2024年3月19日星期二

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。


2024年3月4日星期一

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...

2024年2月23日星期五

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.

2024年2月15日星期四

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.

...

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

...

That’s where Bitcoin comes in.


Is Bitcoin the Antidote to CBDCs?

...

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

...

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.

...

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.

...


=====================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.

...

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.

...

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.

2023年11月28日星期二

HK Petrol Supply should be treated the same as Electricity/Gas 20231128

There is one thing that Hong Kong reigns supreme on global league tables – besides its high academic IB scores or long life expectancy – the city is the world’s most expensive place to buy petrol:

Figure 1: not the right reason to be named world #1?

So just how expensive is the cost of petrol to the citizens living here, and is there something that should be done about this exorbitant cost? Below we delve into the wonderful world of high land costs, oligopolies, and misdirected net zero policies to unravel this unfair set up that is likely hampering business and living costs for all Hongkongers.

 

Disadvantaging business vs competitors

Naturally when comparing competitiveness with other jurisdictions, we turn to fellow small open economies such as Singapore and Switzerland, while also benchmarking two larger countries for added context. In this exercise we have chosen Japan (for Asia comparison) and USA (for global context):

Chart 1: absolute petrol prices – HK is head and shoulders above rest of world…

Chart 2: we pay almost 3x as much as the average US driver

According to Bloomberg/globalpetrolprices.com data, it is eyewatering how expensive Hong Kong’s petrol cost (U$3.09/litre in Oct 23) is compared to Singapore which comes in at U$2/litre, while Japan sits almost 40% lower than Singapore still at $1.21/litre. But US really rules the roost, where costs are another 12% lower at only U$1.07/litre (Chart 1). To put everything in the context of relative premium to US prices, Singapore is already at a high 92% premium, but Hong Kong for reasons we will look into below, doubles that, coming at a whopping 189% premium (Chart 2) – what is disconcerting is how the HK premium has been very steadily ranging from 150-200% since much of the past 10 years!


Petrol overpriced against premium office rent AND per capita GDP

Is this expensive fuel cost a function of Hong Kong’s high productivity or expensive land costs? Sadly not. When plotted against Grade A office rents of various top financial centres, HK really stands out in how costly its petrol is – to return to the regression norm, the price of petrol needs to plunge some 25% as a minimum:

Chart 3: HK’s high petrol costs not justified even factoring in its expensive office rents (as a cost proxy for businesses)

Maybe Hong Kong’s expensive real estate is a reflection of its underlying economic productivity? So we plotted the petrol costs against per capita GDP also – here the trend shows much tighter clustering around the regression line:

Chart 4: petrol costs unjustifiably high in context of our economic output

Except Hong Kong that is… Being a true outlier, our petrol prices needs to be cut an even bigger magnitude of 45% to be near the global trend line!


A double whammy of govt & big oil plundering?

To properly analyse the phenomenon of high prices, we first look at whether Hong Kong is buying more expensive international oils:

Chart 5: Import price seems to be relatively stable compared to average Brent price (and rightfully so)

It seems the spread of imported petrol over Brent price has been quite stable even though the premium does vary from teens to high 30%s in the period we looked at above. As a result, Brent oil price can be a useful approximation to the cost of gasoline for imports into Hong Kong (in the absence of dedicated granular data series thereon).

Breaking out the retail prices into its key components, we can see once more how much the consumer is being disadvantaged compared to other countries – whilst the American driver pays only 42% of hiss pump cost to the oil company and government (the rest being cost of the underlying oil), Hong Kong drivers fork out 81% in the pump price to government and oil company (Chart 7), a truly exorbitant magnitude indeed:

Chart 6: Breakdown of pump price – HK is shockingly high on tax and fees

Chart 7: The same components in % terms – HK consumers pay dearly above underlying costs

Here HK in absolute terms are even more jaw dropping – but what surprises us most is how large the profit element is that the oil company makes, after the government already takes the biggest tax chunk out of all comparable markets already (Chart 6).

But has it always been like this, or is it something that happened recently? Looking at the past 18 years, the government levy has not moved (despite being one of the highest in the world all that time!), but it is the major spike in oil company profits that has hiked costs to the consumer:

Chart 8: Pump price – the biggest rise were in oil company margins over the past 2 decades

If we indexed the oil company margins against HK property prices it actually came in lower than home prices in the same comparison period, but something funny happened in 2018-9 period to the cost of petrol station land costs (blue line), which rose much much more (perhaps due to a combination of new entrants and the government suspension of new station tenders):

Chart 9: Comparing price of petrol filling stations; margins, and home prices

But in any case, the significant surge in recent years in oil company margins (now well above inflation index) bodes ill for consumer affordability.

Not only was the arbitrary cessation of petrol station roll out harmful to competition, as the number of cars will not stop rising as the economy and population grows in the longer term, the wishful thinking that everything can go from carbon based fuel to electric from now on (which was the basis of ending new petrol station tendering) is both unrealistic and counter-productive:

Chart 10: how likely can HK go from 85% carbon fuel to zero in 20 years? 

The outright plunge by global bureaucrats towards their utopian of zero carbon targets by 2030s will create endless suffering to the people over whom they govern – a glance at the blue areas above shows how overwhelmingly dominant the global economy and people’s livelihoods are powered today by carbon sourced energy.

To impose a planned economy style hard target over the citizenry and deprive them of essential energy (red arrow) will surely return civilisation back to the stone ages – in other words, the impossibility to come up with a substitute energy capacity in such a short span of time (represented by the vertical orange arrow) means the global population, if all following this mad course of action, will be deprived of 85% of their current energy needs…

In view of the above, the HK govt should rapidly reverse its policy and start issuing new petrol station sites without delay – or consumers will continue to suffer.


A new model for petrol station licencing?

Back to the question of affordable fuel for the end user – the traditional way the HK government tenders out station sites has been on a land sale mentality – that is, with a view to selling the site areas to fetch the highest land revenue for the government and not with a purpose of creating a sustainable after market for the masses.

However, if we view petrol as an essential part of people’s daily needs, much like telephone and electricity then why should we not tender petrol stations on a different formula? Whereas the telephone exchanges and electric substations are pretty much given away for free, we submit that petrol stations should also be tendered out based on minimising future fuel costs.

The objective of controlling electricity costs is achieved by the Scheme of Control framework, which is based on return on capital invested. What we should do on petrol stations perhaps, is to have the oil companies bid for each station where the winner of the site is the one that promises the lowest price margins over the prevailing oil price at the time? Not only is this simple formula easy to monitor from an ongoing basis, it introduces a mechanism to drive down long term fuel costs and every economic sector of the society will benefit, rather than just the government’s one off land sale income. Which would you rather trust to keep the spoils from reduced oil company profits – the government or the people? The answer should be beyond dispute…

 

The author would like to thank Chan Hei Lui Kiandra from The University of Science and Technology majoring in Quantitative Finance for assisting in data collection and analysis of this article.