Hong Kong's new, patriots-only governance to prioritise housing issues - Lam (updated)

Sun Hung Kai Properties

21/09/2021 05:37

(Adds analyst comments)
    By Jessie Pang and Clare Jim
    HONG KONG, Sept 21 (Reuters) - Solving Hong Kong's shortage
of housing and increasing land supply will be key priorities for
authorities under the new, "patriots only" political system
imposed by Beijing, Chief Executive Carrie Lam said on Tuesday. 
    Lam's remarks come after Reuters reported last week that
Chinese officials have told Hong Kong's powerful tycoons in
closed meetings this year that they should pour resources and
influence into backing Beijing's interests and helping solve the
city's housing shortage.  urn:newsml:reuters.com:*:nL4N2Q1146
    On Sunday, Hong Kong held its first vote since China
overhauled the former British colony's electoral system to
ensure that only "patriots" run the city. The government
considers a patriot to be a person who pledges loyalty to Hong
Kong and China.  urn:newsml:reuters.com:*:nL1N2QL00O
    The changes dramatically reduced the tycoons' influence in
the 1,500-strong committee that selects Hong Kong's China-backed
chief executive, although groups close to their business
interests retain a presence.
    Asked about the Reuters report at her weekly new conference,
Lam told reporters she could not confirm or comment on
"rumours."
    "I can only say the central government cares about social
issues very much," Lam said.
    "After improving the election system, government efficiency
can increase. Once efficiency is raised, of course it will want
to solve people's problems," she said, namely border reopening
in the near future and housing issues longer term.
    Shares of Hong Kong's four major developers, CK Asset
 1113.HK , Henderson Land Development  0012.HK , Sun Hung Kai
Properties (SHKP)  0016.HK  and New World Development  0017.HK ,
dropped between 9% and 12% on Monday, with analysts citing
market worries about potential regulation curbing their growth.
The market was more stable on Tuesday.
    Raymond Cheng, head of Hong Kong research at CGS-CIMB
Securities, said investors were concerned that Beijing would ask
Hong Kong to impose measures such as price caps or home purchase
restrictions akin to recent rules introduced in mainland China. 
     But "adopting those China housing policies in Hong Kong is
unlikely," Cheng said.     
    Citi analysts said that developers' shares were oversold on
the back of the report but that "without any near-term actions
to remove policy risk concerns ... the sector may not see any
sustainable rebounds."
    The Reuters report made no mention of any potential
regulatory intervention emerging from several meetings this year
between Chinese officials and developers.
    Lam said the main factor behind the housing shortage was
land supply and that the government could use existing
legislation to take back land for public housing.
    "I feel today (the developers) are very willing to cooperate
with the Hong Kong government's policies," Lam said. "I hope
this kind of public-private-partnership to solve social issues,
after perfecting the electoral system, will yield more results."
    Big property firms have long exerted outsized power in Hong
Kong, helping choose its leaders, shaping government policies,
and reaping the benefits of a land auction system that kept
supply tight and property prices among the world's highest.
    Beijing has partly blamed the conglomerates' "monopolistic
behaviour" for the city's housing woes, which it believes have
played a big role in stirring discontent with the government and
fuel mass pro-democracy protests in 2019.

 (Reporting by Jessie Pang and Clare Jim. Editing by Gerry
Doyle)
 ((marius.zaharia@thomsonreuters.com; +852 2843 6358;))