樓市走勢前瞻：專家點評｜王震宇：業主急去貨超賣！4大利淡因素不宜上車 20240328

 本文於2024年3月28日在【香港財經時報】刊登: 樓市走勢前瞻：專家點評｜王震宇：業主急去貨超賣！4大利淡因素不宜上車

【樓市走勢前瞻：專家點評】雖然政府全面撤辣後，樓市轉活，但不少專家對今年樓市走勢仍持審慎態度，今年之後走向較難預測。但Bricks & Mortar Management主席兼總裁王震宇則看淡未來一、兩年樓市。他接受《香港財經時報》訪問時解釋，有4個利淡因素影響後市走勢，包括長息會上調、公營房屋供應增加、新盤爭相減價開售，以及外圍有戰爭爆發。他提醒有意置業人士，未來樓市持續向下，上車、換樓不是時機，最好租樓。

業主急去貨而超賣

近月樓市轉活，一、二手市場交投倍增，但二手市場錄得部分二手盤蝕讓成交。王震宇分析指，在過去一段時間，美元強，息口升得高，加上內地和本港經濟表現欠佳，但市場去貨意欲強，故部分業主趁撤辣後急於去貨，於是大幅減價，出現超賣情況。在未來3至6個月，住宅買賣成交宗數勢將倍增。

政府撤辣 配合內地「放水」交投倍增

王震宇指，政府撤辣，配合內地「放水」，投資開放，內地人來港購物，加息預期暫時放緩，估計未來3至6個月樓價持續回升，升幅5%至8%。交投會上升，增幅則難預測，但由於先前基數低，相信增幅以倍數計。據土地註冊處資料，在撤辣前的1月和2月，住宅買賣合約分別為3477宗和2375宗，屬於偏低水平。

4個利淡因素礙樓市復甦

不過，王震宇預期，樓市經過這3至6個月回升後，將會掉頭向下。他提出4個原因：

息口會調升；

未來2、3年公營房屋供應排山倒海地推出，搶走部分私樓購買力；

未來3個月發展商相繼推盤，料二手市場受壓；

外圍有大規模戰爭爆發的風險。他預計，未來一、兩年樓價再下跌。

長息升拖累港樓

現時市場普遍預期，今年美國會減息，利好樓市。但王震宇着眼點在於長期債息走勢。他預期，未來長息會調升，這方面連央行也控制不到，但短息所起作用不大，因沒有人買短期債。長息是主宰長線資本投資回報的重要因素，長息升，影響全世界所有資產，資產回報率上升，本港亦受牽連，樓市自然受到影響。

公營房屋供應大增

其次，未來2、3年政府增加大量公營房屋供應，影響私人住宅市場。據房屋局資料，預計未來5年（即2024/25至2028/29年度）傳統公營房屋的建屋量約14.2萬個單位，再加上額外興建約3萬個「簡約公屋」單位，整體公營房屋建屋量將增加至約17.2萬個單位，較上一個五年期的15.8萬個增加約9%。按此推算未來3年公營房屋供應量，每年平均提供約3.44萬個單位，高於私人住宅每年落成量。

私樓供應少推高樓價

王震宇批評現時政府的政策步伐落後於市場形勢。他指出，政府在樓市上升時搶地，發展公營房屋，減低私人住宅供應，私樓供應愈少，樓價升得高。當樓市掉頭向下時，先前搶的地皮落成的供應量，便排山倒海地推出，最終「踩死」樓市。

他表示，原本租私樓人士，現在可以以近「零成本」租住公屋；原本可以買私樓的人士，現在以較大折扣優惠價買居屋。

發展商減價推盤

另一個因素是發展商將會相繼推盤，對二手市場有壓力。王震宇指，未來3個月發展商會減價推盤，相信二手市場會受壓，並會耗盡購買力。現時新盤積存貨尾量高。據資料指，撤辣後新盤接連推售，暫時共有7個新盤，提共超過3500個單位。執筆時，黃竹坑港島南岸3B期Blue Coast已上載樓書，快將開放示範單位。將軍澳SEASONS PLACE將會首輪開售368個單位，折實平均平方呎價僅為1.41萬元，較區內上一樓盤價錢低約16%。

外圍欠佳難減息

外圍環境不理想，地緣政治緊張，俄烏戰爭已打了兩年，仍未結束。王震宇指，外圍環境欠佳，影響整體經濟，本港難以幸免。「歐洲爆發戰爭，影響本港出口，從而全球經濟，導致通脹上升，那麼如何減息呢？」

去年本港出口貨量和貨值按年下跌。翻查統計處資料，2023年全年香港的商品整體出口貨量及進口貨量分別按年下跌11.6%及9.2%。；同年的商品整體出口貨值亦按年下跌7.8%。同時，商品進口貨值下跌5.7%。政府發言人表示，展望未來，地緣政治局勢緊張、環球經濟增長減慢等因素將在短期內繼續為香港的出口帶來壓力。

豪宅跑贏中小住宅

未來中小型住宅和豪宅走勢如何？王震宇稍為看好豪宅。他預期，中小型住宅樓價跌幅會高過大市，因這類住宅供應多，而且失業裁員集中這類住宅業主，加上業主多數申請高借貸，風險較高。相反，豪宅樓價跌幅不會太多，因豪宅業主受失業裁員影響較小，並且較少申請高借貸。

據差餉物業估價署資料，去年中小型住宅單位樓價跌幅較大單位多。A類單位(實用面積431平方呎以下)售價指數累跌8.8%，是5類單位跌幅最高。D類單位(實用面積介乎1076至1721平方呎)和E類單位(實用面積1722平方呎或以上)售價指數分別累跌7.6%和6.4%，跌幅低於A類單位。

1. 樓市或下行 不宜上車

面對未來樓市持續下行形勢，王震宇覺得，無論上車或換樓都不適宜。他指出，現時不是上車時機，因外圍有戰爭，經濟表現欠佳，息口有機會上升，以及市場供應多，影響樓市走勢。

2. 最好轉買為租

他更反問記者：「現在應教人『落車』，如有人想買你嗰盤，減少少價畀佢就得，趁淡鬆畀佢。」他提醒，最好3年內不要『揸樓』，樓市會向下，長期走勢則不預測。他又說，如要換樓，最好轉買為租，都是換樓的一種方式，只不過是租樓而已。

3. 定期仍勝過買樓收租

至於買樓收租，不值得考慮。他說，銀行剛調整定期存款，利率達至5.2厘，高過買樓收租回報。而且，今年租金會先升後微跌，因稍後經濟表現不好，影響租金走勢。

Barbarians at the gates – will mainland eateries flood HK’s F&B scene?

 

One of the hottest topics in dinner conversations of late has been Hongkongers shopping or even spending weekends in Shenzhen, even major media channels are reporting the phenomenon (eg. in SCMP and NYT). The scale of the outbound outpouring is not restricted to just Guangdong of course, given how locked down HK has been during 2020-2023, and how strong the HKD has risen against other currencies of late.

This thirst for new and affordable cuisines and services should not have escaped the attention of any ambitious PRC brands – in fact the southbound march has begun in earnest already (as seen in this Singtao piece). We have found some examples of recent PRC brands opening here:

Figure 1: MuWu BBQ	Figure 2: HeFu Noodle
Figure 3: Tai Er Pickled Veg Fish	Figure 4: Tan Yu

 

So how big are the potential inroads these Mainland brands can make in HK? We start by looking at a Top 100 PRC Restaurants for 2023, which covers some 219,000 outlets nationally to assess likely impact of shop openings in HK. The top 30 names from the list is shown here alongside their scores and franchise sizes:

Table 1: Top 100 PRC food & beverage brands and their cuisines

 

Charting food preferences in China

By analysing the breakdown of the top F&B chains into their cuisine and types of foodstuffs, we are able to peer into the modern taste of the Chinese urban population at large.

First, by cuisine, Sichuan cooking has the highest number of chains operating across China (16 of them, followed by beverage brands at 13, see blue bars below):

Chart 1: Top 100 PRC brands/outlets by cuisine

Sichuan cooking is also the 3^rd highest cuisine by number of outlets (orange marks above), closely following beverages at #1 and American at #2.

Together, almost 30% of Top 100 PRC F&B outlets offer Sichuan and Guangdong cuisines. Most surprisingly however, of the 23 cuisines charted above, Shandong and Jiangsu ranked #23 and #19 respectively despite their reputation as part of the ‘eight major cuisines of China’!

Made to order & fast food dominate food types

When it comes to type of foods, it is unsurprising to see people wanting their individual tastes catered for, resulting in cook-to-order (also known as 小菜) chains ranking first by brands (1^st blue bar below). We think this more labour intensive way of catering should be dominated mostly by smaller chains in the list, not to mention millions more even smaller eateries not in the top-100 list.

The next biggest entries are all easy to cater, volume business type foodstuffs, such as hotpot, beverages, fastfood, burger, pizza, and the like:

Chart 2: Top 100 PRC brands/outlets by food type – mostly fastfood varieties

Also unsurprising is how these fastfood outlets – handshake beverage, Chinese fast food, fried chicken, Chinese braised meat (or 滷味) – given the economies of scale due to fast turnover and large volumes came high in the ranking of number of outlets (orange marks above).

Why is Guangdong cuisine so underrepresented?

Despite the freshness, high creativity, and widespread availability around the world, it was surprising for us to note that Guangdong cooking was probably the most underrepresented cuisine in the top-100 list:

Chart 3: Brand % vs outlets % - high penetration from fastfood vs low presence from Guangdong

In fact, as is clear from the chart above, Guangdong cuisine is the furthest away from trend in relative proportion of branches as well as outlets. This unexpected pattern might be explained by the need to have fresh ingredients many of which from warm climate, and proliferation of seafood dishes which call for proximity to the ocean, and possibility of the more skilled preparations required (eg more frying rather than braising) which limits the availability of proficient cooks being available to staff the kitchens…

Drinks and mass fast food items dominate market shares

In the food type domain, the same factors are at work in deciding which type is abundantly supplied (fastfood category food, see blue labels below) compared to those serving cook to order food (red label) where complexities in diners’ orders results in a smaller number of brands operating but is compensated by higher number of outlets (in fact the highest category by food type):

Chart 4: Brand % vs outlet % - Food Items

 

How do Shenzhen and Shanghai measure vs national average?

We next look at how brands enter top cities (we chose Shanghai and Shenzhen) to gauge how each city has its own appetite, as well as if opportunities exist for under served cuisines in these cities.

It is interesting to note that in Shanghai, the over populated brands (red names below) appear to be dominated by listed companies from HK and benefited from easy access to capital market for their expansion plans. On the other hand, the underpenetrated brands tend to be regional brands which may have a lower mind share or ‘prestige’, thus explaining their under penetration in Shanghai (ie population implied outlet numbers are much higher than actual outlets, eg. Shuyi and CHAGEE):

Chart 5: SH - population implied outlets vs actual outlets

The pattern is even more interesting in Shenzhen – the one phenomenon that stands out here is how the city is highly penetrated by local brands and cuisines – Hakka and Guangzhou already point to the geographical proximity of their cuisines, while ZhenGongFu and Muwu are both locally grown brands:

Chart 6: SZ – population implied outlet numbers vs actual

 

HK to see a torrent of new entrants yet

Set aside the fact that HK may be at equilibrium in its number of F&B outlets, the large number of PRC hopefuls to establish a bridge head here, or simply to use HK as a marketing medium given its international status, should suggest that a large number of the top F&B brands in China will continue to come this way.

So how do we estimate the likely inflows? With Hong Kong and Shanghai both being gateway cities, it may well be a good proxy to use the Shanghai F&B population as a proxy of likely concentration of eateries present there already but not yet entered HK yet. Below is the result of our projections:

Chart 7: SH population implied outlets vs actual numbers in HK

Funnily, the Shanghai concentrations suggest that Café De Coral is over populated in HK, and could be in need of some trimming in numbers. However in its place there are dozens of just the top-100 brands that will want to open up here, as shown by the whole bank of orange marks on the left. All of them, given their own concentration in Shanghai already, should mean hundreds of new arrivals in HK in the months and years ahead – the thinner arrow above suggests each brand with >10 outlets, and those behind the fatter arrow suggests single digit openings.

Applying the SH mix to HK, here is a league table of top brands that need to open shop here:

Chart 8: HK brand potential – most likely entrants and leavers charted

The results are an incredible number of new beverage outlets to come, at roughly 300 stores from the above chart! Factors outside the above quantitative analysis however must be factored in when making predictions, for example, how heavily penetrated are local HK coffee shops already – you can hardly not bump into specialty barista cafes anywhere you go these days, have they already filled the gap of the Luckins of the world? What about the local traditional herbal tea brands that may reduce demand for mass PRC milk tea offerings like HeyTea?

On the flip side of likely inflows, we may have an oversupply of brands in HK such as Juewei which specialises in duck necks (?!), and local champions like Café de Coral may also see leakage of its traditional customer base as the HK product mix enriches with new entrants…

Retail demand from new entrants – not material

So how will this new onslaught of new brand openings in HK bring in terms of new retail floor space demand? Our modelling suggests some 0.55m square feet of new entrants from the top 100 brands, which when benchmarked against HK’s retail stock at 130m square feet, is but a rounding error – or a mere 0.45% boost. It is exciting nevertheless as a consumer to see new offerings which increases shopper choices and introduces new ways of eating/drinking which can only enhance HK’s reputation as a ‘paradise of food’ even further…

 

The author would like to thank Yeung Ching Wa Oscar from City University of Hong Kong majoring in Finance for assisting in data collection and analysis of this article.

香港汽油貴甲寰宇 供應模式應效電煤 20240319

本文亦於2024年3月19日在【信報】刊登: 香港汽油貴甲寰宇 供應模式應效電煤

在眾多國際排名上，香港除了IB分數與人均壽命傲視同齊以外，更以汽油價格最貴而聞名遐邇。

圖一：如此第一，不贏也罷 

至於汽油在本港市民眼中到底有多昂貴？而各界又有否良方來控制過高的價錢？以下筆者由高地價政策、寡頭壟斷、以及荒謬的零碳政策等方面來分析此一供應鏈是如何令香港營商成本及生活負擔都高踞不下。

油價無理昂貴 營商無謂艱難

每將香港與其他地域作比較時，當然選擇小型開放經濟體系更為合適，如新加坡和瑞士。此外為增加研究的完整性，筆者加入兩個大型經濟體為樣本：分別為日本（乃亞洲先進地區）和美國（全球最大市場）。

圖二：香港汽油 領先全球…

圖三：本港入油成本為美國三倍 

根據彭博／globalpetrolprices.com的數據，香港油價與2023年10月時為$3.09（美金／公升，下同)，遠遠拋離新加坡的$2；同時日本再比新加坡低大約四成，為$1.21。但美國要再平一截，以$1.07稱王（低日本12%，【圖二】）。若以美國價格爲基準，新加坡有著非常高的92%溢價，但香港則更為驚人，較美國價高出189%，兼是新加坡價的兩倍【圖三】。更令人不安的是，香港的溢價持續地地維持於150-200%之間，毫無收窄跡象。

相對甲廈租金及人均產出，本港油價實在太貴

那麼，如此昂貴的燃油成本是建基於香港的高生產力或高地價嗎？可惜兩者皆不是。與其他國際金融中心的甲級寫字樓租金比較，香港的汽油仍是驚人地昂貴。若要與國際對手看齊，油價起碼要下降25%（【圖四】箭嘴）：

圖四: 就算香港寫字樓租金已是環球數一數二，亦被更昂貴的汽油價比了下去

 
或許香港租樓成本並不反映經濟出產？故此，筆者再將汽油與人均國內生產總值（GDP）進行比較，結果兩者之間的趨勢呈更加緊密的線性關係：

圖五：以經濟產出作比較，本港汽油價格依然不合理地高 

可惜香港再度有別於人，若要回歸全球趨勢線的話，本地油價須下調更加大幅度的45%方才合理（上圖紅箭嘴）！

高油價：政府政策和油公司壟斷下的結果？

為高油價現象診斷成因，須先瞭解本港汽油的入口價錢是否高於國際水平：

圖六：入口成本與布蘭特原油價格關係穩定 

對比布蘭特原油過去三十來年的定價，本港汽油入口價格似乎相對穩定，大約在入口價15-30%以上波動。可見在缺乏更詳細數據的情況下，大可以布蘭特原油價格來估計本港汽油入口成本。

若將零售價細分而觀之，可見香港的消費者相對其他國家是處於多惡劣的處境：美國司機只須支付政府及石油公司相當於42%油站標價之際（餘下乃汽油本身成本)，香港司機卻向政府和石油公司貢獻標價的81%有多，豈非欺人太甚？

圖七：零售價組成：香港稅費比例高得驚人

 圖八：以組成百分比計，香港消費者付出遠高於成本的金額 

香港汽油成本中的利潤及稅費成份之高令人瞠目結舌：但最爲驚人的，不是政府已經抽取環球最高額的稅費，而是油公司更為肥厚、大概亦是傲視全球的利潤【圖七】。

但這是一直以來的狀態，還是最近才出現的現象？回望過去十八年歷史，政府稅收並無改變（儘管在期間仍是全球最高昂稅額），但石油公司的利潤卻大幅膨脹，導致消費者的成本急劇飆升：

圖九：過去20年汽油價格飆升主兇似是油公司利潤之無序膨脹 

然而，若將油公司的利潤成份與樓價指數相比，會發現油公司利潤（【圖十】紅線）變化其實低於同期的樓價升幅（綠線）。不過在2018-9年間，加油站土地成本（藍線）卻突然暴升，可能是新入場油公司搶地盤加上政府暫停新油站招標所致：

圖十：加油站地價、油公司利潤率及樓價的變化 

但無論如何，石油公司近年利潤率大幅上升（高於同期通脹指數約6成之升幅）對用家的負擔能力而言仍是難以接受的。

此外任意停止批出加油站新址不僅不利競爭，而且未來隨著人口及經濟持續增長，車輛數目亦只會不斷上升。官員一廂情願以為可以朝夕間將所有燃油車輛變為電動的想法不但非常離地，最終只會助長油價飆升，得益的只有少數已入了場的油公司：

圖十一：全球經濟於十數年間由85%化石燃料轉爲零碳排的機會微乎其微 

隨著全球政客／官僚不顧一切地奔向其2030年代零碳排目標，人民必將深受其害：上圖各藍色區域明顯反映，當今全球經濟和人民的生計是如何全面及壓倒性地以石化燃料爲能源基礎。

以計劃經濟式的高壓目標（紅色箭嘴）去剝奪人民賴以為生的能源供應必會將文明打回石器時代──換言之，在如此短時間要拿出可以取代石化燃料的其他能源（圖中垂直的綠色箭頭）實在是天方夜譚！如果全球各國都同時實施這一瘋狂的方案，則當前85%的能源供給將被剝奪，經濟產出亦會倒退到20世紀中期的水平！

因此，港府實應逆轉現行政策，立即重新批出新加油站地皮，否則消費者將繼續受苦。

加油站批地新模式？

再回看消費者如何可以買到廉宜汽油這個問題——港府招標站址的一貫思維是以賣地賺錢為目的（即出售站址以庫房收入最大化為目標），而非為市民開拓可持續的售後消費市場。

然而，若將汽油視為市民日常生活的必需品，與電話和水電看齊，則油站招標的模式是否有大幅調整的必要？既然電話機樓和電力變電站這類基建設施幾乎都是免費批出的，那油站用地實應同樣地以降低此公用必需品的成本為目標而進行招標。

香港規管電力費用是以《管制計劃》機制來實現，而該框架是以電力公司的投資資本回報為基礎。將此一方案用諸油站基建上，是否應該讓油公司為每個油站地塊投標，而中標者乃是承諾在來價水平上賺取最低邊際利潤的公司？此一簡單的規管方法不僅易於持續監控，兼且結構上令燃料成本維持低廉，令社會每個經濟領域都受益不淺；相對於僅在政府一次性批售土地時收取最大利益收入，新方案更能長久地造福市民！此外，因油公司低價投地所產生的社會得益，是否強於一次性賣地收益只入官僚的金庫？答案應是無可爭議的...

筆者特別鳴謝香港科技大學計量金融學系陳熙蕾同學協助收集及整理本文相關數據及圖表。

Key comments on the 2024/5 Budget (香港2024/5預算案點評) 20240304

Your correspondent has made various comments in several media interviews relating to the budget measures. The most ‘uncut’ must go to the live interview on RTHK programme:

1) 《理財新世代》 - 預算案全面撤辣是否有助樓市走出困局

listen to RTHK here or on my own Youtube, followed by

2) Oriental Daily interview: 財赤嚴重勿只靠舉債 搞花招無助振經濟 (here) and then on the paper’s B1 section coverage, extracts of which reproduced here:

    東方日報B1：大屋苑車位狂冧價 街舖蝕讓激增1.4倍 (link)

    Bricks & Mortar Management主席兼總裁王震宇認為，息口高企，投資物業回報追不上存款利息，樓價難見起色，就算買部分高息地產股，回報也遠高於物業。假設租金上升，回報率要由約3厘上升至4.5厘，才可追近現時市場5厘息口。在息口未有回落情況下，整體樓市格局不會改變。

And finally

3) Feature article text from iMoney front cover story (link):

    《全徹辣 鬆按揭 樓市轉勢在望？》王震字：短時間反彈5％至7%

    瑞銀前房地產研究領主管·Bricks & Mortar Management主席兼總裁王震宇說樓價已經去到極度超賣水平，相信短期內一定反彈，預計升5%至7%，但「可能第四季調頭向下」，又強調「若非中國『印銀紙』，美元這段時間弱，以及全世界覺得美國短期內不能加息，香港樓價很難反彈。不應該覺得今次樓價反彈，全由政府『撒辣』所致。」

    他續說，「徹辣」雖令置業成本減少，但未必釋放很多購買力，「買樓的原因是因為覺得樓價會升。但如果樓價長遠仍跌，是不會有人因為成本少了，而擁入來買樓。」他又指經濟及政治環境才是左右樓市的主要因素，但前景不是得好，「中美角力這件事是最大問題，加上歐洲戰事令美元再升，令香港出口，或是賺匯能力會繼續跌下去。」

北水不會大舉重臨

    部分本地買家或看淡經濟前景而無意置業，但今次「徹辣」不只本地買家受惠，海外買家也包括其中，稅率與港人睇齊。事實上，港樓向來受內地投資者歡迎，政府未推出「辣招」前，部分發展商甚至安排專車，接送內地買家來港睇樓。王震宇認為目前大形勢已改變，相信北水不會大舉重臨，「內地炒家也不想來香港，如果在港沒有資產，可能會有興趣，但如果已經來港，或有能力出資來港的，一早留意更遠的地方」

搶人才或成新動力

    雖說北水難以大舉重臨，但政府過去一年積極搶人才，當中不少為中高收入人士，有望成為樓市新動力。王震宇明言，這些專才對樓市有些幫助，但暫時很難量化，又指如果「高才通」都是高資產人士，相信他們與投資者一樣都是看回報，「到底放錢落美元收息好，還是買樓收租，賺兩厘多回報？」

    外圍環境複雜多變，世界經濟復甦速度不似預期，香港作為外向開放型的經濟體，難免受影響，樓市自然受累，但這是否意味香港樓市黃金時期已成歷史？王震宇認為，這視乎香港如何重拾競爭力，「暫時來說，美國的打壓不會放鬆」，而香港要避免財政儲備被慢漫陰乾，要找方法抵禦下個風浪，「不停發債不是一個解決方法。」

香港自保勒緊褲頭

    被問到有何政府有何保救之法，他坦言可做不多，亦非香港可以控制，「現在打杖，怎樣保救？」」但建議政府避免破壞既有優勢，盡快減少過太多的福利及經常性支出，將編制減低，「要勒緊褲頭，未來一段時問是非常難頂的時候。」

    他又說，今次《財政預算案》將香港簡單稅制摧毀得體無完膚，皆因薪俸稅本來是單一稅率，但將變成兩級制，又要實施差餉累進制，導致香港減低簡單低稅率優厚條件。更壞的是，政府推進落實經濟合作與發展組織(OECO)的稅率方案，令香港低稅率優勢失去，相信對香港長遠競爭力造成非常大的打擊。

    王震宇說，目前樓價去到極度超賣水平，短期一定反彈，但受外圍環境影響，而且非香港可以控制，所以樓市長遠始終不穩，「如果以6個月為期限，就是入市時機，但若看遠一點就不好」，無論是投資者，抑或買家，情況亦一樣。他又建議，若打算賣樓套現，可以「趁高鬆綁」。

As we keep emphasising, the poorly thought out decimation of HK’s simple and low tax system is the biggest concern from this year’s budget, followed by a departure from HK’s traditional prudent financial disciplines – more welfare spending, zero scaling back of government expenditures, which resulted in the need to raise large amounts of new debts. No wonder former Financial Secretary John Tsang is also worried (see:曾俊華憂香港將要借貸度日)

Below was our original comment on the say of budget speech, plus extracts of relevant texts from the speech:

Very simply, the various property support measures come at a time when Chinese credit easing, temporary pause in US rate hikes, and technically oversold condition in local property prices (RSI at multi-year low):

​

This suggests whatever budget measures will only add to the bigger picture favourable tail winds. In the next 6-9 months, expect high single digit rebound in home prices and volumes, but by late 2024 we think the resuming USD strength and European wars to again weaken local property demand, with possible finish by early 2025 at levels below current prices.

Extracts of budget speech below, with emphasis from your correspondent, and comments in []:

------------most disappointing measures relating to HK’s tax system------------------

234. …implement a two‑tiered standard rates regime for salaries tax and tax under personal assessment starting from the year of assessment 2024/25. … the first $5 million of their net income will continue to be subject to the standard rate of 15 per cent, …portion exceeding [at] 16 per cent. It is expected that about 12 000 taxpayers will be affected, accounting for 0.6 per cent of the total number of taxpayers … revenue will increase by about $910 million each year.

[for a puny little increase, why destroy HK's simple income tax regime?]

235. …implement the progressive rating system for domestic properties, …effect from the fourth quarter of 2024‑25 onwards. …properties with rateable value over $550,000, which account for about 1.9 per cent of the relevant properties. It is estimated that the system will contribute to an increase of about $840 million in government revenue annually.

[for another puny increase, why destroy HK's simple rates system?]

238. …global minimum tax …by the OECD to address base erosion and profit shifting. …apply the global minimum tax rate of 15 per cent on large multinational enterprise groups with an annual consolidated group revenue of at least EUR 750 million and impose the Hong Kong minimum top‑up tax starting from 2025. …bring in tax revenue of about $15 billion for the Government annually starting from 2027‑28.

[for rubbing shoulders with mostly overleveraged / wanton spending bureaucrats elsewhere this is a big loss for HK's competitiveness (yes I know the pressures of being put on 'grey lists' etc - get big bro China to back us instead of bowing to profligate tyrannies elsewhere might be a better option?]

----------------------other important initiatives--------------------------

Re-domiciliation Mechanisms

36… putting in place user‑friendly fund re-domiciliation mechanisms for Open-ended Fund Companies and Limited Partnership Funds. … will submit a legislative proposal enabling companies domiciled overseas, especially enterprises with a business focus in the Asia-Pacific region, to re-domicile in Hong Kong.

Lifting all punitive stamp duties

43. …cancel all demand-side management measures for residential properties with immediate effect, that is, no SSD, BSD or NRSD needs to be paid for any residential property transactions starting from today.

Likely lifting of LTV/DSR restrictions too

44. …now room to make further adjustments to …property lending …The HKMA will make announcements later today.

Deduction of Expenses and Allowances under Profits Tax

54. …Profits-tax payers will be granted tax deduction for expenses incurred in reinstating the condition of the leased premises to their original condition. …the time limit for claiming the allowances will be removed. This will allow the new owner to claim allowances for the property after a change of ownership …take effect from the year of assessment 2024/25. [seems applicable to new purchases rather than new tenancies for existing owners - impact limited]

Tax / rates concessions

72.

    (a) rates concession for domestic properties for the first quarter of 2024/25, subject to a ceiling of $1,000 for each rateable property;

    (b) rates concession for non‑domestic properties for the first quarter of 2024/25, subject to a ceiling of $1,000 for each rateable property;

    (c) reduce salaries tax and tax under personal assessment for the year of assessment 2023/24 by 100 per cent, subject to a ceiling of $3,000. …This measure will benefit 2.06 million taxpayers and reduce government revenue by $5.1 billion;

    (d) reduce profits tax for the year of assessment 2023/24 by 100 per cent, subject to a ceiling of $3,000. …benefit 160 000 businesses and reduce government revenue by $430 million; and

    (e) allowance to eligible social security recipients, equal to one half of a month of the standard rate Comprehensive Social Security Assistance (CSSA) payments, Old Age Allowance, Old Age Living Allowance or Disability Allowance, while similar arrangements will apply to recipients of the Working Family Allowance, altogether involving an additional expenditure of about $3 billion.

Lower bribes for EVs

87. The first registration tax (FRT) concessions for electric vehicles, due to terminate at the end of March, will be extended for two years. …will reduce the concessions by 40 per cent. …At the same time, e‑PCs valued at over $500,000 before tax will not be entitled to concessions [good to see govt stepping back from mad rush to net zero, but can do more - scrap all concessions!]

'high' tech grants everywhere - really should scale back?

[109 & 113 & 119 & 123.... $3bn to Cyberport, $6bn to universities on biotech, $10bn on New Industrialisation Acceleration Scheme (NIAS), $2bn on InnoHK research clusters, etc... blind throwing of money at problems that may not need govt intervention? ]

HK to consolidate its #1 RMB hub status

131. As the world's largest offshore RMB business hub, Hong Kong processes about 75 per cent of global offshore RMB settlement. We also have the world's largest offshore RMB liquidity pool, at over RMB 1 trillion.

Lower patent tax

160. ...amend the Inland Revenue Ordinance ...implementing the "patent box" tax incentive, which will reduce substantially the tax rate for profits derived from qualifying IP to five per cent.

Increase ship register in HK

164. In addition, Hong Kong's ship registration regime is widely recognised internationally. Hong Kong ranks fourth in the world in terms of gross tonnage, ...port state control detention rate of Hong Kong registered ships is much lower than the global average. ...to offer block registration incentive to attract shipowners to register ships in Hong Kong extensively. The Government will amend the relevant regulations regarding this incentive starting this year.

Oversupply of public housing continues: 31k vs 16k private p.a. starter home collapse to continue

184. We will make available land for the production of no less than 80 000 private housing units in the coming five years.

185. On public housing supply, the Government has identified sufficient land for meeting the supply target of 308 000 public housing units over the next ten years (from 2024‑25 to 2033‑34).

No sign of fiscal restraint, big disappointment

208. Total government expenditure for 2024‑25 will increase by about 6.7 per cent to $776.9 billion, with its ratio to nominal GDP projected to increase slightly to 24.6 per cent.

209. Recurrent expenditure will increase by seven per cent to $580.2 billion. Of this, substantial resources will still be allocated to livelihood‑related policy areas including health, social welfare and education, involving a total of $343.7 billion, representing 59.3 per cent of recurrent expenditure.

211. ...will be a deficit of $48.1 billion for the year, and fiscal reserves will decrease to $685.1 billion. [time to take back many crowd pleasing non-means tested giveaways - eg the Joy You scheme)

212. In 2024‑25, the Government will maintain its target of zero growth in the civil service establishment. [should cut civil service size!]

[whilst forecasting 26/27 budget surplus, we believe this is overly optimistic, including on land sale projections as well as not factoring in global geopolitics]

So there you have it, short term asset positive, but may be a good opportunity to lighten up given decoupling uncertainties in the wider macro environment...

Will HK fall more than SZ? 20240222

HK property is facing significant challenges, in the new reality of being increasingly viewed as 'another Chinese' city. Will this mean prices will fall more than its brethren in the north (or rise less if market turns up) henceforth? We look into a number of factors that influence the outcome of this interesting investment dynamic, perhaps starting with the bad news first: 1) Chinese outbound tourists bypassing HK (bad)? As more relaxations are introduced/restored for visa free entry to global destinations (right column in table below), PRC tourists may bypass HK even more and head for exotic climes directly: This trend of disintermediation, is also manifesting with more overseas countries given visa exemptions for visiting China (left column above), a factor further compounded by increasing flights from gateway PRC airports to overseas cities, reducing the hub role HK has long come to enjoy. 2) Rising retail standard + cheap RMB => surging northbound HK shoppers (bad) As amply illustrated in article 1 below, increasingly sophisticated retail offerings in PRC cities, more spacious physical hardware, (sometimes) better services, and of course cheaper cost is now triggering a new phenomenon where HKers go spend weekends in SZ for leisure and even for grocery shopping. In office space alone, more companies may be tempted by the now Grade A spec but much more affordable occupation costs up north: Global Occupier Markets: Prime Office Costs – Q4 2023 HK office costs are still 3x prime SZ equivalents, which coupled with cheaper labour, may entice increasing numbers of businesses to set up north of the border - especially if travelling on the High Speed Rail, one can be in Futian from Kowloon West in a matter of 14 minutes, on fares (book yours here) cheaper than the cost of a cup of Starbucks ... It is worth noting also that occupancy costs fell across the board in the China/HK markets in Q4 23, compared to mostly rises in other global cities - showing how weak the domestic economy was then, and why the Chinese govt had to pump prime to save the property sector in recent weeks. 3) PRC rate cuts vs Fed rate hikes (bad) We have long maintained that wars and deglobalisation will only worsen inflationary pressures, and that this would leave little to no scope for rate cuts by the Fed: On the other hand, the need to reflate domestic consumption is leading China to stage one rate cut after another (article 3): LPR = loan prime rate What's more, the still high real interest rates in China allows it ample further scope for credit easing - some 150bps vs US, and nearly 280bps vs UK): The conclusion of this rate trend divergence is best illustrated in the chart below: Whenever HK rates hike less than PRC rates (green arrows pointing up, eg 1992, 2006), HK prices tend to rise much faster (red arrows up). The reverse is the case when HK rates rises more above PRC rates - which is where we are now - prices underperform SZ (eg 1996, 2013 to date). With the rate picture increasingly looking like HK rates staying high while China cuts further in the coming year (rightmost green arrow above), HK residential premium over SZ will likely shrink further in the coming two years. 4) Facilitating Southbound flows (good) The HK govt has been tapping into the rise in PRC wealth and talent by attracting them to settle in HK (article 2), but this is not radically different from some other immigration schemes already in place, and perhaps does not have as strong an impact as in earlier years. Similarly, attracting more southbound shoppers is nearing its potential (we already have 49 cities on easy travel arrangements, see article 4), and thus will unlikely result in any quantum leaps with further relaxations. 5) Higher SZ base good for higher HK too (good) As can be seen below, the premium in HK prices remain quite substantial over SZ for comparable luxury estates (Residence Bel Air in HK vs Seaworld Shuangxi Garden in SZ): Whilst global comparison suggest that our current 120% premium may be too high - eg NYC Midtown is 50% premium over San Fran, and 63% premium over NYC Downtown - perhaps the shrinkage of the HK-SZ premium is largely done. Hopefully SZ price increases will do most of the catch up work rather than even deeper HK price drops... Looking forward, we think a combination of the two remains the most likely scenario; here the Price-to-income ratio trends suggest that SZ prices will improve by some 12% in the coming year or two whilst HK might see a larger 30% correction. For HK, the bulk of the improvement will have to come in price correction rather than income growth: 6) Yields already safer than many global cities (good) A saving grace for HK at least is that its real property yield is already quite 'reasonable' when viewed in the context of real property returns: Above table is updated to December, showing that high inflationary pressures in places like Tokyo and London is destroying returns on rentals, whilst both SZ and HK sit reasonably happy in positive territory near the top of the pile. Generally high real return markets are more sustainable pricewise than -ve yielding ones. The higher nominal yield in HK (3%) also means that the higher interest rates here in the longer term will make for a healthier market when SZ's paltry 1.4%: rental yield 7) final technical look - SZ might do better medium term? On a long term technical perspective, SZ could continue to play catch up, but we await price action to give the next signal (either pierces the green support or breaks out of the blue resistance) before jumping into investment action. The answer might show itself by as early as mid-2024: SZ vs HK price ratios Given various headwinds in primarily geopolitics, perhaps investors are best to diversify into commodities and low conflict risk jurisdictions, exactly what we have been doing for the past 2-3 years... ==================Article 1================== Hong Kong vs Shenzhen: a day of food, drinks, sightseeing and leisure compared – how much cheaper can the mainland Chinese city be? The recent jump in people heading from Hong Kong to Shenzhen at the weekend suggests you can enjoy a lot more for much less in the mainland Chinese city... https://www.scmp.com/lifestyle/travel-leisure/article/3250410/hong-kong-vs-shenzhen-day-food-drinks-sightseeing-and-leisure-compared-how-much-cheaper-can-mainland ==================Article 2================== Facilitation measures on two-way flow of high-end talents within the GBA The Hong Kong Special Administrative Region Government and Mainland authorities have been exploring means to further facilitate the two-way flow of talents within the GBA, including “northbound” flow of non-Chinese Hong Kong residents.... https://www.info.gov.hk/gia/general/202401/24/P2024012400464.htm ==================Article 3================== China cuts 5-year mortgage rate by record margin to aid property sector The People's Bank of China lowered the five-year rate to 3.95%, from 4.2%, marking the first reduction since last June... https://asia.nikkei.com/Economy/China-cuts-5-year-mortgage-rate-by-record-margin-to-aid-property-sector ==================Article 4================== 消息指中央同意擴大自由行來港 有議員料納入更多二三線城市 現僅49個城市居民可自由行來港 部份省份無份 原文網址: https://www.hk01.com/article/993035 English Google translate here.

Crypto - Is it too late to invest already? 20240215

As the relentless march continues (BTC crushed through the $50k resistance and closing above it yesterday), those who are not fully allocated to crypto may start having the usual FOMO (fear of missing out). We will look at the issue in a little detail in this email, and ask whether it is still not too late to chase...

Recent ETF trigger may drive price up more

The recent spate of ETF launches did indeed have a meaningful price impact, as we already topped 70,000 BTCs bought by various funds as of 3 days ago:

Chart 1: Net Bitcoin ETF Flows

In fact, the increasing realisation that BTC is the new gold which is not easily stopped at customs check points is probably why the BTC inflows were funded by, amongst others, gold outflows:

Chart 2: ETF Aggregate Flows Since Bitcoin Spot ETFs

The run, however, is not just in BTC, but in the crypto complex at large - if you look at the top 15 coins (+ the 3 top stables), most were rising on the day, 7-day, and 30-day horizons, often at accelerating paces:

Table 1: Current crypto price

So how much is now owned by funds and how much by other entities? here is an estimate which suggests institutionalisation is only beginning, where funds ownership is just a tiny fraction (the green area most likely includes the GBTC trust already):

Figure 1: Bitcoin Mix

Another facet of institutionalisation is how off-ramping is now finally being implemented at a large scale, as Visa the credit card company has also started taking BTC and crediting holder card account - this will finally make spending BTC a reality (not solely an investment vehicle)! More details are in article 2 below.

Is Halving as potent as touted? We think not

Some maximalists keep touting the upcoming Bitcoin halving as a trigger of a next run, but is that indeed the case? Halving describes the protocol phenomenon where after a certain number of blocks, the reward to miners (ie maintainers of the blockchain) is halved, here is a visual representation of the last 3 incidents and the upcoming one as well:

Chart 3: BTC Daily Issuance, supply, and halvings

We believe the halving may have less to do with price rallies than the more important network effect - where more adoption increases the value of the network (of users) and thus the price of the commodity that is the subject matter of the network. In fact, as the number of coins in circulation increases and the halving reduces new supply, the proportional impact of each halving also falls, as shown in the table below - where the last halving over its 4-year period had a 8% impact on supply, but the upcoming halving sometime in mid-April will only have 4% cumulative effect:

Table 2: BTC halving

We reckon that the more important indicator for coming price action to be on how fast the network effect spreads, which is now indeed taking off given wider institutional adoption. Our technical estimates put likely BTC prices in 3 likely levels:

a) almost there already - $60k by March 2024 (mid blue dotted line);

b) in six months' time - $190k in Aug 2024 (top red dotted line); and

c) blue sky (?) next top - $1m sometime in Q3-Q4 2025.

These are shown here:

Chart 4: BTC price log-log chart

So perhaps you have our answer already - It is not too late to jump onboard this up cycle. In fact, just updating our usual Google search chart, you can see that the search frequency of key crypto terms remain well down from the previous two peaks in Jan 18, Apr 21 by >80%:

Chart 5: Google Search

We would argue that another trigger to prompt more people jumping on to crypto might be govt's desperate moves to join the game through their CBDCs (central bank digital currencies) - because only by forcing people to ditch their paper notes can they flush out the money under the mattress. But what this might do instead is people sell the bank notes and buy decentralised, permissionless, and open source private coins instead...

To end, we present an updated 2-year chart of our managed strategy:

Chart 6: Core performance since 2022

=====================Article 1====================

The Globalists Want CBDCs in 2024… What Really Comes Next Will Surprise Them

There’s an excellent chance governments worldwide will soon force their citizens to use central bank digital currencies (CBDCs).

CBDCs enable all sorts of horrible, totalitarian things.

They allow governments to track and control every penny you earn, save, and spend. They are a powerful tool for politicians to confiscate and redistribute wealth as they see fit.

CBDCs will allow central banks to impose deeply negative interest rates, which are just a euphemism for a tax on saving money

Governments could program CBDCs to have an expiration date—like some airline frequent flyer miles—forcing people to spend them, for example, before the end of the month when they’d become worthless.

CBDCs will enable devious social engineering by allowing governments to punish and reward people in ways they previously couldn’t.

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CBDCs are, without a doubt, an instrument of enslavement. They represent a quantum leap backward in human freedom.

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That’s where Bitcoin comes in.

Is Bitcoin the Antidote to CBDCs?

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CBDCs are going to introduce and familiarize people with using digital currencies. Then, it’s only a matter of time before they discover Bitcoin.

CBDCs and Bitcoin share some characteristics. For example, they are both digital and facilitate fast payments from a mobile phone. But that is where the similarities end.

The reality is that CBDCs and Bitcoin are entirely different in the most fundamental ways.

You need the government’s permission and blessing to use a CBDC. With Bitcoin, nobody can be prevented from using it.

Governments can (and will) create as many CBDC currency units as they want. Bitcoin is totally resistance to debasement. There can never be more than 21 million BTC.

CBDCs are centralized. Bitcoin is decentralized

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In short, CBDCs are a pathetic attempt to compete with Bitcoin. They are a desperate, last-ditch effort to keep the fiat currency scam going—a Hail Mary.

CBDCs make an inferior form of money even worse, but at the same time, they are an excellent Trojan Horse for Bitcoin.

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That’s how, contrary to conventional wisdom, CBDCs could be an enormous catalyst for Bitcoin adoption.

Historically, Bitcoin’s biggest moves to the upside happen very quickly… and the next big move could happen imminently.

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=====================Article 2====================

Visa enables crypto withdrawals on debit cards in 145 countries

MetaMask users can now sell crypto directly to a Visa card, which eliminates the need to use centralized exchanges.

Global payment giant Visa is doubling down on cryptocurrency adoption by enabling another method to exchange crypto to fiat currencies without using a centralized exchange.

Visa has partnered with the Web3 infrastructure provider Transak to introduce cryptocurrency withdrawals and payments through the Visa Direct solution, the firms announced on Jan. 30.

The new integration allows users to withdraw cryptocurrencies like Bitcoin directly from a wallet like MetaMask to a Visa debit card. Available immediately, the integration enables one to exchange crypto to fiat and pay at 130 million merchant locations where Visa is accepted.

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The partnership allows users from 145 countries to directly convert at least 40 cryptocurrencies to fiat without relying on centralized exchanges. Some of the supported countries include jurisdictions like Cyprus, Malta, Singapore, Turkey, Portugal and the United Arab Emirates, according to Transak's global coverage page.

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One of the world’s largest companies in the payments industry, Visa has been actively exploring the use cases of cryptocurrency in recent years. In 2020, Visa made a major move into crypto, by partnering with the blockchain firm Circle to support the USDC stablecoin on certain Visa cards. In September 2023, Visa rolled out support for USDC payments settled on the Solana blockchain as it continued to expand the support of the stablecoin.