Speech at Council Meeting-Members’ Motions “Adjusting the policies on the stock and property markets to strengthen the impetus for growth”


President, the rise and fall of property prices will trigger positive or negative wealth effects, which will affect people’s desire to spend, and the performance of the Hong Kong stock market has always had a decisive impact on Hong Kong’s status as an international financial centre.  I would like to thank Dr CHOW Man-kong and the other six Members for proposing the motion and their amendments respectively, allowing this Council to discuss the policies on the stock and property markets.

With the continuous adjustments in property prices recently, people planning to form a family or improve their living environment have an increased desire to buy homes.  However, for first-time home buyers, the down payment imposes the greatest pressure, and the Hong Kong Monetary Authority has specified the interest rate stress-testing requirement for property mortgage lending of 200 basis points for applicants for bank mortgage loans, which limits the total loan amounts of borrowers.  Under these circumstances, if the Government can appropriately review and lower the interest rate stress-testing requirement or the ratio of monthly mortgage repayment amount to monthly income, this will allow people who have the intention to buy homes to apply for larger loan amounts from banks to meet their home ownership needs.  As long as the genuine users are benefited and speculation is not promoted, even slightly larger loan amounts should not affect the level of mortgage loan bad debts, which can better promote the development of the user market.

Moreover, the Policy Address introduces a stamp duty suspension arrangement for incoming talents’ acquisition of residential properties.  The relevant bill has just passed the Third Reading in this Council.  According to a number of real estate agencies, after the announcement of the measure, they received enquiries from many overseas professionals about home acquisition, a 30% increase as compared with the past.  In the past few months, a number of home acquisition cases by professionals have indeed been recorded, involving both new and second-hand properties, and it is believed that this will inject new impetus into the property market.  Although the new Capital Investment Entrant Scheme does not include residential property investments, it is believed that these investors will have home ownership needs and they may trigger the next wave of momentum.

The three measures above are intended to increase demand, but there will be shrinkage in property transactions with high interest rates and a continuous increase in housing supply in the future.  It is timely for the Policy Address to introduce three measures to reduce the “harsh measures” for the property market.  As to whether such a move will be effective or whether it is necessary to completely withdraw the “harsh measures”, the Government must objectively review the current transaction data of the property market and decide whether it needs to take action again according to the actual situation, to ensure the stable and healthy development of the property market which will be in the best interest of the public.

In response to market demands, the Policy Address also announced that the rate of stamp duty on stock transfers will be reduced from the current 0.13% to 0.1%, i.e. the level as of August 2021, but it seems that this has not been effective in promoting stock market trading so far.  The performance and trading volume of the stock market depends on a number of factors, including investors’ expectations, economic performance and whether enterprises with potential are listed.  The recent stock market weakness is also affected by macroscopic factors such as high interest rates and geopolitical wrestling.  I have not noticed any significant changes in these macroscopic fundamentals for the time being, and it is doubtful whether reducing stamp duty alone will be effective.  Yet, I have reservations about completely withdrawing the “harsh measures” for the reasons given by many colleagues earlier.

The listing in Hong Kong by enterprises from the Belt and Road and the Middle East and other regions is a way out but it is necessary to review and adjust the local listing requirements; otherwise, there will be difficulties.  As a few colleagues have discussed this point earlier, I am not going to repeat what they said.  Instead, I would like to say that the current mandatory delisting conditions include four reasons: sustained low prices, continuous losses, non-disclosure of financial reports, and failure to undertake business restructuring.  Since market values and trading volume are not included in the delisting conditions, there are a number of micro-listed companies in the market with low market values and pitiful trading volume, and there are hundreds of GEM shares that are currently priced below HK$1 per share.  The Government should enhance the delisting conditions, establish an OTC (over-the-counter) trading market, allow “penny stocks” to be delisted in an orderly manner, and maintain the attractiveness of listed companies to investors.

In terms of initial public offering (“IPO”), PricewaterhouseCoopers projected that, for A-share IPOs, there will be 200 to 240 new shares this year, and the amounts financed will be around RMB190 billion, which indicated that there is still demand for listing and financing by small and medium enterprises in the Mainland.  Most of the new shares in Hong Kong still originate from the Mainland, and business opportunities have not vanished.  Mainland stock exchanges such as those in Shanghai and Beijing have taken the initiative to reach out to target enterprises, and the Hong Kong Stock Exchange has also done so but it mainly targets large enterprises.  In order to enhance Hong Kong’s international and regional financial competitiveness, the authorities must stay alert to threats and dangers, proactively liaise with and reach out to target enterprises, and continuously improve the listing regime.

President, I support the motion proposed by our “G19” Member.  I so submit.