This article is from Snowball's Snowball Sister Amy's Cross-Border Financial Circle. The original title was "the world has changed, the vicissitudes of life! The changes of the constituent stocks of the Hang Seng Index over the past 50 years, looking at the history of Hong Kong's industrial development.

Today, together with Sister Amy, we will follow the changes of the Hang Seng Index over the past 50 years to take a look at the early stock market and economic context of Hong Kong.

Yesterday"the world has changed and the vicissitudes of life have changed! The changes of constituent stocks of Hang Seng Index over the past 50 years, looking at the History of Securities and Industry in Hong Kong (part I)From the establishment of the HKEx in 1914 to the 1970s, today we are talking about the 1980s to date.

eighties

In the 1980s, Hong Kong's industry was transferred to the Chinese mainland, and the development of the service industry was transformed. Real estate, finance and the service industry became the three pillars of Hong Kong.

Service industry

There are two events that are particularly important to the development of Hong Kong in the 1980sOne is China's reform and opening up in 1978.. With the reform and opening up in 1978, China began to attract some manufacturers and transferred some production bases to the Pearl River Delta for low cost-effectiveness, but it did not become a fashion at that time. AndThe real change in climate is another important event-- the Sino-British negotiations from 1982 to 1984.。

The Sino-British talks will determine the future ownership and development of Hong Kong.During the Sino-British negotiations, people were in a panic, and many manufacturers became more eager for quick success and quick benefits. instead of making long-term high-tech investment, they had to fight for cheap labour so as to achieve cheap production and improve returns. So on the one hand, manufacturers emigrate their families to Canada, the United States and Australia.Why do Chinese people like to emigrate to Canada, the United States and Australia? In fact, the preference of immigrant countries was established during this period.

On the other hand, manufacturers moved their factories from Hong Kong to the Pearl River Delta, which developed in this direction throughout the 1980s. At the same time, this phenomenon also explains why Hong Kong does not extend to the high-end household appliances and semiconductors of the industrial chain like Japan. The reason is that manufacturers are eager for quick success and quick profit. After the inward relocation of the facilities, because of the low cost, they only focus on the production of cheap manufactured goods and are unwilling to invest in high-tech mobile phones and other industries. There is no shortage of technology in Hong Kong. in the early years, semiconductors and circuit boards were produced, as well as radios and stereos. At that time, Hong Kong already had a sufficient foundation for development, but due to the short-sightedness of businessmen, this golden opportunity was missed. After the industrial transfer, the local people of Hong Kong turned to the service industry. This includes retail, catering, entertainment and so on.

estate

A small and wonderful part of Hong Kong's real estate industry appeared in the 1970s and early 1980s.As a result of the Sino-British negotiations in 1982, there was a wave of emigration in Hong Kong, and real estate fell to a low ebb.. During the Sino-British negotiations, some British companies withdrew their investments from Hong Kong one after another. Some local property developers in Hong Kong with political wisdom, such as Li Ka-shing, are expanding against the trend.

Throughout the 1980s, CK Asset completed more than 60 property development projects. Apart from Whampoa Garden, there are also City Garden, Wo Fu Centre, Ka Wan Hop, Lok Shun Hop, Ruifeng Garden, Jubilee Garden and Belvedere Garden. More than 52500 residential units are provided. With the release of the Sino-British Joint Declaration in 1984, the political situation in Hong Kong was clear and real estate was on the rise again.During the 1980s, the properties developed by CK Asset accounted for about 20% of the entire property market in Hong Kong. Changshi has become a leader in the real estate industry in Hong Kong.

Financial industry

The Hang Seng Index rose rapidly from the late 1970s to 1981, when the Hang Seng Index reached a high of 1810 in 1981. However, the good times did not last long. From 1982 to 1984, as a result of the Sino-British negotiations, the stock market was heavily depressed, falling as low as 680 points, which was also a low of the Hang Seng Index in the 1980s. When China and Britain signed the Joint Declaration in 1984, the political situation in Hong Kong was clear, and foreign capital began to pour into Hong Kong to buy Hong Kong shares. At the end of 1984, the Hang Seng Index rose again to 1000 points, and the upward trend continued until the end of 1986. The Hang Seng Index has risen above 2000 points. The Hong Kong stock market accelerated in 1987, and by October, the Hang Seng Index had risen to 3968. This increase is equivalent to that of the Dow in the United States from 1919 to 1929.

The 1980s was the peak of the development of banking business in Hong Kong.In 1981, there were 123 banks in Hong Kong, including 1301 branches, that is, 1178 banks.Japanese banks were the most active in the 1980s, when the Japanese stock market was strong and Japan became an exporter of funds. Japanese banks have set up offices in Hong Kong to provide services as offshore centres.The loans made by Japanese banks are signed in Hong Kong, and Hong Kong has become the Booking Center of these loans. The advantage is that these loans are completed in Hong Kong, but the users do not have to be in Hong Kong, so Japanese banks do not have to pay profits tax in Hong Kong. At the same time, they do not have to pay Japanese profits tax, thus becoming the overseas income of Japanese banks. Foreign currency deposits accounted for 14% of Hong Kong's total deposits in 1980. By 1988, the proportion of foreign currency deposits had increased to 59%. Foreign currency deposits were more than local currency deposits, and the location of the offshore center was unshakable.From 1980 to 1988, syndicated loans in Hong Kong reached US $35.7 billion, second only to London, New York and Paris, and more than Tokyo and Singapore.

The securities industry in Hong Kong changed a lot in the 1980s.The important event isThe British financial sector underwent a major reform in 1986, known as Big Bang, which allowed foreign banks to acquire British brokerage firms and financial institutions.Citibank acquired Vegor Securities, UBS acquired Philip & Drew,Security Pacific, and acquired Hoare Govett, then the largest UK brokerage firm. Therefore, in the late 1980s, these 10-odd British brokerage firms with branches in Hong Kong were gradually swallowed up by British, European and American banks or investment banks.

Changes in constituent stocks of the Hang Seng Index

When we look at the changes in the constituent stocks of the Hang Seng Index in the late 1970s and 1980s, the most obvious change is that the newly added constituent stocks in the 1980s are almost all real estate stocks. Jiahong International, Eagle King, Hang Lung, Henderson, Hopewell and Hysan are all real estate stocks. Lixin and Mandarin have both hotels and real estate. Financial stocks also added a bank of Bank of East Asia.

And the withdrawal of constituent stocks also have obvious characteristics of Orient overseas, Hui Tak Fung Shipping Industry, Yau Ma Tei, Huaguang Shipping Industry 4 are shipping stocks. This also proves thatWith the industrial changes in Hong Kong in the 1980s and the transfer of light industry to the mainland, the position of the global port and shipping center has declined accordingly, while the real estate and financial industries flourished in the 1980s. Hong Kong has gradually turned to an industrial structure with finance, real estate and services as the three pillars.

90's

In the 1990s, Hong Kong's real estate industry stood out alone, the financial industry integrated with the mainland, and the entertainment media industry was a flash in the pan.

Real estate

From the early 1990s to the financial crisis in Southeast Asia in 1997, the real estate industry entered a golden age.In the six years from 1991 to 1997, house prices quadrupled. At the peak in June 1997, the price of general mid-range housing reached about 80, 000 yuan per square meter, and the price of luxury housing was as high as 200000 yuan per square meter. Real estate developers are making a lot of money.

Take Changshi as an example, four large housing estates were mainly developed in the 1990s, with a total investment of 18.5 billion yuan and a total supply of 40, 000 residential units. The conservative estimate of Jiahu Villa, the largest of these, will bring the company a profit of 13 billion.

Financial industry

In the 1990s, Hong Kong's banking industry, local banks accompanied by the rapid growth of the real estate industry.However, as an international offshore financial centre, the status of Hong Kong's banking industry has declined. The main reason is thatAfter Japan's local real estate and stock market bubbles burst in 1990, Japanese banks had a lot of bad debts and were thirsty for funds, so they could no longer become providers of funds.Eventually, Japanese-funded offshore center services were gradually withdrawn from Hong Kong.In the foreign exchange market, the foreign exchange market of Hong Kong was larger than that of Singapore in the 1980s, but it was surpassed in 1990.Singapore uses low tax rates to attract international banks to trade foreign exchange in Singapore.

Some new features appeared in the securities industry in the 1990s.The most important of these isChinese companies from Chinese mainland have the best part of listing in Hong Kong.. Prior to this, local state-owned enterprises such as Yuexiu, Yuehai and Shougang also listed through shell buying in Hong Kong, but instead of political appointments, they wanted to raise funds to invest in the motherland. In 1993, the Hong Kong Government decided to open up Hong Kong's stock market as much as possible to allow state-owned enterprises to list in Hong Kong as mainland-registered companies, known as H-shares, or to list companies registered in Hong Kong directly in Hong Kong.Red chip”。

In 1993, Tsing Tao Beer, the first state-owned enterprise, came to Hong Kong to list in H shares, which caused a stir because this brand of beer was very popular in Hong Kong at that time. In addition to Tsing Tao Beer, there were later Shanghai Petrochemical, Yizheng Chemical Fiber, Zhenhai Oil Refining and Maanshan Iron and Steel. Another wave appeared in 1996 and 1997. At that time, the state-owned enterprises listed on the stock market were: Beijing Control, Shanghai, Yanhua, Angang, Datang Power Generation, Huaneng International, Jiangsu Ninghu, China Eastern Airlines Corp Ltd, China Southern Airlines Company, Jiang Copper, Shenzhen Expressway, Zhejiang Shanghai, Hangzhou Ningbo and China Mobile. Towards the year 2000, larger state-owned enterprises such as Petrochina Company Limited, China Unicom and China Petroleum & Chemical Corp also listed in Hong Kong one after another.

H shares and red chips listed in Hong KongOn the one hand, it increases the income of the securities industry, on the other hand, it is also the most important aspect.It has changed the structure of Hong Kong's securities market so that the Hong Kong market can fully share the fruits of the development of the mainland, which is also an important reason why Hong Kong can maintain an international financial center.

Media industry

The development of the media industry in the 1990s can be said to be a rare bright spot in Hong Kong's service industry. From 1994 to 1995, Oriental newspaper and both were selected into the Hang Seng Index. However, with the retrogression of performance in 1997 and 1998, the two newspapers were removed from the constituent stocks for less than five years. The Television broadcasts Limited has been in the Hang Seng Index for 19 years since it joined the Hang Seng Index in 1985 and was not removed until 2004. It can be regarded as a leader in media stocks.

Changes in constituent stocks of the Hang Seng Index

Let's look at the late 1980s and the late 1990s.The most obvious change in the Hang Seng Index is the increase in the number of Chinese mainland. Citic Pacific, China Resources Entrepreneurship, China Telecom Corporation and Shanghai Industries entered the Hang Seng Index. The five listed companies of the British-funded Jardine system-Jardine Holdings, Jardine Strategy, Dairy International, Man Va Hotel and Land, withdrew from Hong Kong and listed in Singapore because of political changes in 1997, all of which were excluded.

The second change is thatWith the rise of the telecommunications industry, China Telecom Corporation and SmarTone Telecom entered the index. Throughout the 1990s, real estate and banks, as the main body of the Hang Seng Index, have hardly changed.

After 2000

After the year 2000, Hong Kong's economy is basically not good enough.The biggest change in the Hang Seng Index is the addition of many mainland companies.There are basically no outstanding industries and companies for local enterprises in Hong Kong.

Conclusion theory

The history of Hong Kong's economic development can be divided into four stages:

Before the Korean War in the 1950s, Hong Kong usedEntrepot trade is dominant.Trade, port logistics, warehousing and hotels are its main economic pillars.

2. The period from the Korean War to the 1960s was a period of industrial take-off in Hong Kong, during which Hong Kong successfullyTransform into processing tradeThe main pillars of the economy are light industries such as textiles, clothing, watches and clocks, toys, wigs and plastic flowers.

3. From the 1970s to the late 1990s, Hong Kong entered a period of rapid urbanization.Real estate, finance and services are the main pillars of Hong Kong。

4. From the late 1990s to the present, it has been very difficult to support the growth of Hong Kong by relying on real estate and tourism. Hong Kong needs to reshape its own position.Proactively connect Chinese mainland with the global economy.The HKEx has set a good example in this respect.

Finally, I sincerely wish Hong Kong, the Pearl of the Orient, a return to its former elegant demeanour.

(editor: Wang Mengyan)