Britain’s Chinese puzzle
THE most remarkable aspect of the six-month uprising in Hong Kong is the restraint that is being shown by Beijing.
A regime not known for its gentle touch with a million Uighurs, Muslims and British consulate workers has allowed the ferment to continue in the hope, presumably, that it will calm.
An indication of why the region is useful to China is the choice of the Hong Kong Stock Exchange for a $12.9bn (£10bn) fundraising for ecommerce giant Alibaba.
The offer has been welcomed by private investors, who have seen the region’s freebooting capitalism hamstrung by disorder.
As confidence shattered, Hong Kong tumbled into recession and luxury retailer Burberry has shuttered some stores.
Britain has huge business ties to Hong Kong. The two biggest hongs, or trading empires, Swire (owners of Cathay Pacific) and Jardine Matheson are deeply involved in both Hong Kong and mainland China.
Financial groups including HSBC, Standard Chartered and Prudential are big players, as are City law firms. So aside from any debate about the territory’s Basic Law and the UK’s responsibility as the former colonial power, there is a national interest in what happens there. There have been warnings against oppression by former foreign secretary Jeremy Hunt. But the British Government response has been limp.
The UK is engaged in a delicate balancing act. China is the main financier behind the £20bn Hinkley Point nuclear power plant in Somerset. Britain is a founder member of China-based Asian Infrastructure Investment Bank and former HSBC chairman Sir Douglas Flint is a Treasury envoy to China’s Belt And Road development strategy.
Chinese firm Jingye has emerged as saviour of British Steel at Scunthorpe, with an eye on supplying the track for HS2.
Astrazeneca has become the most pervasive Western pharma company in China. And were it not for RBS and Lloyds running for cover, Fosun might have ploughed hundreds of millions of pounds into the rescue of Thomas Cook.
The London Stock Exchange favoured a relationship with Shanghai over being swallowed by Hong Kong. And there is much more to come, especially if Britain tilts towards the Pacific after Brexit.
Contrast this with the US, which plainly views the disorder in Hong Kong as a chance to stigmatise President Xi Jinping’s regime. The US Congress will vote this week on a bill that would require America to review Hong Kong’s special status on an annual basis, and to sanction mainland officials blamed for human rights abuses.
One fears the UK lacks similar resolve to stand up for the protesters in the light of the commercial interests at stake.
Slow coaches
THE scandal at Neil Woodford’s investment empire has cast a cloud over the integrity of the whole fund management industry.
Those who manage the funds and those who sell them, notably the investing platform Hargreaves Lansdown (HL), have come under intense scrutiny. Almost a quarter of HL clients were exposed to Woodford funds and nobody shouted foul until it was too late.
The regulator, the Financial Conduct
Authority, is probing what went wrong and it would be nice to think that HL, which is a rich outfit with fat profit margins and wealthy founders, will eventually have to pay compensation.
The wheels of justice move painfully slowly at the FCA. Latest example is the decision to fine Henderson £1.9m for continuing to charge 4,700 investors fees for active management of funds when they were de facto trackers.
The abuse only affected the smaller investor, because fees to the professionals had been cut. The offences date back to 2011.
That is a ridiculously long wait for financial justice to be delivered.
Plane food
FOOD service group SSP may be laden with debt – part of its private equity heritage – but it is becoming a travel champion.
Expansion at airports in North America and continental Europe is driving up sales, and it now has Australia in its sights, having bought 14 outlets in Perth and Melbourne.
Together with WHSmith it looks to be making Britain a bit of a powerhouse in airport locations.
Same-store sales at SSP have increased, and profits have zipped up to £200m.
Struggling High Street gastro-brands should be so lucky.