Opinion

George Chen

Is China exporting a dotcom bubble?

George Chen
Apr 21, 2011 08:28 UTC

youku

By George Chen
The opinions expressed are the author’s own.

“Will you marry me, Nasdaq?” that may be the message Jiayuan.com is keen to send to the Nasdaq and potential investors.

Jiayuan.com, an online dating service founded by a student of the Journalism School of Fudan University in 2003 and whose name means “a good destiny of love” in Chinese, today applied for an initial public offering in the United States. It’s the latest in a series of Chinese Internet technology and social networking companies to apply for a U.S. listing in recent months.

Now, I’m not a chartered financial analyst or Internet industry expert, so I just want to look at this wave of IPOs from a more personal perspective. First of all, I do believe there’s a reason behind the current rush of listing applications; it’s not mere coincidence!

The financial crisis changed the global landscape for many sectors, not only the financial industry but also many consumer-driven services. Wall Street investors have long been worried about the performance of traditional media companies such as the New York Times Co, while Google and Apple are already too expensive for some.

Youku.com and Renren.com, clones of YouTube and Facebook in China, naturally sound like a more comfortable investment solution to many Western investors who may have missed the previous gold rush for Google and Apple and are looking for something similar with a cheaper price tag.

High net worth individuals: China’s new export

George Chen
Apr 20, 2011 09:57 UTC

LV

By George Chen
The opinions expressed are the author’s own.

From Paris to New York, London to Hong Kong, when you see more Chinese people shopping in high-end retail outlets, you know they are indeed growing rich. What if I tell you that many rich Chinese are actually planning to become non-Chinese in the foreseeable future?

Merchants Bank, China’s No.1 credit card issuer, which is also widely considered the best retail bank in the world’s No.2 economy, has teamed up with consultancy firm Bain & Company for a study of China’s high net worth individuals. In addition to some fancy numbers, I’m amused and surprised by one of the latest findings – about 60 percent of China’s high net worth individuals have emigrated or are seriously thinking of doing so.

Who are they? Most of them are entrepreneurs with at least 100 million yuan (about US15.3 million) to invest, according to the joint survey.

Income gap matters

George Chen
Apr 12, 2011 03:07 UTC

PaulsonBy George Chen
The opinions expressed are the author’s own.

We’ve been talking about accelerating inflation for some time, and it has resulted in another tough issue for the government to address — with much care — the growing income gap between rich and poor.

Income disparities in some affluent cities such as Hong Kong have apparently reached a critical point, with frequent protests in the former British colony. Last weekend, a group of the so-called post-1980 generation of young people went to Central to protest the wealth imbalance. They even attempted to break into Cheung Kong Centre before the police arrived and stopped them.

They viewed Cheung Kong Centre, home to many large banks like Barclays Plc and BNP Paribas, as well as the offices of Li Ka-shing, Asia’s richest and also the city’s most powerful man, as a symbol of the imbalance. I was told by friends in mainland China that a similar anti-rich atmosphere is also brewing fast in big cities like Beijing and Shanghai, where relatively poorer people are complaining about inflation, especially rising property prices and rents.

From noodles to gasoline, inflation is not just an issue in China

George Chen
Apr 8, 2011 05:42 UTC

noodlesBy George Chen
The opinions expressed are the author’s own.

These days I’m increasingly convinced that inflation is not just a China issue but a global problem and one that is becoming worse.

Yesterday when I posted a photo of rice noodles on my Chinese Twitter-like mini blogging account, I didn’t expect it would lead to quite such an active online discussion. I paid HK$16 (about US$2) for the bowl of noodles in the canteen of the University of Hong Kong (HKU). My friends from Geneva to New York to Shanghai “complained” that the price was way too cheap.

Well, the University Canteen is intended for students and I am indeed a HKU post-graduate student, part-time.

Where China traders meet

George Chen
Apr 4, 2011 03:09 UTC

IPOBy George Chen
The opinions expressed are the author’s own.

My readers on Reuters.com know me as a columnist who regularly writes about China and I also run a Chinese-language column, Mr. Shangkong, about Shanghai where I was born and Hong Kong where I call home now, on Reuters.com.cn, the China portal.

In fact, my day job is not just about writing columns but more about Trading China, a young and energetic Thomson Reuters project. It’s a public holiday in China today and the markets are relatively quiet, so I’d like to share something different in today’s column as I want to talk a bit about Trading China, which comprises Carmen, Joseph and myself.

Since receiving a call about a year ago from my boss North Asia Editor Phil Smith, aka “chart guru” in the Trading China community, I was quickly sent to Dubai to learn about and launch Trading China. Dubai is the place where Sex And The City 2, the movie, was not allowed to be filmed and our sister project Trading Middle East was launched smoothly.

Firing and hiring

George Chen
Apr 1, 2011 02:39 UTC

GS

By George Chen
The opinions expressed are the author’s own.

Today is April Fools’ Day, a rare opportunity to make fun of friends and colleagues with pranks and practical jokes. Ever ahead of the game, Goldman Sachs produced an amusing mistake yesterday making it look more than a little foolish, as many investors and rival bankers may attest.

The bank’s Asia structured products unit said yesterday that trading in four index warrants it issued in relation to the Nikkei 225 was abruptly suspended in Hong Kong because of errors in supplemental listing documents. The formula of “cash settlement amount per board lot” for the warrants was misstated, Goldman Sachs Structured Products (Asia) Ltd said in a filing with the Hong Kong stock exchange. Click here to read the Goldman Sachs statement (PDF).

Before being suspended, the warrants surged by between 130 and 1,077 percent on Thursday morning, which local media reported could cost the bank millions of dollars.

The next 48 hours

George Chen
Mar 29, 2011 03:32 UTC

By George Chen
The opinions expressed are the author’s own.

What might you do in the next 48 hours in China? A number of things — how about rushing to nearby supermarkets to stock up on soap and shampoo if you are a price-sensitive consumer?

No kidding!

Retail prices for those products are set to rise sharply in China from next month. At least two industry leaders — Procter & Gamble and Unilever — were reported by Chinese media to have decided to lift detergent and soap prices by up to 15 percent next month.

State television on Monday showed images of empty store shelves in some cities as residents raced to hoard P&G and Unilever products before the price rises went into effect.

Post-earthquake concept stocks

George Chen
Mar 24, 2011 04:01 UTC

By George Chen
The opinions expressed are the author’s own.

Have you had breakfast or lunch yet? In Hong Kong, I’m guessing few people are choosing sushi these days.

Many restaurants in Hong Kong, even Japanese restaurants, have been quick to distance themselves from the crisis in Japan since the earthquake as concerns about food safety are growing in many Asia-Pacific cities, including Beijing, Seoul and Sydney.

The Japanese authorities announced this week that they would widen a ban on exports of a wide range of food products from areas surrounding the earthquake-hit Fukushima Daiichi nuclear power station. In fact, even before the official ban, the health authorities in China, Hong Kong and South Korea were already monitoring all such imports from Japan.

Dairy and property: How Japan’s crisis is affecting China

George Chen
Mar 17, 2011 09:06 UTC
Chinese moms While the rest of the world is trying to help Japan deal with the aftermath of its earthquake and tsunami, some parents in China and Hong Kong are on a single-minded quest to buy up as much made-in-Japan baby formula as they can. On my way to work on Monday morning, I saw a long queue of anxious-looking people in front of a grocery store. Over the following three days, the queue got longer and longer and more and more anxious. They were all after the same thing – baby formula from Japan. This is simply because some Chinese parents believe their babies are accustomed to drinking Japanese milk and they are concerned that radiation may affect the quality of exports from Japan in coming months Hong Kong media reported that retail prices for some Japanese baby formula have risen more than 30 percent this week. At present, the market price is about HK$250 (US$32) for a standard container and some retailers are reportedly limiting purchases to six per person to avoid angering latecomers. In this case, parents called on relatives, even elderly grandparents, to join the queue on their behalf (which works if you have many relatives and friends who are willing to help). Of course, Hong Kong parents are not alone in this concern. A fast-growing number of parents in mainland China are on a similar quest and they don’t mind paying HK$2,000 (US$256) for a round-trip ticket from major mainland cities to Hong Kong to buy made-in-Japan products. People in Hong Kong, may soon face a bigger disappointment as a result of Japan’s earthquake – the possibility of property prices rising even further and faster. Local property agents say they have noticed some landlords want to increase rents, especially in downtown areas such as Admiralty and the Mid-levels, which are within minutes of Hong Kong’s Central financial and business district, where many international banks have their regional headquarters. Global financial firms including Blackstone, BNP Paribas and Royal Bank of Scotland are relocating foreign staff, especially senior executives, from Tokyo to neighboring bases to avoid the possibility of radiation exposure. These executive typically head to Singapore, Hong Kong and Beijing, with most apparently happier to choose Hong Kong, if not Singapore. Rents in Hong Kong are already a social problem, making the city one of the most expensive places in the world in which to live. The government has been trying to cool prices since late last year. With more rich but timorous bankers being relocating to Hong Kong from Tokyo and so far no indication of when they might return to Japan, the outlook for the property market in Hong Kong looks bullish. I’m not saying this isn’t a positive  trend, but given what is happening to the lives of ordinary people in Hong Kong and China, the crisis in Japan is becoming a crisis for Asia, if not the rest of the world. If the nuclear crisis cannot be contained and people lose confidence in crisis management and post-crisis protection, a chain reaction may be seen in many areas beyond dairy and property prices.

Japan

By George Chen
The opinions expressed are the author’s own.

While the rest of the world is trying to help Japan deal with the aftermath of its earthquake and tsunami, some parents in China and Hong Kong are on a single-minded quest to buy up as much made-in-Japan baby formula as they can.

On my way to work on Monday morning, I saw a long queue of anxious-looking people in front of a grocery store. Over the following three days, the queue got longer and longer and more and more anxious.

Japan, in danger and opportunity

George Chen
Mar 14, 2011 03:41 UTC

earthquake

By George Chen
The opinions expressed are the author’s own.

You might consider yourself very smart, powerful or perhaps wealthy, but after watching live coverage on TV of the devastating earthquake and tsunami in Japan on Friday afternoon, what was your reaction? We’re all nobodies in the face of the forces of nature.

On Friday afternoon before the earthquake, the benchmark Shanghai Composite Index showed unexpected signs of recovery but the rebound was unfortunately short-lived. Immediately following the news alert about Japan’s worst earthquake in decades, stock markets from Hong Kong to Shanghai all retreated quickly.

This was a very natural reaction to such a massive natural disaster. Almost the same reaction was seen after the earthquake in China’s Sichuan province in May 2008. When investors feel uncertain and then the market sentiment becomes anxious, they sell. Fair enough – who really is in the mood to trade after seeing such a horrible event?

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