Top Hong Kong Stock? Umbrella Maker


Hong Kong is having another umbrella moment.

First there was the umbrella movement last year when young people took to the streets to defy China’s plan for watered-down democracy. Now there is an umbrella maker that’s stunned the stock market.

“It is a bit crazy. The fundamentals do not justify the current stock price.”

— Hannah Li, strategist at UOB-Kay Hian

Jicheng Umbrella Holdings Ltd.1027.HK +13.29% is an unlikely title holder of Hong Kong’s best performing newly listed stock in 2015. At its initial public offering back in February, it received little interest with bankers pricing it at the low end of an indicated price range. But once it got trading it went through the roof, and at one stage last month it rose nearly 20-fold from its IPO price and is still up 14-fold as of Friday.

“It is a bit crazy,” said Hannah Li, strategist at UOB-Kay Hian. “The fundamentals do not justify the current stock price.”

The rally means the company is worth 9.1 billion Hong Kong dollars ($1.17 billion), and is trading at a price-earnings ratio of 100, far higher than the 11.2 for the average of stocks in the Hang Seng index.

[Read the full text here, at WSJ – China Real Time Report]

Exactly why investors are so keen on an umbrella maker to give it a sky high valuation is puzzling, while its shareholder structure looks even more bizarre. The Securities and Futures Commission, Hong Kong’s market regulator, issued a warning Thursday to investors that just 17 shareholders hold over 99% of the company’s shares (the major shareholder owns 75% of the company). This means a buyer could easily push the stock up substantially as there’s so few owners of the shares.

Ms. Li said while Jicheng’s business is in good shape, the small number of shares held by public shareholders is a major reason for the rally. Read the rest of this entry »

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A Model to Bring Back Taiwan Into Beijing’s Fold Turns Into a Negative Example

HONG KONG — Andrew Browne writes: For modern Chinese leaders, no mission carries more patriotic importance than realizing the dream of “One China.”

“As prospects for political accommodation between China and Taiwan evaporate, expect tensions to increase.”

Deng Xiaoping saw Hong Kong as an opportunity to win over hearts and minds in Taiwan, the greatest and most elusive part of that vision. Freewheeling Hong Kong was the opportunity to show a model that could work: “One Country, Two Systems.”

Photo: Pundit Planet Hong Kong Bureau

Photo: Pundit Planet Hong Kong Bureau

If China could take over and preserve Hong Kong’s existing capitalist system and way of life, the thinking went, it would demonstrate to Taiwan “compatriots” that their future, too, would be secure under Communist rule.

President Xi Jinping is now watching as prospects of Taiwan returning to the embrace of the motherland recede into a far distant future, as parts of Hong Kong remain paralyzed by pro-democracy protests.

“By Beijing’s own calculation, Hong Kong was the key to bringing Taiwan back into the fold.”

Although it isn’t apparent from the rhetoric coming out of Beijing, one of the most significant outcomes of the rallies in Hong Kong over the past weeks has been to further diminish whatever was left of the hope that China could achieve the reunification of Taiwan and its 23 million people.

Photo: Pundit Planet Hong Kong Bureau

Photo: Pundit Planet Hong Kong Bureau

The implications of this may not be felt immediately, but they could be far-reaching over time. Behind Beijing’s stated wish for “peaceful reunification” is the threat to use force if necessary. That keeps the Taiwan Strait as a potential flash point for conflict between China and the U.S., Taiwan’s main arms supplier and international supporter.

“Now, Mr. Xi confronts simultaneous challenges from two sets of students in Taiwan and Hong Kong…”

As prospects for political accommodation between China and Taiwan evaporate, expect tensions to increase.

By Beijing’s own calculation, Hong Kong was the key to bringing Taiwan back into the fold.

Photo: Pundit Planet Hong Kong Bureau

Photo: Pundit Planet Hong Kong Bureau

Its return was relatively straightforward: It fell back into China’s arms because a British lease over the main part of its territory expired in 1997. Taiwan, a self-governing island, would have to be persuaded through powerful example.

“Worse, the groups are finding common cause: Leaders of the Sunflower Movement have been sharing street tactics and negotiating skills with those running the Umbrella Revolution in Hong Kong.”

For a while it looked promising, but for many Taiwanese, Hong Kong is now a negative example—proof that China won’t tolerate genuine democracy, can’t be trusted to deliver on its promises of autonomy and lacks the flexibility needed to manage a sophisticated population and their political aspirations.

Taiwan has even more to lose since it is an independent country in all but name, with an already-flourishing democracy.

Photo: Pundit Planet Hong Kong Bureau

Photo: Pundit Planet Hong Kong Bureau

“Hong Kong Today, Taiwan Tomorrow,” has become a slogan of the student-led Sunflower Movement in Taiwan, which engulfed Taipei in protests earlier this year against a proposed free-trade agreement with Beijing. Opponents argue the arrangement would make the island dangerously vulnerable to economic coercion from the mainland. Read the rest of this entry »

Hong Kong Protests Hit 2.3 Million in Tweets


Maya Pope-Chappell reports: There have been more than 2.3 million tweets related to the protests in Hong Kong since Sept. 27, according to Twitter data.

Though talk of the protests is still abuzz on the social network, the number of tweets has waned since Sunday’s crackdown by police, which saw more than 700 tweets per minute about the protests.

[More: How the protests unfolded on Twitter]

As photos of protesters using umbrellas to protect themselves against pepper spray and tear gas spread, the movement took on the name “Umbrella Revolution,” which also began appearing as a hashtag on Twitter and in Western media. Read the rest of this entry »

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