Snake Year: ANZ predicts Hong Kong's economy will profit from cash influx and interest rate reduction

The city's economic growth is projected to range from 2.5 to 3 per cent, according to Raymond Yeung, ANZ's main economist.

The recent actions taken by Beijing are predicted to increase investment in Hong Kong's stock market, which will become a significant factor for the city's economic expansion in the Year of the Snake, says the regional chief economist at ANZ Banking Group.

Raymond Yeung stated that more reductions in interest rates could boost the number of real estate deals, and a surge in tourism would also have a positive impact on the city's financial health.

"During the Year of the Snake, Hong Kong's economic expansion is projected to be around 2.5 to 3 per cent," Yeung stated during a preview of the Lunar New Year, which kicks off on January 29. "The upcoming year will bring more advantages than challenges for the city."

A variety of strategies could enhance Hong Kong's financial markets and its overall economy. At the Asian Financial Forum held earlier this month, Pan Gongsheng, the governor of the People's Bank of China (PBOC), stated that Beijing plans to escalate the "asset allocation operation in Hong Kong" from the nation’s staggering foreign exchange reserves of US$3.2 trillion.

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Pan also mentioned that authorities would promote "more superior businesses to go public and issue bonds in Hong Kong", while there were ongoing plans to broaden the cross-border Bond Connect program.

Hang Lung, a developer from Hong Kong, is branching out due to issues faced by consumers. CEO Weber Lo emphasizes the need for self-improvement and maintaining the relevance of their services.

"We need to better ourselves and ensure our services are suitable," stated Weber Lo, the CEO of the Hong Kong construction company. "Our goal is always to introduce fresh concepts and experiences to our clientele, and that is crucial."

In order to combat these tendencies, Lo stated that the firm needs to construct facilities that accommodate a variety of requirements. They also need to prudently modify the tenant composition in each commercial area, keeping in mind the optimal match.

As an illustration, he mentioned the newly opened Grand Hyatt, located in the Spring City 66 complex in Kunming, which is the capital city of the southwestern province of Yunnan in China. This luxury hotel, with its 331 rooms, adds a premium lodging option to the complex that also includes a shopping centre and a 66-floor office tower. The total floor space of this complex is approximately 168,000 square metres, or 1.8 million square feet.

"Lo stated, 'We strive to enhance the customer experience and set our standards higher. As customers enter our complex, we aim to provide a comprehensive experience. Customers are not just visiting our mall for dining, they might also work here, or have international colleagues staying in our hotel. Hence, we aim to offer an all-encompassing service.'"

Hong Kong shares increase as DeepSeek triggers US tech downfall based on value consideration

Shares go up as investors are predicted to search for less expensive alternatives following the introduction of DeepSeek's widely adopted affordable AI model, leading to a US$1 trillion tech slump.

Shares in Hong Kong increased in value, going against the trend of losses in local markets. This was due to rumors that international investors may start moving away from pricy American tech firms. The cause of this speculation was due to Chinese start-up DeepSeek triggering a Wall Street sell-off with its affordable artificial intelligence (AI) model, which has gained significant popularity.

On Tuesday, the Hang Seng Index experienced a slight increase of 0.1 per cent, reaching 20,225.11, furthering its 0.7 per cent rise from Monday. Tencent saw a 1.4 per cent growth, taking its value to HK$401.20, while Alibaba Group Holding's value rose by 1.2 per cent to HK$88.30. Meanwhile, Baidu's shares leaped by 3.6 per cent to HK$87.80, and Xiaomi, a smartphone and car manufacturer, saw its shares escalate by 3.2 per cent to HK$38.30.

The Hong Kong stock market ended trading at midday in observance of the Lunar New Year and is scheduled to recommence on January 31. Stock markets in the mainland, with their prime indicator CSI 300 experiencing a 3% increase in January, were not operational on Tuesday but will restart operations on February 5.

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Trump: The impressive performance of Chinese AI startup DeepSeek is a 'wake-up call' for the US technology industry.

"Considering the emergence of DeepSeek, market predictions suggest a decreased demand for premium chips in the future," stated Kelvin Lau, a financial analyst at Daiwa Capital Markets, in a report. "China will persist in enhancing their production capacity for semiconductors, which will require increased domestic replacement."

'Exceptionally appealing': The reason behind the craze of Chinese consumers for a lesser-known local grocery store

Pangdonglai has demonstrated that traditional physical retail is still thriving in China, as shoppers wait in line for hours outside its stores in anticipation of the Lunar New Year celebration.

On a freezing afternoon in Xuchang, a modest city in the north of China's Henan Province, a relentless wind sweeps across the street, eliciting shudders from the people wrapped up and stooped over on the sidewalk.

However, the consumers are undeterred by the chilly weather. Numerous individuals are queued up outside the shopping center, ready for an extended delay. A sign in close proximity indicates that the mall will remain closed for another hour and a half.

According to an anonymous staff member in charge of managing the line, individuals begin to gather as early as 6am or 7am, a considerable time before the mall's opening hours, due to company policy.

The atmosphere seems akin to the unveiling of a new smartphone, however, the store causing such a stir is actually a neighborhood grocery store called Pangdonglai.

In recent years, Pangdonglai has unexpectedly surged in popularity in China, turning its shops into sought-after spots prior to the start of the Lunar New Year holiday, commencing on January 28.

DeepSeek's technological advancement is celebrated in China as the solution for triumphing in the AI battle. In a post on Weibo, Zhou Hongyi from Qihoo 360 expressed his belief that China will ultimately emerge victorious in the AI conflict with the US.

In their domestic environment, Chinese technology leaders and assorted analysts quickly praised the groundbreaking impact of DeepSeek.

Feng Ji, the founder and CEO of Game Science, the developers behind Black Myth: Wukong, expressed in a popular Weibo post that DeepSeek's advancements in AI have the potential to alter China's destiny amidst its ongoing technological clash with the US.

DeepSeek made a public announcement on January 20, unveiling their open-source R1 reasoning model. They assert that this model matches the performance of OpenAI's o1. According to the American start-up, this model has the capacity to navigate complex tasks and solve more challenging problems in fields such as science, coding, and mathematics compared to its predecessors.

The major advancement by DeepSeek and the plummeting stocks of Nvidia have sparked worries about the necessity for substantial investments in Artificial Intelligence. Big American tech firms might potentially adopt and emulate some of the training strategies that DeepSeek utilized to decrease the price of R1.

DeepSeek, an under-the-radar Chinese start-up offering competitively priced technology that rivals major US tech giants like OpenAI and Meta Platforms, has sparked investor worries about the need for massive investment in research and development.

The AI firm from China unveiled its open-source logic model, R1, in the early part of this month. The aptitude of this model is nearly equivalent to the sophisticated models offered by OpenAI, Anthropic, and Google, but it comes with a much more affordable training expense.

The remarkable ratio of performance to cost has sparked worries among investors regarding the need for the billions of dollars that major US tech firms are investing, along with the additional billions they intend to put into generative AI in the forthcoming years," stated Malik Ahmed Khan, a stock analyst at Morningstar.

He mentioned in a research note on Tuesday that several major American technology firms might consider adopting similar AI training methods that DeepSeek used to reduce the cost of R1.

Upon its release, DeepSeek rapidly rose to become the top downloaded app in Apple's US AppStore. The app's unexpected success led to a significant drop in the stock value of Nvidia and other tech companies on Wall Street on Monday. The company's shares plummeted by 17 percent, dropping to US$118.58, and wiping out nearly US$600 billion in market capitalization.

The story on Monday suggested that the massive amounts spent on AI by massive tech firms could become outdated if a less expensive alternative is available, according to analysts at BCA Research in Montreal. Basically, the defensive barrier around the "Magnificent Seven" US tech titans might not be as broad as once believed, they stated.

Analysts suggest that the management changes at China Vanke indicate a rescue plan for the struggling property developer. Raymond Cheng from CGS believes that backing Vanke may lead banks to provide more loans, decrease markdowns on asset transactions and enhance the confidence of property buyers.

After the announcement of alterations to the board on Monday, Vanke's stocks experienced a significant increase, rising up to 6.89 per cent on Tuesday. However, the gains were later reduced, settling at a closing increase of 2.1 per cent, with a value of HK$5.78.

Vanke, previously the second biggest property developer in China in terms of sales, has appointed Xin Jie as its new chairman. In addition to this role, Xin also holds the position of chairman at the state-owned Shenzhen Metro Group (SZMC), which is the largest shareholder in the company.

Raymond Cheng, the managing director at CGS International, believes that Vanke's primary supporter has enough financial strength to save the developer.

He highlighted that SZMC is supported by the Shenzhen State-owned Assets Supervision and Administration Commission, which has assets exceeding 5 trillion yuan (around US$689 billion). On the other hand, SZMC independently holds assets worth 800 billion yuan.

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Cheng suggested that a rescue could result in three beneficial shifts for Vanke, such as reassurance for financial institutions to provide loans, decrease in asset sale discounts, and increased confidence from homebuyers in its projects.

The accounting organization in Hong Kong is urging for increased proficiency in sustainable practices. According to a council report, only 21% of Hang Seng Index participants achieved a 'fair' score, while more than half, 53%, were given a 'modest' rating.

Over fifty percent of the companies that make up the Hang Seng Index chose to release their sustainability performance reports last year, says Hong Kong's accounting regulatory organization. They urge companies to further enhance their skills in this area.

The Accounting and Financial Reporting Council reported on Monday that around 21% of the audited companies received a "fair" evaluation from sustainability assurance auditors. In contrast, about 53% were given a "limited" assessment. The remaining companies fell into the "mixed or other" category, according to the report.

Auditors, under the stipulation of reasonable assurance, need to gather enough proof to minimize the possibility of inaccuracies to a level that can be deemed acceptable. On the other hand, with limited assurance, it implies that auditors couldn't find any solid proof to dispute the assertions made by the entity presenting the report.

Research examining market preparedness for sustainability reporting and verification took place from May 6 to 23 of the previous year, during which time there were 82 members in the Hang Seng Index. In addition, the council independently questioned listed companies and auditors about their procedures and future strategies.

The council stated that these organizations claimed that guarantees could boost the confidence of investors, their sustainability rankings, and brand image. The study concluded that the most critical problem identified by listed organizations was the absence of internal expertise in sustainability reporting.

The council anticipates initiating a public discussion regarding a regulatory structure for sustainability verification later this year. In March, the government pledged to be one of the initial regions to harmonize domestic stipulations with the International Financial Reporting Standards for Sustainability Disclosure Standards.

High interest rates in December caused a 21.1% decrease in Hong Kong's mortgage rates, pushing potential homebuyers to hold off. The Hong Kong Monetary Authority reported a drop in mortgage applications to 6,306 last month, marking the first dip since September.

According to the city's unofficial central bank, there was a drop of over 20% in mortgage applications in Hong Kong in December. This indicates a sense of caution among potential homeowners due to political instability and increasing interest rates.

The Hong Kong Monetary Authority (HKMA) recently reported that there was a 21.1% decrease in mortgages last month, dropping to 6,306 from November's figures. This is the first monthly decline since September, which experienced a 15.9% dip in demand.

The standard interest rate in Hong Kong, which has been closely aligning with US monetary policy since 1983, is predicted to stay elevated for an extended period. This is largely due to the anticipated return of US President Donald Trump to the presidency, which may introduce a wave of tariffs and isolationist policies potentially triggering increased inflation.

"Interest rates continue to be the primary influence on the real estate market this year," stated Martin Wong, Senior Director and Head of Research for Knight Frank's Greater China division.

The mortgage and loan interest rates in Hong Kong remained at their peak, the highest in 23 years, following 11 hikes from March 2022 to July 2023. However, a trend of reduction started in September 2024, with further decreases seen in October and December.

In order to sustain their operations, banks have hastened their mortgage approval process. This resulted in 5,342 applications worth HK$25.53 billion (US$3.28 billion) being approved last month. This is a 2.6% increase compared to the same period last year and a 5.4% rise from November.

According to mReferral, throughout the entire year, mortgage loans saw a decrease of over 20% to 76,752 instances. The total worth of these loans was HK$275.9 billion, marking a drop of over 25% from HK$374.9 billion in 2023 and reaching the lowest point in 11 years.

Business magnate Richard Li is planning to offload the HKEJ publisher to PCCW in an asset reshuffle with a price tag of US$9 million. PCCW will purchase the unprofitable publishing company at a rate of 0.69 times its revenue, which is slightly higher than the industry average of 0.64 times.

Business magnate Richard Li Tzar-kai from Hong Kong is once more reorganizing his holdings, currently through liquidating his private shares in the company that publishes the Hong Kong Economic Journal (HKEJ). The shares are being sold to the telecommunication firm PCCW, with a transaction value of HK$70 million (US$9 million).

The Alibaba Group Holding-owned South China Morning Post is in competition with HKEJ.

The cost was determined by multiplying the revenue by 0.69, which was calculated using the average rate of 0.64 from three anonymous industry counterparts listed in Hong Kong, as shown in the document. This estimation places HKEJ's 2023 income around HK$100 million, based on its buying price and earnings multiplier.

Analysis | The significance of DeepSeek's triumph for Nvidia and the expensive GPU-based AI expansion

Views on Nvidia and the necessity of its high-tech chips for state-of-the-art AI are changing due to DeepSeek's achievements, but is this change justified?

Nvidia saw a recovery in early Tuesday trading, but analysts pointed out a change in how the firm's contribution to expensive AI development through graphics processing units (GPU) is viewed. This could potentially endanger one of the globe's most highly valued tech giants.

In what has DeepSeek accomplished?

DeepSeek asserts that it has successfully pre-trained its V3 model utilizing only 2,048 Nvidia H800 GPUs over the course of two months. Each of these chips has an operating cost of approximately US$2 per hour. The full expenditure for training the V3 model came to US$5.5 million, corresponding to 2.8 million GPU hours. This is considerably less than the training costs of competing models.

In the meantime, its open-source logic model, R1, which was launched earlier this month, has shown abilities that are on par with those of more sophisticated models from OpenAI, Anthropic, and Google. However, it does this at a substantially reduced training expense.

Is it confirmed that Nvidia chips are not essential due to DeepSeek's actions?

As of now, the answer is no. In a dialogue with Chinese news source Latepost in 2023, the creator of DeepSeek, Liang Wenfeng, stated that the firm had slowly amassed over 10,000 Nvidia GPUs. This accumulation ranks them as one of the leading holders of computational assets among AI-based Chinese start-ups.

Understanding | The unexpected breakthrough of tech start-up DeepSeek in the US-China AI rivalry

Under the leadership of the far-sighted founder Liang Wenfeng and his team of committed young scientists, DeepSeek is charting a unique path in the realm of AI.

This is the information we have up to this point regarding the business and the apparent factors contributing to its prosperity:

A forward-thinking chief