese electric vehicle maker Xpeng is aiming to raise up to US$2.3 billion when it launches its dual primary listing on the Hong Kong Stock Exchange next month. The company is expected to price its IPO at US$180 a share and sell 85 million shares in what is expected to be the fifth largest flotation this year, behind IPOs by video-sharing mobile app Kuaishou Technology, logistics company JD Logistics, Internet and technology company Baidu and video-sharing website Bilibili. Xpeng’s Hong Kong IPO is expected to raise more than double the US$1.1 billion it raised when it listed on the New York Stock Exchange in August last year. Shares will start trading on 7 July under the stock code 9868.
PwC to increase global headcount by 100,000 within the next five years
PwC plans to invest US$12 billion to increase its global headcount by 100,000 over the next five years by creating new roles aimed at helping its clients tackle issues in ESG and in artificial intelligence. The new staff members will be direct hires from competitors and come from mergers and acquisitions the firm completes, according to Bob Moritz, PwC Global Chairman. The plan, announced on 15 June, reinforces the firm’s and other Big Four firms’ plans to have ESG advisory become part of their core business lines as investors and regulators become more critical of companies’ impact on the environment and their diversity initiatives.