The SFC, to the relief of fellow tenants, is reportedly set to move out of Chater House in June 2013. We ask why the police and their masters have been so reluctant to enforce the Noise Control Ordinance against protestors, and what tenants and passers by at their reported new home can look forward to. The landlord, controlled by HK's biggest tycoon, has 7 listed companies and 2 REITs in the group, all ultimately regulated by the SFC, so there is a risk of future perceived conflicts of interest which it would have been better to avoid.

SFC's neighbours will celebrate
22 August 2011

Local press reports suggest that the Securities and Futures Commission is moving on from Chater House, owned by Hongkong Land Holdings Ltd (HKL). Apparently the landlord proposed a renewal rent of HK$180 per sq ft per month, which is even higher than in the nearby International Finance Centre. The high rent demand may be a subtle message to get out - fellow tenants of the grade-A building are probably less than happy with the commotion that the SFC has attracted to the building's entrance from disgruntled purchasers of various financial products (or possibly from rent-a-mobs funded by others with a grudge against the regulator), including loud banging of drums, megaphones and posters demonizing the SFC's directors. The SFC found it necessary to have its own elevator guarded by men in berets at the ground floor, in the elevator and on the 8th floor landing.

Here's a video of said protests that we took in Dec-2010:

All of this begs the question of whether the right balance is being struck between the right of people to protest and the right of other people not to have their peace disturbed. It is not as if this was just a passing 1-day march - these protests went on for months, and the noise at street level made it impossible to conduct a conversation as one walked by. The Vulgari jewellery shop in the building (seen at the end of the video) must have been delighted at their choice of location. Other protests have been held outside various banks, or in some cases, inside them.

In our view, the police should have drawn the line at megaphones, drums and gongs for disturbing the peace, but allowed the peaceful displays of posters and placards in public areas as long as they were not obstructing the public right of way, on the understanding that unattended material would be removed. Instead, Hong Kong's finest stood back -  apparently their masters were terrified of being accused of interfering with free speech in HK (unless of course, that free speech takes place near a visiting mainland leader). The same goes for the near-permanent Falun Gong protestors with their noise pollution on Battery Path near the Court of Semi-Final Appeal. Section 5 of the Noise Control Ordinance makes it an offence to play a musical instrument, loudspeaker or megaphone in a public place which is a source of annoyance to any person, with a fine of up to HK$10,000.

Anyway, the net result of all this, say reports, is that the SFC is moving to the Cheung Kong Center, which, despite its name, is owned by Hutchison Whampoa Ltd (HWL, 0013) and not by its largest shareholder, Cheung Kong (Holdings) Ltd (CKH, 0001). The building is fondly known as "The Box the Bank of China Came In" for its somewhat boring-but-practical shape and its location across the road from the iconic tower with the rugby posts on the roof. CKH is controlled by tycoon Li Ka-shing, who has his office (with swimming pool with retractable roof) on the top floor. We wonder whether loud protests will be as tolerated outside this building as they have been outside Chater House. Fellow tenants include his second-favourite bank Goldman Sachs (just below the big man) and Bloomberg. The double glazing will keep the noise out, but the public seeking to enjoy the open space and nearby garden might not be so lucky. Incidentally, that space was created when the colonial government sold the old Beaconsfield House and a car park to HWL, which owned the Hilton Hotel where the tower now stands, without a tender, for HK$3.02bn in 1996. That's where the plot ratio came from to allow the 62-storey 1.26m gross sq ft building.

Of course, moving into a property owned by a HK-listed company does create the potential for perceived conflicts of interests - particularly if they find themselves negotiating rents or renewal at the same time as some future regulatory action against one of the 7 listed companies and 2 REITs in the group (or their directors) is pending. That risk never existed with Chater House, because the Jardine-controlled landlord shifted its primary listing from HK to London in 1992 and then delisted altogether in 1995. Today the shares mostly trade in Singapore. The SFC was in Edinburgh Tower, another HKL asset, until Jun-2003, when it moved into the new Chater House for 10 years starting 1-Jul-2003.

So it appears that the SFC will be moving at the end of Jun-2013. No word yet on which floors they are taking, or who is making room for them by moving out of the Cheung Kong Center, but at a reported 100,000 sq ft, they need about 5 floors. Don't all rush at once! Depending on the altitude, they could be taking supervision to a whole new level.

©, 2011

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