Monthly Archives: February 2010

Cover of February, 2010

Leave a comment

Filed under at Cover


 1. Cover story

Will the real estate market hold after State Eleven

2. Economy outlook

Commercial operation begins of the western segment of the Second West-East Gas Pipeline

3. Financial strategy

The four spearheads in Chinese stock exchange

4. Legal spotlight

The current status of patent registration system in Hong Kong

5. Point of interest

Expo 2010 Shanghai China May 1 to Oct 31

6. Portrait

From secretary of president to president

7. Remark from editor

Is Tiger year a good year for stock market

Leave a comment

Filed under Contents

Will the real estate market hold after State Eleven

The subprime crisis in the US ignited a global housing market crash since the end of 2007. China was not immune to this catastrophic domino effect. However, unlike many other countries, Chinese real estate market was less affected. It is quite complicated as to how the Chinese managed to achieve this. One of the many reasons is that most of the banks in China are still national banks. They do not sell their housing loans to other entities and are more susceptible to government interventions and persuasion.

With that in mind, there is no denying that the real estate market in China is still a roller coaster ride for the past two years. This phenomenon is evidenced by the rise and fall of stock prices of E-Housing Holdings (NYSE), a top Chinese residential brokerage firm that is publicly traded in the U.S. Its stock value has increased 136% over the past 12 months and yet slipped 32% from the high in last August recently. Government forces definitely play the visible hand in this market.

On the 7th of January, 2010, the office of China’s State Council issued a notice regarding how to promote the stable and healthy development of real estate market. The notice brought eleven points to the attention of all the subordinate agencies and local governments as follows.

  1. Speed up the construction of middle to low priced medium to small housing units.
  2. Increase the supply of residential lands and the efficiency of their utilization.
  3. Rigorously execute discriminating lending interest rates for second housing loans.
  4. Continue the implementation of differential rates for property tax.
  5. Tighten risk management of housing loans.
  6. Continue to regulate the market order of real estate trading.
  7. Further strengthen land supply management and real estate sales management.
  8. Strengthen market surveillance.
  9. Strive to solve the hosing problems of 15.4 million low income families by 2012.
  10.  The central government will increase the subsidy to affordable housing in the mid-west, improve the processes of subsidizing housing and ensure the efficacy of the funding appropriated by the central government.
  11.  The provincial and county governments are responsible for stabilizing the housing market and solving the housing problems of low income families.

There are a lot of debates about whether there is a bubble in China’s real estate market. Bubble or not, Chinese government has been very explicit in their intention of regulating the market order for real estate trading all along. The State Eleven is just another example and its effect remains to be seen.

Leave a comment

Filed under Cover story

Commercial operation begins of the western segment of the Second West-East Gas Pipeline

On January 20, the Jingbian cross-link station started pumping natural gas to the Shaan-Jing Gas Pipelines, marking the commercial operation of the western segment of the Second West-East Gas Pipeline.

Heavy snowfall and low temperature since the beginning of the year led to a dramatic increase of gas consumption in Beijing, which was up to 53 million cubic meters on January 4, much higher than routine volume. China National Petroleum Corporation (CNPC) promptly took pre-arranged countermeasures to ensure gas supply to Beijing. Gas from Central Asia via the Second West-East Gas Pipeline will provide additional guarantee for gas supplies to Beijing and the surrounding regions.

On December 14 and 31, 2009, the Central Asia-China Gas Pipeline and the western segment of the Second West-East Gas Pipeline were put into operation respectively.

On January 20, 2010, after a 20-day preparation for pressure boosting, the 2,745.9 kilometers long western segment of the Second West-East Gas Pipeline was ready for gas delivery and began to distribute gas to the Second Shaan-Jing Gas Pipeline.

Zhongwei-Jingbian branch is a cross-link line of the West-East Gas Pipelines and Shaan-Jing Gas Pipelines. As an important hub of gas pipelines in China, Jingbian station dispatches imported Central Asian gas to Eastern China through the First West-East Gas Pipeline, and to Beijing and surrounding regions through the Shaan-Jing Gas Pipelines.

Urumqi Municipality of Xinjiang Uygur Autonomous Region is the first city to enjoy the benefit of Central Asian gas. The city has totally eased off gas shortage since the western segment became operational 20 days ago.

Currently, gas production on the right bank of Amu Darya in Turkmenistan is well under way. The daily input volume at the initial station at Horgos is 6.6 million cubic meters, and the pumping pressure at Jingbian station is 5.16 Mpa. The Central Asian gas is expected to arrive Beijing in three days. Meanwhile, construction of the eastern segment of the pipeline is putting forward smoothly, with 1,560 kilometers already been wielded.

The Second West-East Gas Pipeline is a single project that draws the heaviest investment in the history of the country. The pipeline, with a design capacity of 30 billion cubic meters per annum, will travel 8,653 kilometers through 15 provinces and regions from Xinjiang’s Horgos to Shanghai in the east, and to the south reaches at Guangzhou and Hong Kong. It is the first large scale pipeline project which introduces overseas gas resources.

The First West-East Gas Pipeline, 3,843 kilometers in length, runs from Tarim in Xinjiang to Shanghai with its gas supply covering Central and Eastern China. It became operational on October 1, 2004, capable to transport 12 billion cubic meters annually.

The Second Shaan-Jing Gas Pipeline became operational in July 2005. It runs from Jingbian in Shaanxi Province to Beijing via Shanxi and Hebei, with a total length of 935.4 kilometers and an annual deliverability of 12 billion cubic meters.


Leave a comment

Filed under Economy outlook

The four spearheads in Chinese stock exchange

Shanghai Stock Exchange

The Shanghai Stock Exchange (the Shanghai SE) was founded on Nov. 26th, 1990, and in operation on Dec.19th the same year. It is a membership institution directly governed by the China Securities Regulatory Commission (CSRC). The Shanghai SE bases its development on the principle of “legislation, supervision, self-regulation and standardization” to create a transparent, open, safe and efficient marketplace. The SSE endeavors to realize a variety of functions: providing marketplace and facilities for securities trading; formulating business rules; accepting and arranging listings; organizing and monitoring securities trading; regulating members and listed companies; managing and disseminating market information.

After several years’ operation, the Shanghai SE has become the most preeminent stock market in Mainland China in terms of number of listed companies, number of shares listed, total market value, tradable market value, securities turnover in value, stock turnover in value and the T-bond turnover in value. At the end of 2008, SSE boasted 1,184 listed securities and 864 listed companies, with a combined market capitalization of RMB 9,725.191 billion and a total of 79.7287 million trading accounts. In 2008, listed companies raised RMB 89.291 billion on SSE through IPO and new share placement. A large number of companies from key industries, infrastructure and high-tech sectors have not only raised capital, but also improved their operation mechanism through listing on Shanghai stock market.

Entering the new century, Shanghai SE is faced with great opportunities as well as challenges to further boost the market construction and regulation. Combining the cutting-edge hardware facilities, favorable policy conditions in Pudong and exemplary role of Shanghai economy, Shanghai SE is fully committed to the goal of State-owned industrial enterprises reform and developing Shanghai into an international financial center with great confidence.

Shenzhen Stock Exchange

The Shenzhen Stock Exchange (the Shenzhen SE) is a mutualized national stock exchange under the CSRC and provides a venue for securities trading. A broad spectrum of market participants, including 540 listed companies, 35 million registered investors and 177 exchange members, create the market. Here buying and selling orders are matched in a fair, open and orderly market, through an automated system to create the best possible prices based on price-time priority.

Since its creation in 1990, the Shenzhen SE has blossomed into a market of great competitive edges in the country, with a market capitalization around RMB 1 trillion (US$ 122 billion). On a daily basis, around 600,000 deals, valued US$ 807 million, trade on the SSE.

China securities market is undergoing fundamental changes. The implementation of the new Securities Law, Company Law, self-innovation strategy as well as the development of non-tradable share reform embodies enormous opportunities to the market. Adhering to the principle of “Regulation, Innovation, Cultivation and Service”, the Shenzhen SE will continue to maintain its focus on developing the Small and Medium Enterprises Board, while seeking for a tier market.

Hong Kong Exchanges and Clearing Limited

In his 1999 Budget Speech, Hong Kong’s Financial Secretary announced comprehensive market reform of the stock and futures markets. The reforms were designed to increase competitiveness and meet the challenges of an increasingly globalised market.

Under the reform, The Stock Exchange of Hong Kong Limited (SEHK), Hong Kong Futures Exchange Limited (HKFE) demutualised and together with Hong Kong Securities Clearing Company Limited (HKSCC), merged under a single holding company, Hong Kong Exchanges and Clearing Limited (HKEx).

This was achieved by the approval of the Schemes of Arrangements of SEHK and HKFE at their respective general meetings on 27 September 1999, which were then approved by the Court on 11 October 1999.  The merger of the three institutions took operational effect on 6 March 2000, and HKEx listed itself on SEHK by introduction on 27 June 2000.

Reports of securities trading in Hong Kong date back to the mid-19th century. However, the first formal market, the Association of Stockbrokers in Hong Kong, was not established until 1891. The Association was re-named the Hong Kong Stock Exchange in 1914.

A second exchange, the Hong Kong Stockbrokers’ Association was incorporated in 1921. The two exchanges merged to form the Hong Kong Stock Exchange in 1947 and re-establish the stock market after the Second World War.

Rapid growth of the Hong Kong economy led to the establishment of three other exchanges – the Far East Exchange in 1969; the Kam Ngan Stock Exchange in 1971; and the Kowloon Stock Exchange in 1972.

Pressure to strengthen market regulation and to unify the four exchanges led to the incorporation of SEHK, the Stock Exchange of Hong Kong Limited in 1980. The four exchanges ceased business on 27 March 1986 and the new exchange commenced trading through a computer-assisted system on 2 April 1986. Prior to the completion of the merger with HKFE in March 2000, the unified stock exchange had 570 participant organizations.

Established in 1976, the Hong Kong Commodity Exchange (the predecessor of Hong Kong Futures Exchange Limited) is a derivatives leader in the Asia-Pacific region.  The main products traded on the commodity exchange were cotton futures, sugar futures, soybean futures and gold futures.  The Hong Kong Commodity Exchange was renamed the Hong Kong Futures Exchange (HKFE) on 7 May 1985.

HKFE launched on 6 May 1986 its flagship product, the HSI Futures, which is still its most popular futures product in HKEx’s derivatives markets today.  HKFE provides efficient and diversified markets for trading futures and options contracts by its more than 160 participant organizations, including many that are affiliated to international financial institutions. The derivatives market under HKEx trades a broad range of products, including equity index, stock and interest rate.

HKEx and its subsidiary companies, HKFE Clearing Corporation Limited and SEHK Options Clearing House Limited operate rigorous risk management system which enables participants and their clients to meet their investment and hedging needs in a liquid and well-regulated market place.

Hong Kong Securities Clearing Company Limited was incorporated in 1989. It created CCASS, the central clearing and settlement system, which started operating in 1992 and became the central counterparty for all CCASS participants.

The clearing operation is based on the immobilization of share certificates in a central depository. Share settlement is on a continuous net settlement basis by electronic book entry to participants’ stock accounts in CCASS. Transactions between CCASS participants are settled on T+2, the second trading day following the transaction.

Taiwan Stock Exchange Corporation

Since its inception in 1961, Taiwan Stock Exchange Corporation (TWSE) has kept pace with the market development and the most up-to-date technologies. TWSE works with the competent authority, Financial Supervisory Commission (FSC), to deregulate and liberalize Taiwan’s stock market, and gears itself up more in line with major international market.

To speed up the liberalization and internationalization of the Taiwan securities market, TWSE has actively reached out to the world in recent years. They have hold promotional tours to the major financial centers in the world and other promising areas such as the Middle East. In addition, TWSE has hold conferences or meetings, at which famous foreign scholars or experts are invited to talk to the local market about current market trends and at the same time inform foreign investors of the continuing liberalization of our stock market.

In order to keep up with the international trend of developing index-related products, TWSE, in association with FTSE, has launched a series of tradable indices in Taiwan: the “TWSE Taiwan 50 Index” on October 29, 2002, “TWSE Taiwan Mid-cap 100 Index” and “TWSE Taiwan Technology Index” on November 29, 2004, “TWSE Taiwan eight industries Index” and “TWSE Taiwan dividend+ Index” on January 15, 2007. TWSE will continue to cooperate with FTSE, in accordance with international standards, to compile more indices to be used as underlying indices of new financial products.


Leave a comment

Filed under Financial strategy

The current status of patent registration system in Hong Kong

According to a written reply by the Secretary for Commerce and Economic Development, Mrs. Rita Lau, to a question by the Hon Wong Ting-kwong at the Legislative Council meeting on December 9, 2009, Hong Kong government have no plan to establish an “original grant patent system” for the time being.

The Patents Ordinance (Cap. 514) of Hong Kong provides for the relevant requirements under the patent registration system in Hong Kong. For the purpose of granting a patent, the Hong Kong Patents Registry will verify the documents and information submitted to ensure that the registration requirements are met. It does not conduct substantive examination, i.e. it does not assess whether the invention is novel, involves an inventive step and is susceptible to industrial applications.

Standard patents obtained in Hong Kong are based on a patent granted by one of three ”designated patent offices”. These “designated patent offices”, which adopt the “original grant patent system”, are the State Intellectual Property Office, the United Kingdom Patent Office and the European Patent Office. The application process involves two stages. At Stage 1, the applicant files a “request to record” in Hong Kong within the prescribed period [1] after the patent application has been published by a “designated patent office”. At Stage 2, after the patent has been granted by the designated patent office, the applicant files a “request for registration and grant” within the prescribed period [2]. The Hong Kong Patents Registry will normally grant the patent within a few months after receiving the relevant certifying document from the “designated patent office”. A standard patent may remain in force for a maximum term of 20 years.

As for a short-term patent, the applicant files his application direct with the Hong Kong Patents Registry without having to go through a “designated patent office”. The applicant will need to submit a search report prepared either by one of the “designated patent offices” or by any International Searching Authority appointed pursuant to Article 16 of the Patent Co-operation Treaty. The Hong Kong Patents Registry will grant the short-term patent after satisfying itself that the information required is fully furnished. Such a process normally takes a few months. A short-term patent may remain in force for a maximum term of eight years.

Before establishing an “original grant patent system”, a Patent Office would need to have a comprehensive technical information databank and a sizable pool of suitably qualified technical personnel. Such prerequisites are essential for the substantive examination of applications covering the main technical fields of inventions, including the capacity to assess whether an invention is patentable (i.e. whether the invention is novel, involves an inventive step and is susceptible to industrial application). The relevant set-up cost is enormous.  Moreover, given the present relatively low volume of patent applications originating from Hong Kong (approximately 1% of the total number of applications received for standard patents), establishing an “original grant patent system” may not be cost-effective.

The patent systems of Singapore and Macao are not “original grant patent systems” either. Singapore has outsourced the substantive examination of patent applications to the Patent Offices of Australia, Austria, Denmark and Hungary while patent applications filed with the Macao Patent Office are entrusted to the State Intellectual Property Office for substantive examination. The relevant patents granted are valid only in the economy where the applications are made.

In Hong Kong, most applicants for patent registration will simultaneously seek patent protection in other economies (including our major trading partners, such as Europe or the Mainland). Not only does the existing patent registration system largely meet the business needs of the applicants, the process leading to registration is relatively straight-forward and inexpensive (entailing a fee of $896 for filing an application).

Note 1: The standard patent application has to be filed in Hong Kong within 6 months after the date of publication of corresponding application in a designated patent office.
Note 2: The request has to be filed in Hong Kong within 6 months after the date of grant of the designated patent by the designated patent office or publication of the request to record in Hong Kong, whichever is later.


Leave a comment

Filed under Legal spotlight

Expo 2010 Shanghai China May 1 to Oct 31

World Expositions are galleries of human inspirations and thoughts. Since 1851 when the Great Exhibition of Industries of All Nations was held in London, the World Expositions have attained increasing prominence as grand events for economic, scientific, technological and cultural exchanges, serving as an important platform for displaying historical experience, exchanging innovative ideas, demonstrating esprit de corps and looking to the future.

With a long civilization, China favors international exchange and loves world peace. China owes its successful bid for the World Exposition in 2010 to the international community’s support for and confidence in its reform and opening-up. The Exposition will be the first registered World Exposition in a developing country, which gives expression to the expectations the world’s people place on China’s future development.

So what will Expo 2010 Shanghai China deliver to the world? There is no doubt the Chinese people will present to the world a successful, splendid and unforgettable exposition.

Expo 2010 Shanghai China will be a great event to explore the full potential of urban life in the 21st century and a significant period in urban evolution. Fifty-five percent of the world population is expected to live in cities by the year 2010. The prospect of future urban life, a subject of global interest, concerns all nations, developed or less developed, and their people. Being the first World Exposition on the theme of city, Exposition 2010 will attract governments and people from across the world, focusing on the theme “Better City, Better Life.” For its 184 days, participants will display urban civilization to the full extent, exchange their experiences of urban development, disseminate advanced notions on cities and explore new approaches to human habitat, lifestyle and working conditions in the new century. They will learn how to create an eco-friendly society and maintain the sustainable development of human beings.

Expo 2010 Shanghai China will center on innovation and interaction. Innovation is the soul, while cultural interaction is an important mission of the World Expositions. In the new era, Expo 2010 Shanghai China will contribute to human-centered development, scientific and technological innovation, cultural diversity and win-win cooperation for a better future, thus composing a melody with the key notes of highlighting innovation and interaction in the new century.

Expo 2010 Shanghai China will also be a grand international gathering. On the one hand, the Expo shall endeavor to attract about 200 nations and international organizations to take part in the exhibition as well as 70 million visitors from home and abroad, ensuring the widest possible participation in the history of the World Expositions. This endeavor will put Expo 2010 Shanghai China in a global perspective, encourage the participation and gain the understanding and support of various countries and peoples, in order to turn Expo 2010 Shanghai China into a happy reunion of people from all over the world.

In addition, Expo 2010 Shanghai China will offer a wonderful opportunity for cross-culture dialogues. Before the conclusion of the Exposition, a “Shanghai Declaration” will be issued. This declaration, hopefully a milestone in the history of the World Expositions, will epitomize the insights to be offered by the participants and embody people’s ideas for future cooperation and development and extensive common aspirations, thereby leaving a rich spiritual legacy of urban development to people throughout the world.

The Chinese Government will go to great lengths to make Expo 2010 Shanghai China a special event that carries on traditions and opens a new vista into the future. Their motto is: “Keeping in mind the next 60 years’ development while preparing for the six months’ Exposition”.


Leave a comment

Filed under Point of interest