Changing China
Giant on the move
from Global Investing:
Home is where the heartache is…
On a recent trip home to Singapore, I was startled to learn just how much housing prices in the city-state have risen in my absence.
A cousin said he had recently paid over S$600,000 -- about US$465,000 -- for a yet-to-be-built 99-year-lease flat. Such numbers are hardly out of place in any major metropolis but this was for a state-subsidised three-bedroom apartment.
Soaring housing prices have fueled popular discontent -- little wonder as median monthly household incomes have stagnated at around S$5,000.
For its part, the government -- which houses 80 percent of people on the densely populated island -- insists that public housing prices are shaped by 'market forces', pointing to a raft of financing schemes to help first-time buyers.
What's less contentious is that Singapore is only part of a regional real estate boom that has driven property values by as much as 70 percent since the start of 2009 in cities such as Sydney, Hong Kong and Beijing.
Like Singapore, the government in China is acting to cool house prices that have skyrocketed in recent years out of the reach of a large swathe of its middle classes.
Chief among Beijing's policy arsenal is social housing. The government is stepping up construction of public housing, targeting a rollout 36 million affordable homes from now until 2015. At the same time, clampdown on property speculation has also helped ease Chinese housing prices.
from George Chen:
Winners and losers as Hong Kong rents scale new heights
By George Chen The opinions expressed are the author’s own.
When you walk around Hong Kong's Central commercial and business district these days, you may notice a number of stores are holding "removal sales", which means they can no longer remain in the same location. The reason? In most cases, just blame soaring rents.
Many analysts have forecast declines in residential and commercial property prices in Hong Kong for next year, although at a stable pace rather than a sharp drop. This may be true for some suburban areas where purchase options are more plentiful than those in downtown areas, but until that happens, prices are likely to keep rising, at least for the rest of the year.
A couple of years ago, mobile phone industry leader Nokia took a moderately sized space on Russell Road in Causeway Bay just opposite Times Square, one of the busiest shopping districts in Asia, for its flagship store in Hong Kong. Local media said the store used to be one of Nokia's busiest in Asia, thanks to mainland Chinese travelers. But the good old days are going to end soon.
The Hong Kong Economic Times reported on October 27 that British luxury brand Burberry had signed a new lease with the owner of a site currently occupied by Nokia. Burberry is said to have agreed to pay HK $6.5 million (about US $836,600) per month for the two-floor 5,200 square foot space,versus the HK $1.8 million that Nokia is paying.
When the news came out, the reaction from the market was quite naturally, "Wow". One reader on Sina Weibo, China's most popular micro-blogging service, wondered: "How many coats and bags will Burberry need to sell to cover the monthly rent?" In Hong Kong, a coat or bag at Burberry usually sells for about HK $10,000-15,000. You can do your own calculations.
Thanks, mahadragon! Couldn’t tell you what’s up with the bag pricing.
How cheap is cheap?
How cheap is cheap?
That was the most frequently asked question among bankers and private equity experts attending a recent forum in Hong Kong, as they swapped strategies about how to pick up stressed assets during the financial crisis.
When Lehman Brothers collapsed a year ago, everyone shared the same view: The global financial crisis was just beginning.
But one year on, many global markets have bounced off the bottom and some have recovered quite nicely. The Shanghai benchmark index, for instance, has gained more than 50 percent since the beginning of this year. As a result, views among bankers and top investment strategists about ongoing risks to the business outlook have started to diverge.
“Valuation is still a big threat,” said Michael Kim, a former senior Carlyle executive who founded MBK Partners after leaving the U.S. buyout giant.
“If a W-shaped recovery is going to happen, I think it will be a tremendous buying opportunity,” said Kim, referring to the possibility of a “second dip” market correction.
Andy Xie, former chief Asia economist at Morgan Stanley who earned his reputation in the financial industry as one of the most bearish analysts in Asia, forecast that a “second dip” in China’s market could occur next year.
Dear Editor,
Well done by way of writing it.
These new,interesting words were created by business schools,writers and economists.
As long as it suits their aspirations,needs and achieved their goals in some extents,then they started going for some other new,attracting words for consolidations,sudden static stage and for further market expansions.
Now a days, it has become customary to say that,recession is over,financial institutions were learned from their back fired results etc.,
Time to buy assets and immovable properties at cheaper denominations and for further selling,profits in future economic growing maps.
Actually speaking, that is not happening at present.
Slight recovery in real estate,consumer durables,automobiles and houses for building,rent,and for purchases.
The word !Cheap!is a very sweet word for borrowers and for sellers.
Whereas, prices are going up in all sectors.
Notably,among food grains,power,video player, systems,educational tools prices are increasing day by day.But, income generations are still in snail pace.
Good,humorous article on economic point of view.
from Commentaries:
A “Wynning” strategy of betting on VIPs
Top-tier casino operator Wynn has always bet on VIP gamblers. Now it is adopting the same approach with its stock market flotation. Wynn is trying to trump half a dozen recent poor Hong Kong market debuts by shunning fickle retail investors and handpicking money managers who are likely to stay the distance. It remains to be seen whether this strategy can help justify its valuation premium.
Most Hong Kong retail investors sell their shares on the first day of trading for a quick profit. By putting 90 percent of the shares in the hands of institutional buyers, Wynn is aiming to avoid the hit when its shares start trading on Friday.
That's probably why the stock has not fallen in grey market trading, even though it was priced at HK$10.08, at the top end of the HK$8.52-$10.08 range.
Wynn has specifically obtained a waiver from the Hong Kong stock market to prevent retail investors from holding more than 30 percent of the total shares offered. But this effort turned out to be unnecessary, as private investors are simply not interested.
Retail demand for Wynn Macau is so weak that small investors are only taking 10 percent of the offering. It appears that Asian high rollers are more interested in gambling in Macau's casinos than investing in their stocks. Many have been burned in the past by the stocks' high volatility.
Investors are also deterred by the rich valuation. Wynn Macau has valued itself at around 16 times forecast 2010 cashflow, much higher than the 7.5 times enjoyed by Macau gambling tycoon Stanley Ho's SJM Holdings.
That is not to say Wynn does not deserve some premium. First, it has always been an investor favourite in the U.S., with a stable institutional investor base. Money managers hold as much as 60 percent of Nasdaq-listed Wynn Resorts. SJM, in comparison, has 1.4 percent institutional ownership.
from Commentaries:
China might keep the weakest bank all to itself
Faced with a backlash against foreign investors, Beijing may be tempted to offer shares in the last of its big four banks to a domestic audience.
That decision may reflect China's new found confidence in the wake of the credit crisis. But it also means Chinese investors will retain full responsibility for the country's weakest bank.
The Agricultural Bank of China might end up just listing in Shanghai without any endorsement from foreign institutions, bankers close to the deal say. The bank claims it is still keeping its options open.
But if AgBank pursues this path, it would be in sharp contrast to the privatisation of China's three other large banks, all of which attracted foreign strategic investors before listing in both Hong Kong and Shanghai.
There are three explanations for this change of direction. First, China has become a lot more confident in its banks, which have weathered the financial storm better than their foreign counterparts.
This means it has less need for foreign banks to provide a seal of approval before launching a public offering. China's Social Security fund is expected to be AgBank's only strategic investor, though China Life also stands a good chance of participating, bankers say.
AgBank is probably not happy with the arrangement, as its chairman has said it wanted to have foreign strategic investors and failure to attract them will be regarded as a loss of face. But the post-credit crunch list of qualified foreign investors with deep pockets and rural banking expertise is very short.
I think there is another factor in play here. When China wooed foreign investors into its other state owned banks it limited investment to 19.9% of equity but still expected the foreign partners to show it how to extend lines of credit to rural areas to facilitate more balanced development in accordance with China’s 11th 5yr plan.
That didn’t happen probably because the foreign partners discovered after signing commitments that basic market information needed to develop suitable products and generate profits from the rural areas simply doesn’t exist and the cost and hassle involved in collecting it would be astronomical. Instead the foreign investors pushed China’s banks towards wealth managment services for the rich in 1st tier cities where they could make easier short term profits.
The Chinese government are disillousioned with the results of foreign investment in Chinese banks and typically can’t lose face by admititng that part of the problem lay with them. So they retaliate by shutting out foreign partners from the Agricultural Bank.
In the long run it doesn’t matter very much because there are several regional players in China who want to go national such as Shanghai Pudong Development Bank (recently renamed SPD) and China Merchant’s Bank. These are far less hemmed in by government restrictions and have a far more customer focused approach than the traditional big four and in my view will provide far better opportunities for foreign investment in due course.
Hong Kong for the weekend
Many Asia bankers and dealmakers are based in Hong Kong but nowadays many of them only stay in the territory for weekends. So where are they during the rest of the week? China, of course.
With deal flow suddenly picking up, it’s getting difficult to fix lunch or dinner appointments with bankers in Hong Kong during the work week, because they spend more time in Beijing, Shanghai and other mainland cities to have food or drinks with the potential China clients. Last week, one Hong Kong-based private equity dealmaker canceled an appointment in the former British colony at the last minute, saying he had to remain in Beijing to wait for a Chinese entrepreneur to sign a deal. In an apology email, he said: “To be honest, Hong Kong to me is purely like a weekend destination these days.” Another friend who works as a private equity investor once joked he and many others are merely “so-called Hong Kong-based” workers.
The fact is, more and more “Hong Kong-based” financial professionals have started to print double addresses and telephone numbers — listing Hong Kong and either Shanghai or Beijing contact details — on their name cards. Hong Kong used to be a focal point in Asia for opportunities in property, telecom, retail and financial sectors, but the epicenter has clearly moved to mainland China in recent years due to the surge in opportunities and cheaper valuations there. “There are no deals in Hong Kong now. It’s just the so-called Asia headquarters for many banks. The fact is, almost everybody is travelling,” said a financial industry friend. “Hong Kong is still the financial centre without a doubt, but it remains as the financial centre because of China,” he added. For many years, Hong Kong called itself “Asia’s World City” to promote its advantage in international trade, but some bloggers have begun to joke in online postings that Hong Kong is now becoming “Just Another Chinese City”. Hong Kong’s low tax rate is a key reason why many bankers spend five days a week in China but still want to be officially “based” in Hong Kong. If Shanghai were to allow low tax rates for foreigners, that might quickly change. Indeed, airlines serving Hong Kong, including Cathay Pacific and Dragon Airlines, must be happy to see the current trend continue — shuttling those executives to work in the mainland and back to Hong Kong for the weekends.
But Hong Kong taxi drivers have started to complain and feel nervous about the rise of Shanghai and Beijing. Twice I have been asked by drivers something to this effect: “So, you are from Shanghai? Then why do you come to Hong Kong to work? Shanghai is the future. People will soon forget Hong Kong.”
My answer? ”Don’t top leaders in Beijing always say ‘Hong Kong’s tomorrow will be better’?”
Photo Caption: Skyline view of Hong Kong island. Photo by George Chen
To some degree, this news is right. However, it looks like a story more than a reality la. Actually, HK is much more international than Beijing and Shanghai, by the observations from the airport only. As a Chinese, i believe HK, SH and other cities of China will be better and better along with the ongoing development of China economy entity. One point is that China govn is able to deal with its domestic issues, such as the corruption, national problems and imbalance between regions. So……Nothing is impossible.
From Canada, looking back
I first visited China in June 1997. It was eight years after the Tiananmen crackdown, weeks before the Hong Kong Handover back to China marking the end of British rule, and over a decade before the 2008 Summer Olympics. It was a family trip — my parents were looking forward to a college reunion with classmates they hadn’t seen in decades and I had just finished my second year of university. I was looking forward to finally seeing the place I’d heard so much about.
Born and raised in Canada, I grew up listening to stories of the past — lessons in history, humanity, tragedy and survival. And like many children of immigrant families, there is a constant search for a balance and a place between the different worlds that shape our identity.
(Caption: Neon lights from skyscraper and 1997 Handover signs cast a glow over Hong Kong’s Victoria Harbour and the extension of the Hong Kong Convention and Exhibition Centre (R, foreground) in this long exposure zoom photograph. Picture taken June 21, 1997. REUTERS/Dylan Martinez)
Over the years I’ve witnessed a dramatic change in my parents’ attitude toward China. For them, the changes in China since they left — over 45 years ago for my father and 35 years ago for my mother — have been beyond anything they could have imagined in their lifetime.
Born just before Japan invaded China in 1937, my parents were children during the Sino-Japanese War and teenagers when Mao Zedong founded the People’s Republic of China in 1949.
Over the next 25 years, the dramatic upheavals, failures and deaths from the Great Leap Forward and the Cultural Revolution spared no one.
In the spring of 1952, my grandfather was falsely accused of corruption and was executed about a month later. He was posthumously cleared and declared a victim of the anti-corruption movement at the time.
The biggest piece of hardware on earth is Tiananmen Square and the Chinese government has it ; the biggest piece of software on earth is human mind and we Chinese citizens have it. Software shall overrun hardware, no matter what.
Dialect fun
There is a common myth perpetrated about China — that everyone speaks “Chinese”.
There is in fact no single “Chinese” language.
There is an official language, Mandarin, taught at schools and used on the airwaves, yet even the government admits that only about half the country’s 1.3 billion population speak it fluently.
But there are hundreds, if not thousands, of other Chinese languages spoken in the country. The government calls them dialects, but linguistically the likes of Cantonese, Hokkien and Shanghainese are as distinct and mutually unintelligable as French, Spanish, German and English.
Linguists consider them separate languages, though many others are genuinely dialects. Mandarin has been promoted as a single unifying tongue by the Communists, and the Nationalists before them, as otherwise somebody from Guangzhou would find it impossible to speak to somebody from Beijing or Shanghai.
That makes total sense. But Chinese “dialects” today are increasingly marginalised, which is, I think, a great loss for Chinese people and their centuries-old culture, both in China and abroad.
First and foremost, to Ben Blanchard, I would like to commend you on a well thought out and informative article. I plan on posting a link to this article on Myspace for my friends to read.
To many of the ignorant commenters I\’ve read from above, I think it is deplorable how very uninformed people have been lambasting this writer. I am ethnically Chinese but raised in the United States. My family\’s dialect is DioJiu (also spelled commonly known as TeoChew and ChiuJau), which is part of the Min(Minnan)subgroup of dialects. I speak English fluently as I\’ve resided in the U.S. since the age of 5 months, but also speak fluent DioJiu, learned a smidgen of Spanish from friends, smidgen of French in high school, and went to Chinese language school to learn Mandarin and write in hanzi (Chinese character script) although I am not at all fluent in Mandarin, I can understand it when spoken to me better than I can reply. Speaking from experience, what Blanchard said is absolutely true. Linguistically, the languages of China were united to use the same writing system because the government devised that it would unite the country and allow people to communicate. China is large and this occured when its kingdoms were united into what is relatively the territory of modern China. People were encouraged to learn Mandarin-later forced even-to speak to one another but could also communicate by writing. In ancient times, people were not educated in schools but learned information passed down orally. Not everyone could write, least of all the poor peasants. This was possible because at the time, not all languages of China likely had their own writing system. Chinese characters are not phonetically read but are ideograms, depicting an idea rather than a sound. Spoken tongues sharing the same writing system are defined as being the same language, whereas a dialect is defined as a variety of a language sharing a writing system but differing in speech. So you can see why Chinese cannot be defined as different languages although they are. This is why Chinese is considered one language. However, linguists do acknowledge that were it not for the singular writing system, China would indeed be considered to have many native languages. This is because most Chinese cannot understand each other while speaking different dialects. However, as noted in a comment, Chinese youth would have no difficulty passing notes in class, because all writing is written the same. In some dialects, spoken idioms and grammar are different when written because they must be converted to the standardized Mandarin version. Some colloquialisms have no translation in other dialects. It is true that people can sometimes understand other dialects because they can guess at the meanings of some words, but this is only true of those dialects from the same region of the country. Unless using Mandarin, a northern Chinese would not understand a southern Chinese by speaking for example. Two southern Chinese speaking different dialects could passably communicate. They could all communicate by writing however.
Beijing shopping surprises
I love to shop – I’m not afraid to admit it. And I passionately believe you can never have too many T-shirts, shoes or bags (and that you should never underestimate the power of a good moisturiser either).
One of the great joys of living in China, and especially in Beijing, is the shopping.
Sure, it’s not as sophisticated as Hong Kong or as off-beat as Taipei, and very few places in Asia can trump Bangkok, but China’s smokey capital has its charms when it comes to a bit of retail therapy.
So here is a personal list of my favourite top 5 shopping destinations in Beijing, in reverse order to keep everyone in suspense.
5) Spin. Pottery’s not sexy, right? Wrong. The master craftmen (and women) behind this store sure know how to whip up a storm with the clay. Simple, clean and understated is the order of the day. And it’s not too expensive. Word on the street is a certain well-kown European fashion designer liked the shop so much he snapped up 20,000 sets of plates during a winter swirl through the city.
4) The cashmere sweater place. Nobody really seems to know what it’s called, but it’s quite well located near the new Dengshikou subway stop. Simply take in a jumper, hat or other top you want copied, pick a colour, and they will produce a copy for you in softest cashmere. It’s very adictive. “I can’t wear anything that’s not cashmere these days,” another cashmere junkie remarked to me recently. And it’s quite understandable. Not cheap, but then luxury never is.
3) This recommendation isn’t one shop, but the part of Beijing’s famous Panjiayuan, or antique market, where they sell old books. I can spend hours here, picking out hidden little gems printed in China’s Communist heyday. This includes glossy hardback coffee table books, sometimes with English text, on China’s provinces. The two books I’m most proud of finding, and have given me the most pleasure, are a book on the remote and rather mysterious province of Qinghai, and another entitled “New China Builds”, full of the brutalist and minimalist architecture that marked the 1950s, 1960s and 1970s.
Plastered T shirts is brilliant, really deserves number 1, everytime i go they have great new designs and other fun stuff, I think i might own more than the writer does. Only problem is I’ve never got to meet this guy Dominic, he’s never been in the shop when i’ve been there, however is ladies that man the shop are great caracters.
