Asia-Pacific | Equities

Addressing Key Questions on Hong Kong

_{Posted on Jul 27, 2020}

Amid tensions between US and China, Hong Kong’s (HK) prospects have come under pressure. Citi analysts share their views on key financial and economic questions from investors.

How might HK's role evolve for international finance and for China?

HK remains a key gateway for capital into and out of China.

HK's significance in global equities is unparalleled, with its IPO value ranked number one in 2019 and may keep the spot in 2020.

How is the revocation of “special status” likely to impact HK?

On July 14, President Trump signed the HK Autonomy Act into law and ordered an end to HK’s special status with the US, which would have the following immediate impact - HK to be treated as China in trade with US.

Exports to the US from HK would be treated as from China, subject to higher tariffs and applicable restrictions. But only 7% of HK’s exports went to the US in 2019. Imports from the US would be subject to more restrictions, particularly tech products. But only 4% of HK’s imports come from the US.

HK’s biggest trading partner is Mainland China. Chinese firms prefer to re-export from HK to global destinations because HK has lower business income taxes and it is more cost efficient to book export revenue in HK versus Mainland China. This aspect will not be affected by the removal of “special status”.

No sanctions for now, but if there were, how might financial institutions be affected?

The State Department could review HK's situation every year and make recommendations about sanctions. If sanctions materialize, they are likely to be targeted on individuals and entities, rather than directly on financial institutions, and much less likely on the whole financial system of HK or China.

How might HK's equity market perform amid uncertainties?

Citi analysts expect sectors related to tourism and consumer services to be more sensitive to reopening.

More broadly, HK equities had been more reserved compared to the A-share rally in July, leaving HK valuations still low at just 1.0x P/B and 10.6x P/E.

Capital inflows to HK are strong due to the home-coming of Chinese ADRs amid US-China tensions.

_{By Citi Global Wealth Investments | Mar 18, 2024}

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_{By Citi Global Wealth Investments | Mar 14, 2024}

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After decades of poor economic performance, Japan now sees wage growth, inflation, and avoided a technical recession. Are we finally seeing the light at the end of the tunnel for Japan? This week, our Global Head of FX Strategy analyzes the situation for the Yen and compare the differences in central bank policy between Japan and the US.

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_{By Citi Global Wealth Investments | Mar 7, 2024}

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(MLP’s) - Energy Related MLPs May Exhibit High Volatility. While not historically very volatile, in certain market environments Energy Related MLPS may exhibit high volatility.

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Market Specific Disclosures

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and should seek independent advice before making an investment decision. You should obtain and consider the relevant product terms and conditions and risk disclosure statement, and consider if it’s suitable for your objectives, financial situation or needs before making any investment decision. Investors are advised to obtain independent legal, financial and taxation advice prior to investing. Investments are not deposits, are not protected by the Deposit Protection Scheme in Hong Kong
and are subject to investment risk including the possible loss of the principal amount invested.

This communication does not constitute the distribution of any information in any jurisdiction in which it is unlawful to distribute such information to any person in such jurisdiction.

CHKL does not provide discretionary portfolio management services.

Singapore: This communication is distributed in Singapore by Citibank Singapore Limited (“CSL”) to selected Citigold/Citigold Private Clients. CSL provides no independent research or analysis of the substance or in preparation of this communication. Please contact your Citigold/Citigold Private Client Relationship Manager in CSL if you have any queries on or any matters arising from or in connection with this communication. Investment products are not insured under
the provisions of the Deposit Insurance and Policy Owners’ Protection Schemes Act of Singapore and are not eligible for deposit insurance coverage under the Deposit Insurance Scheme.

This communication is for general information only and should not be relied upon as financial advice. The information herein has no regard to the specific objectives, financial situation and particular needs of any specific person and is not intended to be an exhaustive discussion of the strategies or concepts mentioned herein or tax or legal advice. Any person interested in the strategies or concepts mentioned herein should consult their independent tax, legal, financial or other advisors,
as appropriate. This communication does not constitute the distribution of any information or the making of any offer or solicitation by anyone in any jurisdiction in which such distribution or offer is not authorized or to any person to whom
it is unlawful to distribute such information or make any offer or solicitation.

Before making any investment, each investor must obtain the investment offering materials, which include a description of the risks, fees and expenses and the performance history, if any, which may be considered in connection with making
an investment decision. Interested investors should seek the advice of their financial adviser about the issues discussed herein as appropriate. Should investors choose not to seek such advice, they should carefully consider the risks associated
with the investment and make a determination based upon the investor’s own particular circumstances, that the investment is consistent with the investor’s investment objectives and assess whether the investment product is suitable for
themselves. Although information in this document has been obtained from sources believed to be reliable, CSL does not guarantee its accuracy or completeness and accept no liability for any direct or consequential losses arising from Its use.

CSL does not provide discretionary portfolio management services.

UAE: This document is distributed in UAE by Citibank, N.A. UAE. Citibank N.A. UAE is licensed by UAE Securities and Commodities Authority (“SCA”) to undertake the financial activity as Promoter under license number 602003.

Citibank N.A. UAE is registered with Central Bank of UAE under license numbers BSD/504/83 for Al Wasl Branch Dubai, 13/184/2019 for Mall of the Emirates Branch Dubai, BSD/2819/9 for Sharjah Branch, and BSD/692/83 for Abu Dhabi Branch.

This is not an official statement of Citigroup Inc. and may not reflect all of your investments with or made through Citibank. For an accurate record of your accounts and transactions, please consult your official statement. Before making any investment, each investor must obtain the investment offering materials, which include a description of the risks, fees and expenses and the performance history, if any, which may be considered in connection with making an investment decision. Each investor should carefully consider the risks associated with the investment and make a determination based upon the investor’s own particular circumstances, that the investment is consistent with the investor’s investment objectives.
At any time, Citigroup companies may compensate affiliates and their representatives for providing products and services to clients.

United Kingdom: This document is distributed in the U.K. by Citibank UK Limited and in Jersey by Citibank N.A., Jersey Branch.

Citibank UK Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Our firm’s Financial Services Register number is 805574. Citibank UK Limited
is a company limited by shares registered in England and Wales with registered address at Citigroup Centre, Canada Square, Canary Wharf, London E14 5LB, Companies House Registration No. 11283101.

Citibank N.A., Jersey Branch is regulated by the Jersey Financial Services Commission. Citi International Personal Bank is registered in Jersey as a business name of Citibank N.A. The address of Citibank N.A., Jersey Branch is P.O. Box 104, 38 Esplanade, St Helier, Jersey JE4 8QB. Citibank N.A. is incorporated with limited liability in the USA. Head office: 399 Park Avenue, New York, NY 10043, USA.

DISCLAIMER [+]

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