〈Asian Post, June 17, 2017〉There is one gap that mainland companies can quickly narrow with their foreign counterparts; all it takes is capital, lots of it.

Over two decades, cash-rich mainland firms have moved into coveted addresses in Central, becoming the new landlords, tenants, and neighbours to Goldman Sachs, Hong Kong Exchanges & Clearing, BlackRock and the Bank of America-Merrill Lynch.

Since Hong Kong returned to Chinese rule in 1997, one-tenth of Central's prime office space is now occupied by mainland firms and financial institutions. In doing so, they have also jacked up prices in the world's most expensive office market to new heights.

The ongoing financial deregulation in the mainland and Beijing's call for domestic companies to "go global" have driven ambitious mainland firms to expand in Hong Kong, where it is often the first port of call for their global financial transactions.

"Most of the firms are coming with the same purpose: outbound financing and investment, for example trading on Hong Kong stocks," said David Ji, Greater China head of research at property consultancy Knight Frank.

Mainland companies snapped up a record 43 per cent of new commercial leases in Central last year, accounting for more than 70 per cent during some months, according to JLL.

The numbers represent significant increases from an average 19 per cent in 2012, and pushed up the financial district's monthly rents by 9.6 per cent last year.Most of the companies are coming with the same purpose: outbound financing and investment, for example trading on Hong Kong stocks David Ji, Knight Frank CBRE's latest report says that Central remains the world's priciest office market with prime office monthly rent going at HK$264 per square foot, almost 50 per cent more than the second most expensive - Beijing's Finance Street.

〈Asian Post, June 16, 2017〉The head of the Hong Kong Monetary Authority has again warned homebuyers that mortgage rates will continue to climb after the city's de facto central bank yesterday raisedits base lending rate by 0.25 percentage points.

The move followed Wednesday's decision by the US Federal Reserve to increase interest rates. "This is the US Fed's third increase in seven months, and is a sign that the pace of rate normalisation is gathering momentum," HKMA chief executive Norman Chan Tak-lam said.

"As interest rates rise I would urge everyone to be vigilant and manage risks carefully."

Hong Kong's base rate now stands at 1.5 per cent. The HKMA is obliged to follow US interest rates as Hong Kong's currency is pegged to the US dollar.

US Fed chairwoman Janet Yellen matched market expectations by increasing the US federal funds rate by 25 basis points, to between 1 and 1.25 per cent.

Hong Kong banks have still to decide whether they will change the interest rates they offer to savers or borrowers.

Since US interest rates began rising in December 2015, no Hong Kong bank has adjusted its prime lending rate, since funds are readily available to them, even as competitive pressures are increasing. The last time banks in Hong Kong adjusted interest rates was in 2008. These were downward moves at a time when the US Fed slashed its interest rates to record lows.

"At the moment there is abundant liquidity in Hong Kong's banking system, but as the interest rate differential widens between the Hong Kong dollar and the US dollar we expect capital outflows to increase," Chan said.

Capital outflows would lead to tighter liquidity, and this would put pressure on banks to raise interest rates.

However, Chan said liquidity was not the only factor affecting mortgage rates."The cost of capital and funding also affects banks' decisions to set their mortgage rates, and a number of Hong Kong banks chose to raise their mortgage rates last week in advance of the Federal Reserve's decision," he said.

〈Global Times, June 16, 2017〉The number of ultra high-net-worth individuals (UHNWI) in Asia will continue to surge in the next decade and purchasing housing is a main component of their investments, according to Nicholas Holt, Asia-Pacific Head of Research at Knight Frank, an independent global property consultancy based in London.

“These individuals allocate a lot of their assets to property. In Asia, about 80 percent of their wealth goes to property,”said Holt at the company’s Beijing office.

“It can be a home or a second home for investment as a residential home or even commercial.”UHNWI refers to people with a net worth of $30 million or more, excluding their principal residence. The recently released Wealth Report 2017 by Knight Frank, which tracks the growing superrich population in 125 cities across 89 countries, suggests that China ranks 2nd in the world in terms of absolute increase in UHNWI population over the next 10 years, and the UHNWI living in Chinese mainland own three homes on average.

“Property is the safest investment,”said Holt. The Knight Frank City Wealth Index uses four critical measures, including current wealth, investment, connectivity and future wealth, to identify the cities that matter to the wealthy.

Results found that London and New York are the two top locations drawing the wealthy. Asian cities including Hong Kong, Beijing and Shanghai are taking on an increasing leading role in the city wealth index.

Apart from property, luxury consumption near the top of the investment list for UHNWI, according to the Wealth Report 2017, are automobiles, wine, coins, jewelry and artwork.

Meanwhile, the Chinese real estate developers are accelerating their business expansion in overseas property markets.

Holt said that 80 percent of the total cross-border investment into residential lands within the Asia-Pacific region has been from Hong Kong and Chinese mainland developers.

“Hong Kong is investing into Chinese mainland; and Chinese mainland is investing into Malaysia, Singapore, India and other regions,” he explained.

The active purchases are featured by a recent high-profile bid, in which a pair of Chinese developers – a joint venture between Logan Properties and Nanshan Group – offered $718 million for a residential site in Singapore, according to a Bloomberg report on May 18.

Apart from Singapore, Australia and Malaysia are among the hot spots the Chinese developers prefer to invest in with the overseas real estate market, Holt said.

“About 36.5 percent of overseas investment by Chinese developers has gone into Australia, but that is mainly focused on Sydney and Melbourne,” he said.

Based on the company’s global research, Holt pointed out that Nairobi in Kenya, which has already been a popular slot for Western developers and UHNWI, is a city with investment potential that has been underestimated by the Chinese.

〈Macau Times, June 15, 2017〉The Macau Monetary Authority (AMCM) said in a statement that it raised its base rate of the discount window yesterday by 25 basis points to 1.5 percent.

It is the fourth time for Macau’s quasi-central bank has raised the policy rate since December 2015. As the pataca is linked to the Hong Kong dollar, the movements of policy rates in Hong Kong and Macau should be basically consistent in order to maintain the effective operation of the linked exchange rate system between the two cities, the statement said.

As a result, the statement said, the AMCM raised the base rate by 25 basis points, following its counterpart in Hong Kong. “Meanwhile, since the Hong Kong dollar is linked to the US dollar under Hong Kong’s linked exchange rate system, the rate hike action of Hong Kong was attributed to the decision of the US Federal Reserve raising the Fed funds rate by 25 basis points” early yesterday (Macau time), the AMCM statement said.

Interest rates of Macau banks on the retail level, including loan and deposit rates, will be based on the fund costs in the money market and their commercial decisions, the statement said. “Macau’s loan and deposit rates remain relatively stable at the current stage.

“Nevertheless, if the uptrend of interest rates persists, uplifting loan and deposit interest rates by Macau banks cannot be ruled out in the foreseeable future, the statement said. “Alongside the up-cycle of interest rates, Macau banks should continue to manage and control the potential risks associated with interest-rate adjustments,” the statement said.

According to the statement, the local government “would like to remind the public to be alert to the potentially enlarging volatility of the real estate market, assess prudentially their financial positions, such as the extra burden on their mortgage payments due to rising interest rates, act within their means for property purchases, and manage the risks well.”

〈The Standard, June 14, 2017〉Hong Kong stocks fell to a three-week low yesterday, led by the property sector, as borrowing costs in the city looked set to rise after a US interest rate hike. The Hang Seng Index fell 1.2 percent, to 25,565, while the China Enterprises Index lost 1.6 percent, its biggest one- day percentage loss in six weeks, amid worries that China's economic recovering is losing steam, to 10,346 points.

Most sectors fell, with the decline led by the real estate sector, which is vulnerable to higher borrowing costs.

Shares of New World Development (0017) fell 2.3 percent, Hang Lung Properties (0101) retreated two percent and Sun Hung Kai Properties (0016) was down 1.7 percent.

The financial sector was also under pressure yesterday with HSBC (0005) down one percent and Standard Chartered (2888) also down 1.6 percent.

Shares of apparel company Global Brands Group (0787) slumped 21 percent, and the share price of retailer Esprit Holdings (0330) was down 13.3 percent.

Chordio Chan Siu-ping, general manager and head of investment management at Bank of China (Hong Kong), said there was not a very strong reaction towards the Federal Reserve's rate hike decision and there was not significant volatility with Hong Kong dollars. He believes there will not be a massive capital outflow from Hong Kong and Asia following the rate hike, adding that capital is still abundant in the Hong Kong market and there is no pressure among banks to raise interest rates.