Catwalk shows return at hybrid London Fashion Week

Models pose wearing creations from the Bora Aksu Spring/Summer 2022 catwalk show at London Fashion Week in London, Britain, September 17, 2021. REUTERS/Henry Nicholls

September 17, 2021

By Marie-Louise Gumuchian

LONDON (Reuters) – A hybrid London Fashion Week kicked off on Friday, with a mix of digital presentations and the event’s first in-person shows in a year.

International press and buyers were back watching the catwalk presentations, including an early display from menswear designer and choreographer Saul Nash.

“It feels really great to be back,” Caroline Rush, chief executive of the British Fashion Council (BFC), told Reuters. “We’re excited to see those key media and retailers that help drive British business.”

The line-up features 79 physical events – including shows, appointments and presentations – and 82 digital productions. Only a handful of designers held in-person catwalk shows last September.

At in-person events “we will be asking for proof of vaccination, we will be encouraging everybody to test every morning,” Rush said.

“And if people haven’t been vaccinated, then testing every morning will be absolutely mandatory as well. Backstage is much stricter … and we will be encouraging people to wear masks.”

This season, the BFC has teamed up with short-video platform TikTok to host its NEWGEN programme aimed at up-and-coming designers.

Saul Nash dressed models in relaxed loungewear including shiny or printed tracksuits and matching polo tops and shorts.

Known for her feminine designs, Alice Temperley took inspiration from Agatha Christie mystery “Death on the Nile” for her spring/summer 2022 collection.

In a pre-recorded video, models wore floral, leaf and zebra-print dresses, checked trouser suits and safari-inspired denim jumpsuits. For eveningwear, there were green silky and black sparkly gowns.

On Thursday evening, sustainable designer Tammam nodded to nature with a colourful “Flight”-themed collection. Some of the clothes featured the blue and red ‘warming stripes’ graphic, illustrating climate change data, produced by climate scientist Ed Hawkins.

The stripes, which show the changes in annual global average temperature since 1850, appeared on dresses, asymmetric skirts and inside a cape.

London Fashion Week runs until Tuesday.

(Reporting by Marie-Louise Gumuchian; additional reporting by Ben Makori; Editing by Andrew Heavens)

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Canadian dollar clings to weekly gain as China injects liquidity

FILE PHOTO: A Canadian dollar coin, commonly known as the “Loonie”, is pictured in this illustration picture taken in Toronto, January 23, 2015. REUTERS/Mark Blinch/File Photo

September 17, 2021

TORONTO (Reuters) – The Canadian dollar edged higher against its U.S. counterpart on Friday as the central bank of top commodity consumer China moved to calm markets, while Canada’s 10-year yield climbed to a five-week high.

Copper prices rose after the People’s Bank of China infused liquidity to ease nerves caused by property giant China Evergrande Group’s debt woes.

Canada is a major exporter of commodities, including copper and oil. Copper rallied 1.5%, while oil gave back some of this week’s gains, falling 1.2% to $71.74 a barrel. [MET/L] [O/R]

The Canadian dollar was trading 0.1% higher at 1.2670 to the greenback, or 78.93 U.S. cents, after trading in a range of 1.2637 to 1.2690. For the week, the loonie was on track to advance 0.1%.

Investors are awaiting a Federal Reserve interest rate decision next week and a Canadian federal election.

Foreign investors are growing more worried that Canada’s election on Monday could result in a deadlock that hampers Ottawa’s response to the COVID-19 pandemic and further slows the economic recovery from the crisis.

On Thursday, Fitch Ratings cut its 2021 growth forecast for the Canadian economy to 5% from 6.6%.

Fitch last year stripped Canada of one of its coveted triple-A credit ratings, but S&P Global Ratings and Moody’s Investors Service still give Canadian debt the highest rating.

Canadian government bond yields were higher across a steeper curve, tracking the move in U.S. Treasuries.

The 10-year touched its highest level since Aug. 11 at 1.289% before dipping slightly to 1.282%, up 4.6 basis points on the day.

(Reporting by Fergal Smith. Editing by Jane Merriman)

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Man Utd losses widen due to COVID curbs

FILE PHOTO: Soccer Football – Premier League – Manchester United v Manchester City – Old Trafford, Manchester, Britain – December 12, 2020 General view of the Manchester United crest on a corner flag before the match Pool via REUTERS/Phil Noble

September 17, 2021

(Reuters) -Manchester United’s full-year loss widened as pandemic-induced lockdowns hammered matchday sales and commercial revenue, the soccer club said, while not setting financial targets for the year due to continuing uncertainty.

The English soccer club’s last two financial years were marred by lockdowns that disrupted sporting calendars and kept fans away from stadiums for extended periods, taking a heavy toll on matchday sales.

“There is little doubt that those 12 months (fiscal 2021) were among the most challenging in the history of Manchester United,” Executive Vice Chairman Ed Woodward said in prepared comments he will make to investors on a call this afternoon.

Total revenue for the year ended June 30 was down 2.9% to 494.1 million pounds ($681.41 million), while annual matchday sales plummeted 92.1%.

The club, who signed five-time Ballon d’Or winner Cristiano Ronaldo from Italy’s Juventus last month, saw a 16.8% fall in annual commercial revenue, although the club’s largest segment of broadcasting revenue surged by 81.7%.

The English soccer club said its net loss for the year ended June 30 was 92.2 million pounds, compared with a loss of 23.2 million pounds in the year-ago period as the onset of COVID-19 in 2020 disrupted all walks of life globally.

The loss was inflated by a one-off taxation issue with the company’s income tax expense for the period surging to 68.2 million pounds from 2.4 million pounds a year earlier.

($1 = 0.7251 pounds)

(Reporting by Chris Peters and Aby Jose Koilparambil in BengaluruEditing by Keith Weir and Toby Davis)

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Oil holds above $75 as storm-hit U.S. supply returns slowly

FILE PHOTO: A TORC Oil & Gas pump jack is seen near Granum, Alberta, Canada May 6, 2020. REUTERS/Todd Korol/File Photo

September 17, 2021

By Julia Payne

LONDON (Reuters) -Brent oil futures dipped on Friday but held above $75 a barrel, remaining on track for a weekly gain of more than 3% thanks to the slow recovery in output after two hurricanes in the U.S. Gulf of Mexico.

Brent crude futures fell 34 cents, or 0.45%, to $75.33 a barrel by 1134 GMT.

U.S. West Texas Intermediate (WTI) crude futures were down 44 cents, or 0.61%, at $72.17 after settling unchanged in the previous session.

“The market is pausing for a breath. This week’s supply-demand reports from OPEC and the IEA suggest that the balance of the year will be tight – demand is expected to grow and non-OPEC supply, partly because of Hurricane Ida, will get tighter,” said PVM Oil Associates analyst Tamas Varga.

“The weather-related disruption was laid bare in Wednesday’s EIA inventory report and further crude oil stock draws are anticipated next week and possibly beyond in the U.S. Gulf Coast.”

The dollar climbed to a three-week high on Friday, making dollar-traded crude imports more expensive for countries using other currencies.

As of Thursday, about 28% of U.S. Gulf of Mexico crude production remained offline, two-and-a-half weeks after Hurricane Ida hit.

“It’s still taking longer than people thought in terms of that coming back. That has been a supportive factor in the market,” said Commonwealth Bank commodities analyst Vivek Dhar.

“We’re going to go into more (supply) deficit conditions – that certainly seems to be the view.”

Preliminary data from the U.S. Energy Information Administration showed U.S. crude exports in September have slipped to between 2.34 million barrels per day (bpd) and 2.62 million bpd from 3 million bpd in late August.

(Reporting by Julia Payne in LondonAdditional reporting by Sonali Paul in Melbourne and Roslan Khasawneh in SingaporeEditing by David Goodman)

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Malaysia’s Top Glove posts 48% profit drop, to seek Hong Kong listing

FILE PHOTO: A worker leaves a Top Glove factory after his shift in Klang, Malaysia Dec. 7, 2020. REUTERS/Lim Huey Teng/File Photo

September 17, 2021

By Liz Lee and Scott Murdoch

KUALA LUMPUR (Reuters) -Malaysia’s Top Glove Corp Bhd said on Friday it will renew its listing application to push ahead with its plans to raise $1 billion in Hong Kong despite a 48% slide in its quarterly earnings.

The world’s largest medical glove maker has been seeking a dual primary listing on the Hong Kong Stock Exchange since last year, but the deal was put on hold after it was slapped with an import ban from U.S. authorities. It already has a primary listing in Malaysia and a secondary listing in Singapore.

The year-long ban was imposed on Top Glove for alleged forced labour abuses and was lifted last week It stalled the company’s listing plans and hurt sales, particularly to the United States, which normally accounts for 15% of the group’s total sales.

The ban has hit Top Glove’s reputation just as it was making record profits on increased demand for its gloves during the COVID-19 pandemic.

Last year, Citigroup Inc and UBS Group AG opted not to sponsor the deal on concerns of reputational risk. China International Capital Corp is currently the sole sponsor of the deal.

A source with direct knowledge of the matter said the ban removal was important and the deal would now be able to be marketed more broadly for a wider set of investors.

The source could not be identified as the information had not been made public.

Top Glove is aiming to raise $1 billion in the Hong Kong listing and will likely appoint more bankers in the future, the source said, adding it was set on completing the IPO as soon as possible.

Top Glove did not address questions about the listing during a briefing on the quarterly results, which showed a 48% drop in the company’s fourth-quarter earnings.

“(The) results were softer on the back of normalising demand following (a) mass vaccine rollout, leading to lower sales volume and (prices), which were not matched by a corresponding reduction in raw material prices,” the manufacturer said in a statement.

It recorded a net profit of 607.9 million ringgit ($145.88 million) during June-August, compared with 1.17 billion ringgit a year ago, lagging behind the 8.69 billion ringgit estimate by analysts in a Refinitiv poll.

Revenue slumped 32% to 2.11 billion ringgit, a stock exchange filing showed.

Sales to the United States fell to 4% of group sales in the quarter but were seen “fully normalising” after the ban lift, the company said.

($1 = 4.1670 ringgit)

(Reporting by Liz Lee in Kuala Lumpur and Scott Murdoch in Hong Kong; Editing by Sherry Jacob-Phillips and Ana Nicolaci da Costa)

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China, growth jitters weigh on global stocks, dollar buoyant

The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, September 16, 2021. REUTERS/Staff

September 17, 2021

By Carolyn Cohn and Alun John

LONDON/HONG KONG (Reuters) – World shares steadied on Friday above three-week lows set in the previous session though they were heading for a weekly loss on China jitters and global growth concerns, while strong U.S. retail sales data buoyed the dollar.

Shares in embattled property developer China Evergrande, which has two trillion yuan ($310 billion) in liabilities and faces an $80 million bond coupon payment next week, dropped a further 0.4% on Friday, down 28% this week.

The editor-in-chief of state-backed Chinese newspaper Global Times warned Evergrande that it should not bet on a government bailout on the assumption it is “too big to fail”.

“The underlying risk for markets is if Evergrande is not bailed out by the Chinese government,” said Giles Coghlan, chief currency analyst at HYCM, though he added: “I don’t think Evergrande is a Lehman scenario – it’s not going to be a massive systemic risk.”

MSCI’s world equity index gained 0.16% to 736.36 but was down 0.12% on the week. The index hit a record high of 749.16 on Sept 7.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.15% but was set to finish down 2.7% on the week, which would be its worst week in four.

European shares put on a better performance, however, on track for weekly gains as news that Britain was mulling easing travel restrictions boosted airlines and hotel groups.

The pan-European STOXX 600 index rose by 0.7% and UK stocks gained 0.4%.

U.S. stock futures, the S&P 500 e-minis, were unchanged.

Stock market prices were expected to be erratic on Friday due to “quadruple witching” day, when four different futures and options contracts expire.

Chinese data earlier this week suggested growth in the world’s second-largest economy will slow in the second half of this year, while economists polled by Reuters said they expected the U.S. economic rebound to have been dented in the third quarter, partly due to the spread of the Delta coronavirus variant.

Respondents to that poll also pushed back expectations for the U.S. Federal Reserve to announce a tapering of asset purchases to November.

This means next week’s Fed policy meeting is likely less consequential than would have been expected a few months ago when many investors felt a September tapering announcement was an option. But traders will be still watching closely for any policy clues from the meeting, especially after the United States posted an unexpected increase in August retail sales on Thursday.

The sales data “confirmed the expectations of the majority in the market, who expect tapering … to begin this year”, Commerzbank analysts said in a note.

The data also boosted the dollar, which held steady near the previous day’s three-week high against an index of currencies. It was little changed against the euro at $1.1776.

The yield on benchmark 10-year Treasury notes was 1.3362%, little changed from its U.S. close of 1.331%, after also rising on the data.

The yield on German 10-year government bonds rose two basis points to -0.288%, close to a two-month high hit on Thursday, after a Financial Times report suggested the European Central Bank expects to hit its inflation target by 2025.

Hong Kong’s Hang Seng Index rose 0.47%, with traders looking for oversold stocks after the benchmark posted its lowest close in 10 months the day before.

Australian shares fell 0.8%, as a drop in iron ore prices hurt miners, but Chinese blue chips rose 1% and Japan’s Nikkei gained 0.58% to head back towards a 31-year high hit on Monday.

U.S. crude fell 0.52% to $72.22 a barrel, and Brent crude dropped 0.41% to $75.36 per barrel, as more supply came back online in the U.S. Gulf of Mexico following two hurricanes.

Gold recovered somewhat, with the spot price trading at $1,761 per ounce, up 0.45% after falling 2.3% on Thursday as higher yields hurt the non-interest bearing metal. [GOL/]

($1 = 109.8700 yen)

($1 = 6.4502 Chinese yuan renminbi)

(Editing by Lincoln Feast and Mark Potter)

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Hyundai Heavy Industries shares jump above IPO price on debut

FILE PHOTO: Parts of the structure of a ship are seen at Hyundai Heavy Industries’ Shipyar in Ulsan, South Korea, May 29, 2018. REUTERS/Kim Hong-Ji

September 17, 2021

By Joyce Lee and Jihoon Lee

SEOUL (Reuters) -Hyundai Heavy Industries’ shares closed 86% above their initial public offering (IPO) price on their trading debut in South Korea on Friday.

The shipbuilder, one of the largest in the world, raised $935 million from its IPO, with much of the proceeds set to fund investments in new technology.

A total of 1,633 domestic and foreign institutional investors placed bids to acquire shares earlier this month, valuing total bids at 1,130 trillion won ($962.3 billion), according to Hyundai Heavy.

The institutional book for the IPO had been 1,836 times covered – the second-largest for an IPO in South Korea after SKIET earlier this year.

“Since the onset of the COVID-19 pandemic, the surge in container ship fares has spread to ship orders, raising ship prices,” said Meritz Securities analyst Kim Hyun.

“If stronger green regulations and testing of new fuels lead to increased demand for eco-friendly ships that replace older fleets, Hyundai, which makes both ships and engines, is well-placed to be competitive.”

Hyundai Heavy plans to use about 760 billion won of the proceeds to invest in future technologies, including eco-friendly ships and digital ship technology, smart shipyards and hydrogen infrastructure.

Hyundai Heavy Industries Group is still awaiting regulatory approvals from South Korea, Japan and the European Union for its planned acquisition of rival Daewoo Shipbuilding, after the deal was announced in 2019.

($1 = 1,174.2200 won)

(Reporting by Joyce Lee and Jihoon Lee; additional reporting by Choonsik Yoo; editing by Stephen Coates and Jason Neely)

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Ford wakes up badly burnt from its India dream

FILE PHOTO: A visitor is reflected as he takes pictures of a Ford Aspire car during its launch in New Delhi, India, Oct. 4, 2018. REUTERS/Anushree Fadnavis/File Photo

September 17, 2021

By Aditi Shah

NEW DELHI (Reuters) – When Ford Motor Co built its first factory in India in the mid-1990s, U.S. carmakers believed they were buying into a boom – the next China.

The economy had been liberalised in 1991, the government was welcoming investors, and the middle class was expected to fuel a consumption frenzy. Rising disposable income would help foreign carmakers to a market share of as much as 10%, forecasters said.

It never happened.

Last week, Ford took a $2 billion hit to stop making cars in India, following compatriots General Motors Co and Harley-Davidson Inc in closing factories in the country.

Among foreigners that remain, Japan’s Nissan Motor Co Ltd and even Germany’s Volkswagen AG – the world’s biggest automaker by sales – each hold less than 1% of a car market once forecast to be the third-largest by 2020, after China and the United States, with annual sales of 5 million.

Instead, sales have stagnated at about 3 million cars. The growth rate has slowed to 3.6% in the last decade versus 12% a decade earlier.

Ford’s retreat marks the end of an Indian dream for U.S. carmakers. It also follows its exit from Brazil announced in January, reflecting an industry pivot from emerging markets to what is now widely seen as make-or-break investment in electric vehicles.

Analysts and executives said foreigners badly misjudged India’s potential and underestimated the complexities of operating in a vast country that rewards domestic procurement.

Many failed to adapt to a preference for small, cheap, fuel-efficient cars that could bump over uneven roads without needing expensive repairs. In India, 95% of cars are priced below $20,000.

Lower tax on small cars also made it harder for makers of larger cars for Western markets to compete with small-car specialists such as Japan’s Suzuki Motor Corp – controlling shareholder of Maruti Suzuki India Ltd, India’s biggest carmaker by sales.

Of foreign carmakers that invested alone in India over the past 25 years, analysts said only South Korea’s Hyundai Motor Co stands out as a success, mainly due to its wide portfolio of small cars and a grasp of what Indian buyers want.

“Companies invested on the fallacy that India would have great potential and the purchasing power of buyers would go up, but the government failed to create that kind of environment and infrastructure,” said Ravi Bhatia, president for India at JATO Dynamics, a provider of market data for the auto industry.


Some of Ford’s missteps can be traced to when it drove into India in the mid-1990s alongside Hyundai. Whereas Hyundai entered with the small, affordable “Santro”, Ford offered the “Escort” saloon, first launched in Europe in the 1960s.

The Escort’s price shocked Indians used to Maruti Suzuki’s more affordable prices, said former Ford India executive Vinay Piparsania.

Ford’s narrow product range also made it hard to capitalise on the appeal won by its best-selling EcoSport and Endeavour sport utility vehicles (SUVs), said analyst Ammar Master at LMC.

The carmaker said it had considered bringing more models to India but determined it could not do so profitably.

“The struggle for many global brands has always been meeting India’s price point because they brought global products that were developed for mature markets at a high-cost structure,” said Master.

A peculiarity of the Indian market came in mid-2000 with a lower tax rate for cars measuring less than 4 metres (13.12 ft) in length. That left Ford and rivals building India-specific sub-4 metre saloons for which sales ultimately disappointed.

“U.S. manufacturers with large truck DNAs struggled to create a good and profitable small vehicle. Nobody got the product quite right and losses piled up,” said JATO’s Bhatia.


Ford had excess capacity at its first India plant when it invested $1 billion on a second in 2015. It had planned to make India an export base and raise its share of a market projected to hit 7 million cars a year by 2020 and 9 million by 2025.

But the sales never followed and overall market growth stalled. Ford now utilises only about 20% of its combined annual capacity of 440,000 cars.

To use its excess capacity, Ford planned to build compact cars in India for emerging markets but shelved plans in 2016 amid a global consumer preference shift to SUVs.

It changed its cost structure in 2018 and the following year started work on a joint venture with local peer Mahindra & Mahindra Ltd designed to reduce costs. Three years later, in December, the partners abandoned the idea

After sinking $2.5 billion in India since entry and burning another $2 billion over the past decade alone, Ford decided not to invest more.

“To continue investing … we needed to show a path for a reasonable return on investment,” Ford India head Anurag Mehrotra told reporters last week.

“Unfortunately, we are not able to do that.”

(Reporting by Aditi Shah; Editing by Kevin Krolicki and Christopher Cushing)

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Supply fears lead EU vaccine industry to seek home comforts

An employee of the drugs and chemicals group Merck KGaA waits in line in front of a vaccination centre at Merck’s plant in Darmstadt, Germany, May 4, 2021, as Germany started projects involving company doctors helping in the state’s vaccination campaign against the coronavirus disease (COVID-19). Arne Dedert/Pool via REUTERS

September 17, 2021

By Ludwig Burger and Patricia Weiss

FRANKFURT (Reuters) – European companies playing key supporting roles in COVID-19 vaccine manufacturing are working to move production and supply chains closer to their customers to guard against trade restrictions that have interrupted supplies during the pandemic.

Germany’s Merck KGaA, whose Life Science unit is one of the world’s largest makers of bioreactor gear and supplies, told Reuters it is pushing to spread its production network geographically so that fewer shipments have to cross customs borders.

U.S. regulations in particular, which give priority to companies fulfilling U.S. government contracts, have posed a challenge for Merck as its seeks to meet soaring demand for supplies such as sterile fermentation bags and filters.

But the United States is not the only country engaging in what some call vaccine nationalism. India barred vaccine exports in mid-April to focus on its domestic immunisation drive as infections exploded across the country, upsetting the inoculation plans of many African and South Asian countries.

In the wake of production shortfalls at AstraZeneca earlier this year, the European Union imposed an export-monitoring scheme and accused Britain of withholding COVID-19 vaccine volumes that it said should be shared with the EU.

“Every forward-looking decision we have made integrated the geographical dimension into it,” Chief Executive Belen Garijo told Reuters. “In the context of the trade constraints that we have seen, we have enhanced our global diversification any time we had the chance,” she added.

At Rentschler Biopharma SE, a German contract manufacturer for major pharma companies that is helping to produce CureVac’s COVID-19 vaccine candidate, the pandemic triggered a review of its procurement routes.

“The coronavirus crisis gave us an important push to bring our supply chains closer to home. We decided to source most of our equipment in Europe so that we are no longer as dependent on the United States,” said Chief Executive Frank Mathias, naming sterile bags for bioreactors as an example. He would not name suppliers.

Mathias said supply chains collapsed earlier this year when the United States commandeered certain volumes for domestic vaccine producers.

The U.S. Defense Production Act with its system of rated orders that prioritise U.S. crisis response, also hobbled Merck’s ability to serve vaccine makers elsewhere in the world.

In response, Merck in March laid out plans to invest 25 million euros in France to make disposable plastic materials for bioreactors, an essential input for COVID-19 vaccine manufacturing.

The new site, Merck’s first such facility in Europe, will likely come on stream at the end of 2021, adding to similar production lines in runs in the U.S. and China.

That followed it investing $47 million in its U.S. facilities in Massachusetts and New Hampshire in December, at the time touted as strengthening its global output to meet unprecedented demand.

“The pandemic has been a wakeup call,” said Merck’s Garijo. “You want to have a global footprint in order to be able to deal with potential trade constraints.”

Family-controlled Merck also makes prescription drugs and chemicals for semiconductor production, but its Life Science unit, mostly made up of businesses formerly known as Millipore and Sigma Aldrich, has become its main earnings driver.

Its competitors include Thermo Fisher, Danaher and Sartorius.

In another move to avoid long transport routes and any fallout from international wrangling, German family-owned vaccine maker IDT Biologika earlier this year laid out plans to invest more than 100 million euros to produce AstraZeneca’s COVID-19 vaccine in collaboration with the Anglo-Swedish drugmaker.

The production line, currently set to come on stream in 2023, would be designed to churn out Astra’s shots or other vaccines of the same viral vector class, to the tune of at least 360 million doses a year.

IDT would make the active ingredient and mix, bottle and pack the final product, combining in one place a suite of production steps that are currently widely scattered.

IDT said the project was on track but declined to comment further. The company has said Germany’s federal health ministry had assisted in the project but the investment was not subsidized.

Retooling production networks in a pharma sector that has for decades relied on cross-border exchange and international division of labour can only be done in incremental steps, cautioned Merck CEO Garijo.

“You cannot move a factory from one day to the other, this takes time,” she said.

(Reporting by Ludwig Burger and Patricia Weiss; Editing by Hugh Lawson)

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With tighter grip, Beijing sends message to Hong Kong tycoons: fall in line

FILE PHOTO: Hong Kong tycoon Li Ka-shing, chairman of CK Hutchison Holdings, meets journalists as he formally retires after the company’s Annual General Meeting in Hong Kong, China May 10, 2018. REUTERS/Bobby Yip/File Photo

September 17, 2021

By Clare Jim and Farah Master

HONG KONG (Reuters) – As Beijing seeks to tighten its grip over Hong Kong, it has a new mandate for the city’s powerful property tycoons: pour resources and influence into backing Beijing’s interests, and help solve a potentially destabilising housing shortage.

Chinese officials delivered the message in closed meetings this year amid broader efforts to bring the city to heel under a sweeping national security law and make it more “patriotic,” according to three major developers and a Hong Kong government adviser familiar with the talks.

“The rules of the game have changed,” they were told, according to a source close to mainland officials, who declined to be named because of the sensitivity of the matter. Beijing is no longer willing to tolerate “monopoly behaviour,” the source added.

For Hong Kong’s biggest property firms, that would be a big shift. The companies have long exerted outsized power under the city’s hybrid political system, helping choose its leaders, shaping government policies, and reaping the benefits of a land auction system that kept supply tight and property prices among the world’s highest.

The sprawling businesses of the four major developers, CK Asset, Henderson Land Development, Sun Hung Kai Properties and New World Development, extend their influence even further into society. For example, the empire of Hong Kong’s richest man, Li Ka-shing of CK Assets, includes property, supermarkets, pharmacies and utilities.

Because the tycoons are so deeply intertwined with the city’s economy and politics, it would be difficult for Beijing to sideline them completely, said CY Leung, former Hong Kong leader and now a vice-chairman of China’s top advisory body.

“They are a major component of our political and economic ecosystem, so we need to be careful,” Leung told Reuters. “I think we need to be judicious with what we do and not throw the baby out with the bathwater.”

INFLECTION POINT Some Chinese officials and state media have blamed tycoons for failing to prevent anti-government protests in 2019 that they say were rooted in sky-high property prices.

The protests, joined by millions of all ages and social strata, demanded greater democracy and less meddling by Beijing in Hong Kong, which had been promised wide-ranging freedoms until 2047.

The new directives mark an inflection point in the power play between Beijing and the tycoons, who once held kingmaking sway in Hong Kong’s political leadership race.

“Now the focus is on contribution to the country; this is not what the traditional business sector in Hong Kong is used to,” said Raymond Tsoi, chairman of Asia Property Holdings (HK) and a member of the advisory group Chinese People’s Political Consultative Conference Shanxi Committee.

In March, Beijing made sweeping electoral changes. In a new election committee, responsible for choosing the next leader of Hong Kong and some of its lawmakers, a greater “patriotic” force has emerged, while many of the prominent tycoons, including Li, 93, will be absent for the first time since Hong Kong returned to Chinese rule in 1997.

Hong Kong’s Constitutional and Mainland Affairs Bureau said the new election committee would be more broadly representative of Hong Kong, going beyond the vested interests of specific sectors, specific districts and specific groups, which it called “inadequacies” in the system.

The source close to Chinese government officials told Reuters a team in the Hong Kong and Macau Affairs Office and the Liaison Office (HKMAO) had sought to curtail the influence of groups perceived to have done little for Beijing’s interests in the city.

HKMAO and the Liaison Office did not respond to requests for comment.

Sun Hung Kai said it was confident about the future of Hong Kong and would continue to invest there and in mainland cities. Henderson Land and New World Development declined to comment, while CK Holdings did not respond to request for comment. Li did not respond to a request for comment.


Developers have already taken measures to show the message was received.

New World and Henderson Land have donated rural land as reserves for social housing. In recent weeks, Nan Fung Group, Sun Hung Kai, Henderson Land and Wheelock applied for a public-private partnership scheme, the first applications since the programme was launched in May 2020.

The programme offers developers an opportunity to build on a higher percentage of open land, but they must use at least 70% of the extra floor area for public housing. Several told Reuters last year that the programme was unattractive because there were many restrictions and a risk of higher costs.

“Beijing is not telling us what to do, but saying you need to solve this problem,” Hopewell Holdings’ Gordon Wu told Reuters, adding that “it won’t be impatient but it will give you pressure.”

Another developer source, who declined to be named because of the sensitivity of the issue, said Chinese officials had laid out expectations, but no strategy or deadline.

“We can continue our businesses as long as we give back more to society,” said the source, a senior official at a top developer in Hong Kong. The sector needs to step up efforts to ease the housing shortage, he added.

Most of the developers have published statements and newspaper advertisements, along with other Chinese corporations, to support the national security legislation and electoral changes.

Critics of the moves said they crushed democratic dreams, while authorities said they were necessary to restore stability after the 2019 demonstrations.

Adrian Cheng, 41, who took over as chief executive of New World, founded by his grandfather, told Reuters late last year the company needs to become more relevant to society, especially in a new environment where firms have to carefully balance the interests of various parties.

“It’s not easy. I have a lot of grey hair you can’t see,” Cheng said.

(Additional reporting by James Pomfret; Editing by Anne Marie Roantree and Gerry Doyle)

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