SEATTLE (MarketWatch) -- The clues are piling up: this is not a good year to be investing based on wishful thinking. I’m not a perma-bear, parsing the fine print, but I can read the writing on the wall about chronic economic crises.
The Federal Deposit Insurance Corp. is planning to beef up its division of resolutions and receiverships, which handles failed banks, by 40% this year. The division currently has 233 employees. Considering that only three banks failed last year, why do they need more examiners?
For now, the FDIC is looking to bring back 25 retired employees with experience in the bank closures of the 1980s and 1990s. No, it’s not just a reunion of hard-nosed accountants who closed banks and savings and loans in notorious Friday night raids and liquidated their assets.
This is a real search for tough, experienced “lone rangers,” who set upon a bank or thrift institution on a Friday to take over as much of the assets as possible and open the following Monday with full assurances for insured depositors and firm answers for uninsured depositors. The latter group will get 100% on their insured deposits, probably 50% on the uninsured portion and “well, we can talk about it, and we’ll send you some more later.”
This week Fed Chairman Ben Bernanke put it bluntly: “There probably will be some bank failures.” Regulators have some real work ahead of them. The FDIC had 76 banks on its problem bank list at Dec. 31, down from 136 problem banks in 2002 and 213 banks in 1990. This past year’s three failures were the first since 2004. Apparently the FDIC expects to have a busy year.
The FDIC’s challenge means you should confine your bank accounts to insured deposits exclusively. Other safe harbors are Treasury-only money-market funds, money funds owned by large institutions (even banks) and maybe short-term Treasury bills.
I am sure that the Securities and Exchange Commission has put a lot of pressure on bank managers of money funds to transfer any questionable securities to their balance sheets from the money funds. Banks don’t have a great reputation for understanding the securities term, “fiduciary responsibility.” I am also sure the SEC has made its expectations clear to bankers who manage mutual funds.
First, David Walker, the Comptroller General of the Government Accountability Office, resigns with five years still left on his term.
Now the FDIC is staffing up. It’s time to rethink your investments
Henderson Land (0012) chairman Lee Shau-kee said the Hang Seng Index will linger between 23,000 and 25,000 points in the first half of the year, experience a torrid summer and then improve by September. Speaking in Beijing yesterday, Lee said the HSI will still be affected by the US subprime debacle in the first six months but will remain "stable." "Plunging to 22,000 points was already more than enough. At the current level of around 24,000 points, the index will slowly climb back. The HSI may rebound to 27,000 this spring and reach 30,000 points this year." But Lee warned the bourse will be very volatile in the summer. "If you have money, you should not invest too aggressively [in the summer]." Lee also expects property prices in Hong Kong to jump 10 percent this year on the back of ample liquidity in the global market. "As Hong Kong citizens have much cash on hand, they may want to improve their living conditions. I believe flat prices will go up 10 percent." But mainland prices will not surge because of austerity measures. Meanwhile, Lee denied he used the mainland identity of his younger brother, Li Zhaonan - or Lee Shau-lam - to invest in A shares of Ping An Insurance (2318). It was reported the younger Lee bought 200 million A shares in Ping An, giving the brothers a paper gain of at least HK$15 billion. "I only have some [H] shares in Ping An," said Lee, and most of the Ping An A shares were held by the family trust. "If you want to know whether the family trust will sell the [A] shares, you need to ask Li Zhaonan."
DALIAN (AFP) - In a drydock at a shipyard in northeast China’s Dalian city, a 300,000-tonne oil tanker is ready for delivery to Maersk, its hull painted in the Danish shipping company’s trademark blue.
Nearby, an offshore drilling platform has been constructed according to precise specifications from US company Noble.
Both are examples of China’s growing success as a shipbuilding nation and its progress towards the goal of becoming number one in the industry by 2015.
“Last year, the order books at Chinese shipyards surpassed those of Japan, to be second only to South Korea,” said Li Cheng, assistant general manager of Dalian Shipbuilding Industry Co.
The company runs the eighth largest shipyard in the world, and last year delivered 32 vessels totalling three million deadweight tonnes.
In terms of new orders, China was actually number one last year, totalling 98.5 million deadweight tonnes, or 42 percent of the global total, according to the Beijing government.
“Chinese shipyards have had their business boosted by the very fast growth of the local economy, which has fuelled demand for container ships and other vessels,” said Li. “If it continues like this, we’ll overtake South Korea.”
Chances are it will indeed continue like this. Dalian shipyard, located in the Gulf of Bohai, has its order books filled right until 2011.
The expansion of the Chinese economy -- leading to strong growth in both exports and imports -- is not the only factor behind this success.
Equally important is the global boom in shipping. Eighty percent of the output of China’s shipyards is exported.
The result is that China’s share of the global market has expanded from 18 percent in 2006 to 23 percent last year, while South Korea and Japan account for roughly 35 percent each, according to research institute Clarkson.
“It’s not impossible that it will eventually take up the leadership position (ahead of South Korea),” said Caroline Huot, general manager of Total Lubmarine for the Asia Pacific.
“It’s got the will, no doubt. There’s a real can-do attitude in China.”
She added the government offers strong support for the shipbuilding industry, investing large amounts of money in new shipyards.
The industry is dominated by two huge state-owned enterprises: China State Shipbuilding Corporation and China Shipbuilding Industry Corporation, the parent of the Dalian company.
But in recent years, it has also seen a large number of new entrants, in the form of smaller shipyards run by local governments or private groups, or set up as joint ventures.
There are now 3,000 of these smaller shipyards, up from just 350 a decade ago.
At the same time, Chinese shipyards have succeeded in building up a good reputation.
“The Chinese companies are very concerned about safety and the environment. They are large and extremely professional enterprises, and they’re just as good as their counterparts in the United States or Norway,” said Huot.
The Dalian shipyard has clients across the globe, from Gear Bulk, 60 percent Norwegian-owned, to Sweden’s Stena AB and customers in Greece and Iran.
To keep up its competitive advantage, the Dalian shipyard now spends heavily on research and development and the continued improvement of the infrastructure.
“We’re still cheap compared with South Korea and Japan, but we have to think about the future and take steps to improve our competitiveness,” said Li.
MARKET TALK:China Shares Down; Regional Falls, Supply Worries
2008/03/03 10:34:00
0234 GMT [Dow Jones] China shares fall on worries over supply pressures, weakness across regional bourses; Shanghai Composite last down 0.5% at 4324.96, with 4200 pegged as next psychological support; Shenzhen Index up 0.3% at 1378.48. "The expiry of lock-up period for shares held by institutional investors this month is pressuring the market," says Zhang Gang at Central China Securities. Various local media report earlier that stock market to face liquidity pressures in March as lock-up periods on CNY400.6 billion worth of shares held by strategic investors, large shareholders for IPOs or share reform due to expire. Financial stocks lead falls partly as investors stay away from sector fearing negative impact extending from U.S. subprime mortgage crisis, Zhang adds; Shanghai Pudong Development Bank (600000.SH) down 2.7% at CNY40.98, China Life Insurance (601628.SH) down 3.2% at CNY37.78.(JSX)
Other emerging economies are producing world-class companies by the dozen. Why aren't the countries of South-East Asia?
IT IS easy to forget, now that China and India are all the rage, that until ten years ago South-East Asia was the world's fastest-developing region, winning the sort of investor attention and breathless column inches that the two new giants now enjoy. The region has, slowly, recovered from the blight of 1997-98. It has recently had several years of strong growth (see chart 1) and its governments' finances have been greatly improved. Even so, after all this time the region's five main economies—Indonesia, Malaysia, the Philippines, Singapore and Thailand—are still notable for the near-absence of companies that could truly be called world-class.
The region has 570m people and had a head start in economic development over much of the rest of Asia. So why does it still have no global consumer brands of the stature of South Korea's Samsung and LG? Where are its rising technology leaders, like Taiwan's AU Optronics and Taiwan Semiconductor? Where are its equivalents of India's world-conquering Tata Steel, Ranbaxy and Wipro? Or China's market-devouring Huawei and Lenovo? Ask an investor in London or New York to name globally respected South-East Asian firms and the answer is unlikely to consist of much more than Singapore Airlines.
In a recent book, “Asian Godfathers”, Joe Studwell, a journalist, examines this failure in stark terms. The region's business scene, he says, remains dominated by old-fashioned, mediocre, sprawling conglomerates, run at the whims of ageing patriarchal owners. These firms' core competence, such as it is, is exploiting their cosy connections with governing elites. Their profits come from rent-seeking: being handed generous state contracts and concessions, or using their sway with officialdom to keep potential competitors out. If they need technology, they buy it from abroad. As a result, Mr Studwell says, the region has “no indigenous, large-scale companies producing world-class products and services.”
Similar things were once said of much of the rest of Asia—and sometimes still are. But somehow other countries' top businesses, even in India, the home of the licence Raj, have escaped this mediocrity trap. Whereas the export-led growth of South Korea and Taiwan comes mainly from indigenous firms making globally competitive goods with their own technology, much of South-East Asia's high-value exports are made by foreign companies. Thailand has built a successful motor industry by attracting multinationals. But it will constantly suffer the risk that these will move to somewhere like China, with lower costs and a bigger home market.
Look under the bonnet of what seems to be a well managed, local industrial firm in South-East Asia, such as Astra, an Indonesian carmaker, and you find that it is assembling Japanese cars under licence and is controlled by a Hong Kong group. Not many have got far beyond serving the home market. A recent study by the Boston Consulting Group (BCG) of the 100 largest multinationals from emerging economies (a category that excludes Singapore) contained only five from the whole region. By contrast there were 13 just from Brazil, which has only a third of South-East Asia's population and which until about a decade ago had no genuinely global firms to speak of (see chart 2).
Class distinctions
To be counted as world-class, a firm needs to be more than just well run and large. It should have a globally valued brand, or its own leading-edge technology, or a genuinely innovative and admired business method. These are demanding standards: even some of those in BCG's top 100 are really just plain big. In South-East Asia few companies meet them. Some come close, especially in Singapore, the region's most advanced country. Singapore Airlines is the world's fourth-largest international carrier and is perhaps the region's best-known brand around the world. Keppel and SembCorp, the world's two largest makers of offshore oil drilling-rigs, dominate their industry.
However, some of Singapore's tech stars are showing signs of fading, worries Garry Evans, an equity strategist at HSBC. Chartered Semiconductor and Creative, for example, are slipping behind rivals in places like Taiwan, which now has “a critical mass in technology and a very entrepreneurial culture,” he says.
In banking, the region has some impressive contenders, like Singapore's OCBC and Malaysia's Public Bank, which are expanding beyond their borders. But now these must contend with China's huge and increasingly muscle-flexing banks as well as Western ones with deep roots in the region, such as HSBC and Standard Chartered. As in other types of business, the region's local champions lack scale in a world where critical mass seems to matter ever more.
Admittedly, the region has some natural handicaps. The ten members of the Association of South-East Asian Nations (ASEAN) have a huge variety of languages, religions, political systems and histories. Even the most populous member, Indonesia, with 230m people, is itself enormously diverse, being made up of 17,000 islands and a rainbow assortment of cultural and religious traditions. By comparison, Brazilians may dance the forró in the north and the samba in the south, but theirs is a pretty homogeneous and monolingual country of 190m, all on one land mass.
That said, ASEAN's leaders could do much more to keep their lofty promises of European-style economic integration, to give local companies a sizeable home market from which to build world-beating businesses. Their failure to construct a genuine single market is shown up by the fact that ASEAN's members still do three times as much trade with non-members as they do among themselves. Internal tariffs have been cut, but as McKinsey, a management consultancy, noted in a report in 2004, product standards and other non-tariff barriers often differ among ASEAN countries, forcing manufacturers to make small production runs for each country.
All this lowers the competitiveness of local firms, as well as multinational companies operating in the region. Corruption is another great burden on business. That is true elsewhere in Asia too, but several South-East Asian countries—notably Indonesia—are afflicted by corrupt and unreliable judicial systems, making it difficult to enforce contracts.
Dicing with relegation
Although it is hard to generalise across Asia, another obstacle to developing world-class businesses is that the five main South-East Asian economies do worse than might be expected—that is, relative to their national incomes—in promoting technology and higher education. Tony Fernandes, the boss of AirAsia, a fast-expanding Malaysian airline and a contender for the “world-class” label, laments how South Korea, where the government has pumped money into research and training, has left his country trailing in so many ways. “We used to beat them at football—not now,” he groans.
Malaysia has also spent heavily on universities and the promotion of technology but its efforts have been stymied by the country's messy racial politics (including preferential university places for the Malay majority) and by the handing of state contracts and concessions to undeserving government cronies. Both the lack of fair competition between businesses and the failure to widen access to education may have a common underlying cause: that South-East Asian countries remain in the grip of narrow elites.
The problem betrays itself not just in the region's relative lack of memorable business names but in its basic economic statistics—in particular, labour productivity, the key to long-term growth. Productivity in China and India is growing much faster than South-East Asia's is. East Asia overtook the region in output per worker by 2000 and has continued to power ahead. Now South Asia is closing the gap (see chart 3). Not even hosting the factories of so many sophisticated multinationals seems to have made much difference to South-East Asia. With all those Indian and Chinese pairs of hands joining the global workforce, the region has no option but to seek to move beyond simply offering low wage costs and produce better-educated workers and more innovation.
It is not all the fault of governments. The region's unwieldy conglomerates could do more to help themselves achieve global scale by concentrating on fewer businesses. Some are doing so, but others still seem unable to resist poking their fingers into another pie. The food-and-drink arm of Charoen Pokphand, a Thai conglomerate, is in BCG's top 100; but the group is an unspectacular contender in industries from telecoms to convenience stores and is now moving into carmaking. San Miguel of the Philippines, a big beer-to-food conglomerate, recently talked of trying its hand at generating electricity. Synergy Drive, the absurdly named merger of three underperforming plantation firms controlled by the Malaysian government, is taking a stake in the giant Bakun hydro-dam in Borneo.
This dilettantism was once summed up damningly by Michael Porter, of Harvard Business School: “These companies don't have strategies, they do deals.” Gerry Ambrose in the Kuala Lumpur office of Aberdeen Asset Management laments that it is indeed hard to find Malaysian companies with “a business plan that will last ten years”. Many firms have improved their profitability since the 1997-98 crisis but that may not guarantee their long-term survival. Because even the best-run firms often have boards and shareholder lists dominated by the founding family and their friends, it is hard to believe that their thinking will change.
Of the “godfatherish” firms profiled in Mr Studwell's book, one that analysts say is among the best performers is YTL, a Malaysian conglomerate. Big in construction, the firm also owns a British water firm, Wessex Water, operates hotels and upmarket shopping malls, runs a high-speed rail link from central Kuala Lumpur to the city's airport and owns a chain of power stations. Its founder, Yeoh Tiong Lay, built a giant construction business with state contracts in the country's early post-independence period. In the 1990s, when his friend Mahathir Mohamad was prime minister, the firm got concessions to generate electricity using subsidised gas from the state oil firm, which the state electricity firm was obliged to buy.
Nice work if you can get it. But the founder's son, Francis Yeoh, who now runs the firm, insists that it has not just rested on its laurels. It has delivered, he argues, “a 55% annual compound growth in profits” since the mid-1980s and it now earns 70% of its revenues outside Malaysia. On February 22nd it declared a profit for the six months to December 31st of 688m ringgit ($202m), 24% more than a year before. The firm does have a core competence, says Mr Yeoh, which is to build and maintain infrastructure assets of first-world quality at third-world prices. Even the group's hotels and shopping malls should be seen as “unregulated infrastructure”, he argues, stretching the point somewhat.
As Asia continues to grow vertiginously, it will need a lot more infrastructure, regulated or not, and YTL, says Mr Yeoh, has shown it can provide it. In particular, he foresees juicy contracts from applying Wessex Water's skills at cleaning up rivers to the continent's murky waterways. This indeed sounds like a promising growth business. But there will be others—not least some sizeable Chinese water-treatment firms—which will be after those same contracts. So far Wessex Water is making decent profits in western England, but its potential to become a global leader is untested.
Hitherto, Malaysian companies have had a remarkable record of picking duds when they buy foreign firms. Laura Ashley, a fashion designer; Costain, a builder; Lec, a fridgemaker; and Agusta, a motorbike-maker: all were bought by Malaysian firms with less than glorious outcomes. Even so, if they continue to improve, YTL and the region's other conglomerates may yet break the mould. Other Asian world-beaters also began as divisions of sprawling, family-run groups but eventually escaped their orbit sufficiently to thrive. An executive at India's globally expanding Tata Steel, for instance, says that Tata Sons, from which it sprang, maintains its minority stake in the firm but these days leaves it to be run by professional managers.
Another hopeful sign for South-East Asia's corporate future is that it seems to be getting easier for those outside the closed circle of the politically well-connected to set up new businesses and challenge the incumbents. Mr Fernandes's AirAsia is the prime example. Started only six years ago, the airline now criss-crosses the region with a huge network of low-cost flights. Mr Fernandes, a former music-industry man, is still frantically adding routes: he expects to be allowed to start domestic flights in the Philippines and Vietnam soon. He has started a separate, low-cost, long-haul airline, AirAsiaX, which is flying from Kuala Lumpur to Gold Coast airport in Australia and Hangzhou near Shanghai. Flights to Melbourne, Amritsar and eventually London are on the way.
Though ASEAN has been slow to lower its barriers in some areas, in aviation they are coming down. Singapore and Malaysian Airlines' duopoly on the Kuala Lumpur-Singapore route has just been scrapped and, says Mr Fernandes, incumbent firms across the region are finding that their home governments are no longer protecting them. It could be said that, by linking the region's cities with cheap and frequent flights, Mr Fernandes has done more to turn South-East Asia into an integrated economic block than any ASEAN ministerial summit. In other once-coddled industries, too, governments are starting to dismantle monopolies. YTL's Mr Yeoh says there will soon be “no hiding place” for firms trying to live from old-fashioned rent-seeking.
The rise of China and India, with their huge home markets, may mean that it is too late for South-East Asia to become big in manufacturing. But it does still have the prospect of producing world-leading firms in other areas where it has an edge. Tourism and hospitality are obvious examples, especially as the region's neighbours become richer. South-East Asia could become both “the Mediterranean and the Caribbean of Asia”, enthuses YTL's Mr Yeoh.
Playing to your strengths
Apart from YTL, well regarded companies that could use tourism growth as a springboard to global greatness include hotel groups such as Singapore's Banyan Tree, casino operators like Malaysia's Genting and even hospital firms like Thailand's Bumrungrad, a growing competitor in “medical tourism”. However, as HSBC's Mr Evans points out, such firms have yet to demonstrate that they can transfer their vaunted “service mentality” to other parts of the world that do not have an abundance of cheap labour.
Natural resources are another promising source of future world-beaters. Following Brazil and, closer to home, Australia, South-East Asia is beginning to build global businesses by making the most of what nature has provided. Palm oil, of which most of the world's supply comes from Malaysia and Indonesia, is one example. Some plantation firms are simply hitching a ride on the boom in prices but IOI, a Malaysian plantation owner, is about 50% more efficient in terms of yield per hectare than its local rivals. If the government could push Synergy Drive, its new behemoth, to the same level of productivity, it would boost the economy.
The region already dominates some types of agricultural produce: Thailand and Vietnam are the world's two largest rice exporters, for example. Since the region has so much coastline and so many rivers, there is much scope for expanding fish-farming and seafood production. Thai Union, a giant tuna-packer, is already in BCG's top 100. Vietnam, the region's rising star, has several big seafood firms which, if they can resist the regionwide scourge of diversification, may one day reach similar heights. But to make the most of its fertile land and waters, the region needs more sophisticated food-processing industries and stronger brands, instead of exporting bulk commodities.
The reasons why South-East Asia has been slower than other regions to produce world-class businesses are complex and open to debate. But they do seem to be linked to the perseverance of narrow elites and to the countries' sluggishness in overcoming old rivalries and building an integrated regional market. As a handful of promising companies are showing, not all is lost. Even in today's fierce jungle, South-East Asia can still breed tigers.
BEIJING - The no-tell motels in Beijing’s university districts pulsate with sex.
Every weekend, lusty college couples make a beeline past greasy spoon restaurants and bootleg video game shops for the dim hotel lobbies to book three-hour blocks of privacy. Students fill half the simple but tidy rooms at the Cheng Lin Ming Guang Hotel, a 10-minute walk from Beijing Normal University.
China is in the midst of a sexual revolution, a byproduct of rising prosperity and looser government restrictions on private life. The relaxed attitudes about sex mark a historic turnaround from the days when love and sex were denounced as bourgeois decadence, and unisex Mao suits and drab austerity were the norm.
But the revolution is taking place largely behind closed doors, and the word “sex” or “xing” (pronounced shing) is spoken only among close friends, and then usually in a whisper.
As a result, sex education has not kept up with sexual activity, with some unwelcome consequences. High school girls make up 80 percent of the patients at Shanghai abortion clinics during one-week school holidays, state media reported last year.
As recently as the 1980s, a couple holding hands in public would draw stares. Now, a government that once had say over when and whom people could marry is more concerned about regulating interest rates. And rising incomes have allowed urban Chinese to pursue much more than mere survival.
While the countryside remains more traditional, at least outwardly, public benches in cities are filled at night with young couples necking openly. Hipsters pack sleek clubs to flirt, chain-smoke imported cigarettes and sip green tea mixed with whiskey. Vibrators are sold in vending machines and at ubiquitous “adult health product” stores. Even the Web site of the government’s Xinhua News Agency has a photo slideshow titled “Paris Hilton goes sexy for birthday party.”
Studies indicate that 60 to 70 percent of Chinese have had sex before marriage, up from 15 percent in 1989, according to Li Yinhe, a sex expert at the Chinese Academy of Social Sciences.
In that time, the average urban marriage age has crept steadily higher, reaching 31 for men in Shanghai last year. There has also been a notable shift in attitudes, particularly among those born in the booming ‘80s.
At the Pepper bar in Beijing, a 20-year-old manager who did not give her name said without hesitation that young women’s attitudes toward sex is casual. Her friends often show up and pick up men.
Cai Junjie, a strapping 23-year-old golf coach who calls himself Tank, saw no reason for a long mating ritual before sex.
“If two people want to be together, time isn’t an issue,” he said, still avoiding the word “sex” when talking to a stranger.
Chu Yanyang, an unemployed 21-year-old, said she once went to a bar known as “One-Night Stand,” just to see if it lived up to its reputation. It did.
“They’ll ... write their phone number on a little slip of paper. And if you drink a beer with him, then he’ll give you the slip of paper,” she said. “That way, you can get in touch if you want to hook up another day, or some people might even just leave together then and get a hotel room.”
Maintaining a relationship can be too much work, Chu added. “If when we eat I always put food on your plate for you and one day I don’t, then you might get mad and fuss at me. These little fights are really hard,” she said. “So you might have a one-night stand. It’s just so much easier.”
Those without their own apartments can turn to hourly rate motels. Dorm rooms in China are generally crowded with a half-dozen students each, while many follow tradition _ or economic necessity _ and live with their parents long after high school graduation.
On a lazy Sunday afternoon, one young woman flounced into the Cheng Lin Ming Guang Hotel, beau in tow, brushing past another couple in the lobby to negotiate loudly with the receptionist for her favourite room (No. 112) and a break on the rate ($12 for three hours).
At a shabby basement hotel around the corner, where every room is decorated with a poster of a scantily clad Western woman, a young couple straightened the sheets and blanket before leaving. A sign on the wall warned: “If the linens are too dirty, you will lose your deposit.”
Families and schools remain shy when talking about sex, and teenage sex has flourished in the gap between awkward discussions and silence.
Psychologist Deng Jun fields 15 to 20 calls a day, mostly about sex, on a hot line for teens she runs out of her office, tucked in a corner of the fifth floor of the dingy Beijing No. 2 Hospital. Most of her callers are high school or college age, though sometimes they are as young as 10.
“With society opening up, our attitudes about sex are changing,” the 52-year-old said. “(Adults) don’t approve of premarital sex ... because when you have sex, it brings a series of unavoidable problems. These problems, as they increase, become society’s problems.”
A vocational high school in Xinjiang, a region about 1,500 miles west of Beijing, briefly enacted a rule last year requiring female students to take pregnancy tests as part of their annual school physical. An outcry about privacy forced the school to retreat.
Abortion is readily available and viewed as a much better alternative to the searing shame of being an unwed teenage mother in China.
A walk-in abortion costs $140 at the Haidian Maternal and Child Health Hospital, a large public hospital in northwest Beijing. Too pricey? Skip the anesthesia and the price falls to $55.
Still, the rising number of abortions among younger Chinese alarms educators, who blame outdated sex education. Students learn about sexually transmitted diseases including AIDS, but the discussions about sex itself are vague and condom use is rarely addressed.
“They don’t talk directly about sexual relations,” said Li, the sex expert. “If you don’t talk directly about sex, it’s an incomplete sex education.”
Frisky blogger “Bamboo Shadows” embodies the contradictions of a changing China, with one foot entrenched in traditional values and the other swinging forward toward a modern kind of free love.
On her site, the Beijing resident openly discusses her breasts, orgasms and struggles to control arousal during yoga classes. But the husky-voiced tech worker, who refused to give her real name in an interview, illustrated in one posting that even in an increasingly permissive China, standards still exist.
She had wrapped her arm around her boyfriend’s waist while riding on the back of his bicycle, caressing him as he pedalled the streets of the Chinese capital. But later, she wrote, “He wanted to be very affectionate in public. I refused. I said we had just eaten and hadn’t brushed our teeth.”
BEIJING - The no-tell motels in Beijing’s university districts pulsate with sex.
Every weekend, lusty college couples make a beeline past greasy spoon restaurants and bootleg video game shops for the dim hotel lobbies to book three-hour blocks of privacy. Students fill half the simple but tidy rooms at the Cheng Lin Ming Guang Hotel, a 10-minute walk from Beijing Normal University.
China is in the midst of a sexual revolution, a byproduct of rising prosperity and looser government restrictions on private life. The relaxed attitudes about sex mark a historic turnaround from the days when love and sex were denounced as bourgeois decadence, and unisex Mao suits and drab austerity were the norm.
But the revolution is taking place largely behind closed doors, and the word “sex” or “xing” (pronounced shing) is spoken only among close friends, and then usually in a whisper.
As a result, sex education has not kept up with sexual activity, with some unwelcome consequences. High school girls make up 80 percent of the patients at Shanghai abortion clinics during one-week school holidays, state media reported last year.
As recently as the 1980s, a couple holding hands in public would draw stares. Now, a government that once had say over when and whom people could marry is more concerned about regulating interest rates. And rising incomes have allowed urban Chinese to pursue much more than mere survival.
While the countryside remains more traditional, at least outwardly, public benches in cities are filled at night with young couples necking openly. Hipsters pack sleek clubs to flirt, chain-smoke imported cigarettes and sip green tea mixed with whiskey. Vibrators are sold in vending machines and at ubiquitous “adult health product” stores. Even the Web site of the government’s Xinhua News Agency has a photo slideshow titled “Paris Hilton goes sexy for birthday party.”
Studies indicate that 60 to 70 percent of Chinese have had sex before marriage, up from 15 percent in 1989, according to Li Yinhe, a sex expert at the Chinese Academy of Social Sciences.
In that time, the average urban marriage age has crept steadily higher, reaching 31 for men in Shanghai last year. There has also been a notable shift in attitudes, particularly among those born in the booming ‘80s.
At the Pepper bar in Beijing, a 20-year-old manager who did not give her name said without hesitation that young women’s attitudes toward sex is casual. Her friends often show up and pick up men.
Cai Junjie, a strapping 23-year-old golf coach who calls himself Tank, saw no reason for a long mating ritual before sex.
“If two people want to be together, time isn’t an issue,” he said, still avoiding the word “sex” when talking to a stranger.
Chu Yanyang, an unemployed 21-year-old, said she once went to a bar known as “One-Night Stand,” just to see if it lived up to its reputation. It did.
“They’ll ... write their phone number on a little slip of paper. And if you drink a beer with him, then he’ll give you the slip of paper,” she said. “That way, you can get in touch if you want to hook up another day, or some people might even just leave together then and get a hotel room.”
Maintaining a relationship can be too much work, Chu added. “If when we eat I always put food on your plate for you and one day I don’t, then you might get mad and fuss at me. These little fights are really hard,” she said. “So you might have a one-night stand. It’s just so much easier.”
Those without their own apartments can turn to hourly rate motels. Dorm rooms in China are generally crowded with a half-dozen students each, while many follow tradition _ or economic necessity _ and live with their parents long after high school graduation.
On a lazy Sunday afternoon, one young woman flounced into the Cheng Lin Ming Guang Hotel, beau in tow, brushing past another couple in the lobby to negotiate loudly with the receptionist for her favourite room (No. 112) and a break on the rate ($12 for three hours).
At a shabby basement hotel around the corner, where every room is decorated with a poster of a scantily clad Western woman, a young couple straightened the sheets and blanket before leaving. A sign on the wall warned: “If the linens are too dirty, you will lose your deposit.”
Families and schools remain shy when talking about sex, and teenage sex has flourished in the gap between awkward discussions and silence.
Psychologist Deng Jun fields 15 to 20 calls a day, mostly about sex, on a hot line for teens she runs out of her office, tucked in a corner of the fifth floor of the dingy Beijing No. 2 Hospital. Most of her callers are high school or college age, though sometimes they are as young as 10.
“With society opening up, our attitudes about sex are changing,” the 52-year-old said. “(Adults) don’t approve of premarital sex ... because when you have sex, it brings a series of unavoidable problems. These problems, as they increase, become society’s problems.”
A vocational high school in Xinjiang, a region about 1,500 miles west of Beijing, briefly enacted a rule last year requiring female students to take pregnancy tests as part of their annual school physical. An outcry about privacy forced the school to retreat.
Abortion is readily available and viewed as a much better alternative to the searing shame of being an unwed teenage mother in China.
A walk-in abortion costs $140 at the Haidian Maternal and Child Health Hospital, a large public hospital in northwest Beijing. Too pricey? Skip the anesthesia and the price falls to $55.
Still, the rising number of abortions among younger Chinese alarms educators, who blame outdated sex education. Students learn about sexually transmitted diseases including AIDS, but the discussions about sex itself are vague and condom use is rarely addressed.
“They don’t talk directly about sexual relations,” said Li, the sex expert. “If you don’t talk directly about sex, it’s an incomplete sex education.”
Frisky blogger “Bamboo Shadows” embodies the contradictions of a changing China, with one foot entrenched in traditional values and the other swinging forward toward a modern kind of free love.
On her site, the Beijing resident openly discusses her breasts, orgasms and struggles to control arousal during yoga classes. But the husky-voiced tech worker, who refused to give her real name in an interview, illustrated in one posting that even in an increasingly permissive China, standards still exist.
She had wrapped her arm around her boyfriend’s waist while riding on the back of his bicycle, caressing him as he pedalled the streets of the Chinese capital. But later, she wrote, “He wanted to be very affectionate in public. I refused. I said we had just eaten and hadn’t brushed our teeth.”
Hong Kong Citizens Waking Up From The So-Called Service Economy Dream, Wonders Where All Factories Went.
Some Hong Kongers just woke up the other day and realized that there is no manufacturing left in Hong Kong.
Hong Kong’s economy is actually quite complicated, but the best way to describe it is as follows:
Hong Kong’s manufacturing is food preparation, like McDonald’s and Burger King.
Programmers in Hong Kong are not provided ample opportunity or good salary in IT.
Top students in Hong Kong are stuck selling real estate. The average students are pushing annuities at Wealth Management firms.
As people begin to unfold the credit derivatives and structured products, problems are surfacing about actual commodities delivery: gold, wheat, pigs, etc. … and who really owns the products?
Furthermore, Hong Kongers may need to start moving to the mainland to find work in the factories they once owned.
Dollar Falls to 3-Year Low on Speculation Debt Losses to Spread
March 3 (Bloomberg) -- The dollar declined to a three-year low against the yen on speculation banks will report more losses from the collapse of the U.S. subprime mortgage market.
The currency broke below 103 yen for the first time since January 2005 and approached a record low against the euro as stocks fell and the cost to protect corporate debt from default rose to a record high in Asia. The dollar also dropped before speeches by two Federal Reserve policy makers and an industry report that may show U.S. manufacturing contracted.
“The U.S. economy is weak and is the epicenter of the subprime loan crisis,” said Masafumi Yamamoto, head of foreign exchange strategy in Tokyo at Royal Bank of Scotland Group Plc, the world’s fourth biggest currency trader, and a former Bank of Japan currency trader. “The trend is for the dollar to weaken against the yen.”
The dollar fell to 102.65 yen, the lowest since Jan. 28, 2005, before trading at 102.77 at 7:01 a.m. in London, from 103.74 late in New York on Feb. 29. It slid to $1.5225 per euro from $1.5179 that day, when it reached $1.5239, the lowest since the common European currency’s debut in January 1999. The dollar may fall to 102 yen this week, Yamamoto forecast.
The yen gained against 15 of the 16 most-active currencies as credit market losses prompted investors to reduce holdings of higher-yielding assets financed with loans from Japan.
Non-Stop Buying
There is still potential for a “significant unwinding” of so-called carry trades, Barclays Capital strategists led by London-based David Woo wrote in a research note today. Barclays expects the dollar to hold above 100 yen.
Ambac Financial Group Inc., a bond insurer, also known as a monoline, said last week it will stop writing guarantees on new asset-backed securities for six months to avoid a credit rating downgrade. Japanese consumer finance firm Takefuji Corp. said today it may report losses of as much as 30 billion yen ($289 million) on subprime-related derivatives transactions. The currency gained to 157.10 per euro from 157.46.
“Investors are shunning risky assets and are buying the yen non-stop,” said Seiichiro Muta, director of foreign exchange in Tokyo at UBS, the world’s second-largest currency trader. “Everything is bad as the subprime and monoline crisis doesn’t seem to be over and stocks may decline.”
The yen may rise to 156.00 per euro today, Muta forecast.
Asian currencies slumped against the dollar on speculation a U.S. slowdown will spread to the region. South Korea’s won fell 0.8 percent to 946.85 per dollar, the biggest one-day decline in more than six months. The Singapore dollar declined 0.3 percent from late Asian trading on Feb. 29 to S$1.3969.
Default Risk
Credit-default swaps, contracts conceived to protect bondholders against default, rose to record highs in Japan and Australia. The MSCI Asia-Pacific index of regional shares fell 2.9 percent after UBS AG, Europe’s biggest bank by assets, predicted global financial companies may lose at least $600 billion from the collapse of the subprime market.
The U.S. currency tumbled 2.3 percent against the euro in February, its biggest monthly decline since September. The synthetic euro, which estimates the European currency’s value before 1999, reached the strongest since at least January 1989, when Bloomberg’s data on the measure begin, on Feb. 29.
While Treasury Secretary Henry Paulson reiterated last week that he favors a strong dollar, Fed Chairman Ben S. Bernanke said the decline was helping cut the U.S. trade deficit. Luxembourg Finance Minister Jean-Claude Juncker said last week he didn’t want to see “excessive volatility.” Japan’s Finance Minister Fukushiro Nukaga today declined to comment to reporters about foreign-exchange moves.
Record Low
The dollar fell to a record low against the currencies of six major trading partners. The U.S. Dollar Index traded on ICE Futures in New York slid to 73.531 today, the lowest since the gauge started in 1973. The Institute for Supply Management will say its manufacturing index declined to 48 in February from 50.7 in January, indicating a contraction, according to a Bloomberg News survey.
The dollar dropped to a record low of 1.0323 Swiss francs from 1.0412 and fell to C$0.9849 against the Canadian dollar from C$0.9878. Philadelphia Fed President Charles Plosser speaks on monetary policy in Arlington, Virginia at 8 a.m. local time today. Fed Governor Randall Kroszner will talk on risk management at 2 p.m. in Washington. Both vote on interest rates.
Futures traders increased their bets that the euro will gain against the dollar, figures from the Washington-based Commodity Futures Trading Commission show. The difference in the number of wagers by hedge funds and other large speculators on an advance in the euro compared with those on a decline -- so- called net longs -- was 31,778 on Feb. 26, compared with net longs of 14,730 a week earlier.
Subprime Loans
The yen gained 1.9 percent against South Africa’s rand to 13.0036 and rose 0.6 percent versus New Zealand’s dollar to 82.33.
Japan’s benchmark rate of 0.5 percent, the lowest among industrialized nations, compares with 8.25 percent in New Zealand and 11 percent in South Africa. In carry trades, investors get funds in a country with low borrowing costs and invest in one with higher rates, earning the spread between the two. The risk is that currency moves erase those profits.
The one-month 25-delta risk reversal rate for dollar-yen options widened to minus 3.35 percent from minus 2.95 percent at the end of last week. Delta measures the change in an option’s value relative to currency moves. A negative risk reversal rate indicates greater demand for yen call options that grant the right to buy over put options that grant the right to sell.
The UK's largest bank HSBC is expected to unveil about $16bn (£8.1bn) of losses for 2007, but will still make an annual profit, reports suggest.
The firm's annual results out on Monday will show that the bad debt charge is mostly related to the crumbling US housing market and consumer blues.
But it is still thought profits will rise to $25bn, from $22bn the year before and it will raise its dividend.
UK banks have so far fared better than their US rivals in the credit crisis.
HSBC is the last of the "big five" British banks to report its earnings for 2007.
Barclays, Royal Bank of Scotland (RBS), Lloyds TSB and HBOS, which was formed by the merger of Halifax and Bank of Scotland, have already filed their figures.
Together with a number of smaller High Street lenders, they have made a collective loss of about £5bn on the declining value of investments linked to the US sub-prime mortgage crisis before factoring in potential losses at HSBC, according to The Observer.
Under pressure
HSBC's $16bn bad debt writedown, forecast in reports in most of the Sunday newspapers, would be two thirds greater than the $10.6bn impairment provision for 2006.
The scale of the losses is expected to increase pressure on the bank's management from activist shareholders to overhaul its policy with regard to its troubled US arm HSBC Finance Corporation (HFC).
Knight Vinke Asset Management is pressing HSBC's chairman Stephen Green to sever ties with HFC and thus ditch all its exposure to struggling US housebuyers, according to reports in The Sunday Times and The Sunday Telegraph.
The investment group wants HSBC to focus on growing markets in Asia.
In line with its demands, the banking giant sold its French regional banking subsidiaries, which had 400 branches, for $3.2bn last week.
Brighter future?
HSBC is expected to reassure investors that its future is brighter by lifting its dividend payout to shareholders by 10% in line with its UK peers.
Analysts believe higher dividends suggest banks feel they are over the worst of the problems in the US housing market, which has been battered by record mortgage defaults, falling house prices and increased borrowing costs.
But there are fears that HSBC's troubles are spreading beyond its US mortgage business with US consumers struggling to repay credit card bills and personal loans.
Japan plans to set up an activist sovereign wealth fund, with a £10 billion share portfolio, aimed at keeping Japan Inc honest and shareholder-friendly, The Times has learnt.
The move comes amid unprecedented criticism of Japanese corporations for ignoring the demands of shareholders and slowly undoing recent market-driven reforms.
Predominantly targeting domestic investments, the activist fund's push for better performance would join calls by foreign investors for higher standards of corporate governance, better transparency and higher dividends. It is expected to grow in £10billion increments every few years depending on performance, and would draw on Japan's £500 billion cache of foreign currency reserves.
Senior government sources told The Times that a worldwide talent search was under way to find managers for the fund, which would be run “as an activist for taxpayers and shareholders”. Its planners hope that, in terms of investment decisions, the fund would maintain an arms-length relationship with government.
Around half the capital would be outsourced to fund-of-fund-style managers, and the fund's research panel has already been swamped with applications to administer the main fund.
“For too long, Japan's huge wealth has been poorly managed by the bureaucrats, who know absolutely nothing about returns,” Kotaro Tamura, one of several MPs spearheading plans for the sovereign wealth fund, said. “It is time to take that role from the amateurs and hand it to professionals. It is something we owe to the country's pensioners.”
The fund's blueprint is under discussion by a cross-party panel of MPs and will be presented to Yasuo Fukuda, the Prime Minister, within the next few weeks.
As legislation is prepared to establish the fund, it is expected to face fierce opposition, not least from the Finance Ministry. One of the fund's tacit champions, however, is Yoshimi Watanabe, the Financial Services Minister, who said last week that sovereign wealth funds had assumed a global presence that “cannot be ignored” and that he was discussing ways to “ensure a win-win relationship” between the fund itself and the targets of its investments.
Given the Government's precarious political status - it controls only one house in parliament - the planners' biggest area of concern is the reputation of sovereign funds around the world as opaque and manipulative. By touting the new fund's credentials as “the people's fund”, members of the planning committee said, the new scheme could be voted through.
When drawing up the main operating model for the fund, researchers visited sovereign wealth funds in Singapore, Abu Dhabi, China and Norway. Norway's example - by far the most transparent in its class - has emerged as the model most likely to be adopted in Japan.
Its proposed activism - already a highly controversial concept in Japan - might appeal to voters as what Mr Tamura described as “cost-free reform”. The presence of five opposition party members on the 20-strong planning committee of MPs and private sector experts is also expected to smooth its passage through parliament.
The plans come as private-sector activist funds in Japan have suffered a string of setbacks and listed companies have refused repeatedly to prioritise shareholders. This has triggered a capital flight from Japanese stocks, wiping trillions of yen in value from the market. Last year, 400 listed companies established poison-pill defence mechanisms. Many more have begun to rebuild “cross-shareholdings”, the informal alliances of supposedly competitive companies that were broken down under the reformist regime of Junichiro Koizumi, the former premier.
Buffett defends sovereign wealth funds By Francesco Guerrera and Justin Baer in New York
Published: February 29 2008 23:10 | Last updated: March 2 2008 22:40
Warren Buffett blamed US economic policies for recent investments by sovereign wealth funds, saying their recent buying spree was America’s doing, not “some nefarious plot by foreign governments”.
In his closely-watched annual letter to shareholders, the billionaire investor revelaled he had chosen four unnamed candidates to become chief investment officer of Berkshire Hathaway, his conglomerate, when he dies or steps down.
The 22-page document – required reading for investors who follow Mr Buffett’s folksy nuggets of wisdom – also warned that the “party is over” for the insurance industry, predicting a sharp fall in margins in Berkshire’s core business in 2008.
The warning was borne out by Berskhire’s fourth quarter results, which fell 18 per cent.
Mr Buffett’s intervention in the debate over sovereign wealth funds comes as presidential candidates and members of Congress have expressed concerns at the lack of transparency of government-controlled investors.
But the “Sage of Omaha” said investments by sovereign funds, which have bought into several Wall Street banks and private equity groups, were a direct result of the US trade deficit, national debt and weak currency.
“This is our doing,” the letter said, adding that sovereign funds were recycling debt issued by the US.
“Our trade equation guarantees massive foreign investments in the US,” Mr Buffett said. “When we force-feed $2bn daily to the rest of the world they must invest in something here. Why should we complain when they choose stocks over bonds?”
Mr Buffett took aim at corporate America, scolding many companies for inflating short-term earnings by over-estimating the expected returns on their pension funds, and criticised financial institutions for their role in the current credit crunch.
He said the fall in US house prices had exposed “a huge amount of financial folly”.
“You only learn who has been swimming naked when the tide goes out – and what we are witnessing at some of our largest financial institutions is an ugly sight.”
On the issue of succession, the 77-year-old investor said that, after a year-long search, he had identified four, unnamed, candidates to manage Berkshire’s $140bn pool of investments when he dies or becomes incapacitated.
He said the candidates “all manage substantial sums currently, all have indicated a strong interest in coming to Berkshire if called”. He added that they were “young to middle-aged, well-to-do to rich and all wish to work for Berkshire for reasons that go beyond compensation”.
Mr Buffett repeated that there were also three unnamed candidates to replace him as chief executive of Berkshire.
Berkshire’s fourth quarter results showed net earnings of $2.9bn compared to $3.6bn in the same period last year. For the full year, net earnings were $13.2bn up from $11bn last year.
Economist: China's stock market not to turn bearish
China's stock market, despite its fluctuation, will not turn bearish, said renowned Chinese economist Li Yining ahead of the annual session of the country's top advisory body.
"The stock market was bullish last year in general. But as the split-share structure reform has drawn to an end, it may undergo correction," said Li, 87, who is a member of the 11th National Committee of the Chinese People's Political Consultative Conference (CPPCC).
Stock market growth will be one of the focused topics among the country's political advisors, who will meet Monday afternoon for their annual full session at the Great Hall of the People in central Beijing.
China saw a round of bull stock market in 2007, with the key benchmark Shanghai Composite Index soaring from 2,728 points on January to 5,261 points, or 92.85 percent, on December 28.
In fact, the market has been on a bullish run for 29 months from June 6, 2005 to November 2007, longer than the general bullish market cycle of 17 to 24 months.
But it has dipped since last November, interlaid by several upturns that failed to turn the scale.
The Shanghai stock exchange closed at 4,349 points last Friday, the latest trading day, which was 1,775 points, or 28.98 percent lower than the historical record high last Oct. 16.
"The plunge was mainly caused by investors' jitters over the influence of the American subprime crisis, the macro control measures to cool the sizzling economy and refinancing plans of companies to be listed," said the economist, adding that lack of experience of the newcomers also fueled their anxiety.
An example is the mammoth trading debut by PetroChina last year, which was blamed to worsen the downward slump of Chinese share prices. On news of PetroChina's listing, China's major stock index dropped 2.31 percent on November 2.
There are two factors signaling whether a stock market is to turn bearish, according to Li. One is economic recession of a country and the other world influence to the country's stock market.
"China's economy is still on the rise, although the growth rate may slow down a little this year," He said. "The world stock market is not bearish and its influence to China's not-so-open stock market is limited."
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The ultimate sell signal
Why does the FDIC need more bank examiners?
By Bill Donoghue, MarketWatch
March 2, 2008
SEATTLE (MarketWatch) -- The clues are piling up: this is not a good year to be investing based on wishful thinking. I’m not a perma-bear, parsing the fine print, but I can read the writing on the wall about chronic economic crises.
The Federal Deposit Insurance Corp. is planning to beef up its division of resolutions and receiverships, which handles failed banks, by 40% this year. The division currently has 233 employees. Considering that only three banks failed last year, why do they need more examiners?
For now, the FDIC is looking to bring back 25 retired employees with experience in the bank closures of the 1980s and 1990s. No, it’s not just a reunion of hard-nosed accountants who closed banks and savings and loans in notorious Friday night raids and liquidated their assets.
This is a real search for tough, experienced “lone rangers,” who set upon a bank or thrift institution on a Friday to take over as much of the assets as possible and open the following Monday with full assurances for insured depositors and firm answers for uninsured depositors. The latter group will get 100% on their insured deposits, probably 50% on the uninsured portion and “well, we can talk about it, and we’ll send you some more later.”
This week Fed Chairman Ben Bernanke put it bluntly: “There probably will be some bank failures.” Regulators have some real work ahead of them. The FDIC had 76 banks on its problem bank list at Dec. 31, down from 136 problem banks in 2002 and 213 banks in 1990. This past year’s three failures were the first since 2004. Apparently the FDIC expects to have a busy year.
The FDIC’s challenge means you should confine your bank accounts to insured deposits exclusively. Other safe harbors are Treasury-only money-market funds, money funds owned by large institutions (even banks) and maybe short-term Treasury bills.
I am sure that the Securities and Exchange Commission has put a lot of pressure on bank managers of money funds to transfer any questionable securities to their balance sheets from the money funds. Banks don’t have a great reputation for understanding the securities term, “fiduciary responsibility.” I am also sure the SEC has made its expectations clear to bankers who manage mutual funds.
First, David Walker, the Comptroller General of the Government Accountability Office, resigns with five years still left on his term.
Now the FDIC is staffing up. It’s time to rethink your investments
Henderson Land (0012) chairman Lee Shau-kee said the Hang Seng Index will linger between 23,000 and 25,000 points in the first half of the year, experience a torrid summer and then improve by September. Speaking in Beijing yesterday, Lee said the HSI will still be affected by the US subprime debacle in the first six months but will remain "stable." "Plunging to 22,000 points was already more than enough. At the current level of around 24,000 points, the index will slowly climb back. The HSI may rebound to 27,000 this spring and reach 30,000 points this year." But Lee warned the bourse will be very volatile in the summer. "If you have money, you should not invest too aggressively [in the summer]." Lee also expects property prices in Hong Kong to jump 10 percent this year on the back of ample liquidity in the global market. "As Hong Kong citizens have much cash on hand, they may want to improve their living conditions. I believe flat prices will go up 10 percent." But mainland prices will not surge because of austerity measures. Meanwhile, Lee denied he used the mainland identity of his younger brother, Li Zhaonan - or Lee Shau-lam - to invest in A shares of Ping An Insurance (2318). It was reported the younger Lee bought 200 million A shares in Ping An, giving the brothers a paper gain of at least HK$15 billion. "I only have some [H] shares in Ping An," said Lee, and most of the Ping An A shares were held by the family trust. "If you want to know whether the family trust will sell the [A] shares, you need to ask Li Zhaonan."
China fast becoming the world’s shipyard
02 March 2008
DALIAN (AFP) - In a drydock at a shipyard in northeast China’s Dalian city, a 300,000-tonne oil tanker is ready for delivery to Maersk, its hull painted in the Danish shipping company’s trademark blue.
Nearby, an offshore drilling platform has been constructed according to precise specifications from US company Noble.
Both are examples of China’s growing success as a shipbuilding nation and its progress towards the goal of becoming number one in the industry by 2015.
“Last year, the order books at Chinese shipyards surpassed those of Japan, to be second only to South Korea,” said Li Cheng, assistant general manager of Dalian Shipbuilding Industry Co.
The company runs the eighth largest shipyard in the world, and last year delivered 32 vessels totalling three million deadweight tonnes.
In terms of new orders, China was actually number one last year, totalling 98.5 million deadweight tonnes, or 42 percent of the global total, according to the Beijing government.
“Chinese shipyards have had their business boosted by the very fast growth of the local economy, which has fuelled demand for container ships and other vessels,” said Li. “If it continues like this, we’ll overtake South Korea.”
Chances are it will indeed continue like this. Dalian shipyard, located in the Gulf of Bohai, has its order books filled right until 2011.
The expansion of the Chinese economy -- leading to strong growth in both exports and imports -- is not the only factor behind this success.
Equally important is the global boom in shipping. Eighty percent of the output of China’s shipyards is exported.
The result is that China’s share of the global market has expanded from 18 percent in 2006 to 23 percent last year, while South Korea and Japan account for roughly 35 percent each, according to research institute Clarkson.
“It’s not impossible that it will eventually take up the leadership position (ahead of South Korea),” said Caroline Huot, general manager of Total Lubmarine for the Asia Pacific.
“It’s got the will, no doubt. There’s a real can-do attitude in China.”
She added the government offers strong support for the shipbuilding industry, investing large amounts of money in new shipyards.
The industry is dominated by two huge state-owned enterprises: China State Shipbuilding Corporation and China Shipbuilding Industry Corporation, the parent of the Dalian company.
But in recent years, it has also seen a large number of new entrants, in the form of smaller shipyards run by local governments or private groups, or set up as joint ventures.
There are now 3,000 of these smaller shipyards, up from just 350 a decade ago.
At the same time, Chinese shipyards have succeeded in building up a good reputation.
“The Chinese companies are very concerned about safety and the environment. They are large and extremely professional enterprises, and they’re just as good as their counterparts in the United States or Norway,” said Huot.
The Dalian shipyard has clients across the globe, from Gear Bulk, 60 percent Norwegian-owned, to Sweden’s Stena AB and customers in Greece and Iran.
To keep up its competitive advantage, the Dalian shipyard now spends heavily on research and development and the continued improvement of the infrastructure.
“We’re still cheap compared with South Korea and Japan, but we have to think about the future and take steps to improve our competitiveness,” said Li.
MARKET TALK:China Shares Down; Regional Falls, Supply Worries
2008/03/03 10:34:00
0234 GMT [Dow Jones] China shares fall on worries over supply pressures, weakness across regional bourses; Shanghai Composite last down 0.5% at 4324.96, with 4200 pegged as next psychological support; Shenzhen Index up 0.3% at 1378.48. "The expiry of lock-up period for shares held by institutional investors this month is pressuring the market," says Zhang Gang at Central China Securities. Various local media report earlier that stock market to face liquidity pressures in March as lock-up periods on CNY400.6 billion worth of shares held by strategic investors, large shareholders for IPOs or share reform due to expire. Financial stocks lead falls partly as investors stay away from sector fearing negative impact extending from U.S. subprime mortgage crisis, Zhang adds; Shanghai Pudong Development Bank (600000.SH) down 2.7% at CNY40.98, China Life Insurance (601628.SH) down 3.2% at CNY37.78.(JSX)
王冠一: 金 融 市 場 三 月 動 盪
上 次 談 及 一 個 新 名 詞 VIEs （ Variable Interest Entities ） ， 未 向 讀 者 交 代 是 啥 ？
VIE 者 ， 中 文 譯 為 「 可 變 利 益 實 體 」 ， 源 於 01 年 美 國 能 源 企 業 「 安 然 」 （ Enron ） ， 利 用 所 謂 的 SPV （ Special Purpose Vehicle ， 即 特 殊 目 的 工 具 或 公 司 ） ， 透 過 短 期 票 據 發 行 融 資 ， 來 為 他 們 的 投 資 / 投 機 水 ， 並 搞 掂 會 計 佬 ， 所 有 此 類 衍 生 工 具 皆 納 入 VIE ， 未 計 數 不 用 顯 示 在 資 產 負 債 表 中 ， 因 此 是 一 種 變 相 隱 藏 的 投 資 。
衍 生 工 具 幫 一 把
據 CreditSights 透 露 ， 由 於 美 樓 市 續 跌 拖 累 經 濟 ， 令 致 有 關 債 券 投 資 價 值 下 降 ， 金 融 機 構 須 向 此 類 投 資 進 行 注 資 ， 甚 或 撥 備 ， 耳 熟 能 詳 的 大 銀 行 如 花 旗 、 美 銀 ， 以 至 華 爾 街 大 行 如 美 林 、 貝 爾 斯 登 和 高 盛 均 有 過 或 數 以 百 億 美 元 被 納 入 VIE 賬 目 內 的 CDO （ 有 抵 押 信 貸 承 諾 ， 或 曰 有 抵 押 債 務 債 券 ） ， 一 旦 出 事 ， 估 計 損 失 高 達 880 億 美 元 。 另 外 Oppenheimer 分 析 員 亦 指 ， 此 類 投 資 損 失 將 逐 漸 浮 現 ， 有 可 能 超 過 700 億 美 元 。 看 來 各 大 金 融 機 構 又 要 為 此 擔 驚 受 怕 矣 ！
話 倒 說 回 來 ， 食 得 鹹 魚 抵 得 渴 ， 過 去 數 年 ， 金 融 機 構 連 續 多 季 或 多 年 錄 得 雙 位 數 字 盈 利 增 長 ， 若 不 是 這 些 創 新 投 資 衍 生 工 具 幫 上 一 把 ， 一 眾 趾 高 氣 揚 之 金 融 業 從 業 員 或 頭 頭 ， 又 怎 會 年 年 有 肥 豬 肉 （ 天 文 數 字 的 花 紅 ） 分 ， 你 估 個 個 係 神 或 孫 悟 空 ， 條 毛 都 識 變 乎 ？
消 息 不 斷 多 凶 險
3 月 份 是 凶 險 的 ， 3 號 中 國 兩 會 開 始 、 5 號 有 油 組 會 議 、 7 日 有 非 農 業 新 增 職 位 、 13 日 中 鐵 建 上 市 、 18 日 聯 邦 公 開 市 場 委 員 會 （ FOMC ） 議 息 、 19 日 有 日 本 央 行 換 行 長 ， 到 月 底 又 是 日 本 企 業 年 結 ， 無 論 中 外 、 歐 美 、 亞 太 皆 或 多 或 少 受 消 息 刺 激 ， 導 致 金 融 市 場 出 現 動 盪 ， 小 心 ！
曾淵滄: 趁 跌 市 買 匯 控 長 楂
2008年03月03日（星期一）
今 日 是 匯 控 （ 005 ） 公 佈 業 績 的 大 日 子 ， 是 極 富 挑 戰 的 日 子 ， 因 為 上 個 星 期 五 美 股 大 跌 ， 道 指 下 跌 316 點 ， 達 2.5% 。 從 過 去 的 經 驗 來 看 ， 今 日 一 開 市 ， 恒 指 就 可 能 失 去 800 點 ， 今 日 是 應 該 趁 美 股 大 跌 先 入 市 買 匯 控 ？ 還 是 等 到 業 績 正 式 公 佈 後 才 決 定 ？
我 長 期 喜 歡 匯 控 。 有 人 問 ， 近 年 來 我 少 提 匯 控 ， 是 不 是 改 變 了 態 度 ？ 沒 有 ， 我 仍 然 認 為 匯 控 是 好 股 ， 但 是 我 不 是 那 種 認 為 「 匯 控 有 買 貴 無 買 錯 」 的 人 ， 我 是 不 希 望 買 貴 的 匯 控 。 我 買 匯 控 一 定 是 等 到 匯 控 股 價 由 高 位 下 跌 後 才 買 ， 過 去 5 年 只 買 過 兩 次 匯 控 ， 一 次 是 2007 年 ， 買 入 價 135 元 ， 另 一 次 是 2002 年 ， 買 入 價 是 80 元 。 當 然 ， 135 元 與 80 元 與 現 價 比 ， 則 135 元 是 貴 了 ， 不 過 ， 當 時 買 入 時 股 價 不 是 由 低 位 上 升 至 135 元 時 買 入 ， 而 是 從 高 位 往 下 跌 時 買 的 。 當 然 ， 我 沒 有 能 力 捕 捉 最 低 價 的 那 一 剎 那 。 我 的 簡 單 要 求 是 股 息 率 要 足 夠 高 ， 作 為 一 名 長 期 投 資 者 ， 股 價 升 升 跌 跌 與 自 己 並 沒 有 甚 麼 直 接 關 係 ， 唯 一 的 關 係 是 股 息 的 收 入 。 過 去 18 年 ， 我 年 年 收 匯 控 股 息 ， 越 收 越 高 興 ， 因 為 匯 控 股 息 年 年 上 升 ， 2007 年 匯 控 每 股 所 派 的 息 比 18 年 前 我 買 匯 控 的 股 價 更 高 ， 我 也 期 待 18 年 後 匯 控 每 股 派 息 100 元 以 上 。
長 期 投 資 睇 股 息 收 入
人 有 錢 一 定 會 手 癢 ， 這 也 是 為 甚 麼 我 永 遠 不 會 賣 光 股 票 ， 不 過 ， 我 目 前 手 上 也 的 確 有 不 少 現 金 ， 靜 極 思 動 ， 希 望 今 天 可 以 趁 低 價 買 入 一 些 匯 控 ， 明 日 再 看 看 有 沒 有 機 會 在 業 績 後 以 更 低 的 價 格 再 買 。 不 過 ， 如 果 明 日 不 跌 反 升 ， 就 不 買 了 ， 寧 可 留 下 來 等 中 鐵 建 （ 1186 ） 上 市 再 買 。 中 鐵 建 是 一 級 好 股 ， 推 薦 的 專 家 已 多 如 牛 毛 ， 不 必 我 再 宣 傳 ， 總 之 大 家 盡 力 去 申 請 。
上 星 期 六 ， 《 蘋 果 日 報 》 在 澳 門 舉 辦 投 資 演 講 會 ， 我 應 邀 為 四 名 主 講 人 之 一 ， 《 蘋 果 》 的 演 講 會 一 向 沒 有 免 費 的 ， 因 為 肥 佬 黎 不 相 信 「 免 費 午 餐 」 。 在 演 講 會 上 ， 發 現 不 少 觀 眾 是 從 香 港 來 的 ， 為 了 感 謝 他 們 特 地 到 澳 門 捧 場 ， 演 講 會 後 我 與 一 群 讀 者 們 一 邊 喝 紅 酒 一 邊 暢 談 投 資 心 得 個 多 小 時 ， 盡 興 而 歸 。
每 一 次 到 澳 門 旅 遊 ， 都 有 新 的 賭 場 、 酒 店 開 張 ， 賭 場 越 開 越 多 ， 已 經 開 始 出 現 競 爭 的 代 價 ─ ─ 部 份 賭 場 似 乎 冷 清 了 。 明 年 ， 新 加 坡 的 賭 場 落 成 後 ， 這 才 是 真 正 的 考 驗 ， 因 為 澳 門 賭 稅 比 新 加 坡 高 許 多 ， 賭 場 會 設 法 把 豪 客 帶 到 新 加 坡 。
Business in South-East Asia
The tigers that lost their roar
The Economist
Feb 28th 2008
Other emerging economies are producing world-class companies by the dozen. Why aren't the countries of South-East Asia?
IT IS easy to forget, now that China and India are all the rage, that until ten years ago South-East Asia was the world's fastest-developing region, winning the sort of investor attention and breathless column inches that the two new giants now enjoy. The region has, slowly, recovered from the blight of 1997-98. It has recently had several years of strong growth (see chart 1) and its governments' finances have been greatly improved. Even so, after all this time the region's five main economies—Indonesia, Malaysia, the Philippines, Singapore and Thailand—are still notable for the near-absence of companies that could truly be called world-class.
The region has 570m people and had a head start in economic development over much of the rest of Asia. So why does it still have no global consumer brands of the stature of South Korea's Samsung and LG? Where are its rising technology leaders, like Taiwan's AU Optronics and Taiwan Semiconductor? Where are its equivalents of India's world-conquering Tata Steel, Ranbaxy and Wipro? Or China's market-devouring Huawei and Lenovo? Ask an investor in London or New York to name globally respected South-East Asian firms and the answer is unlikely to consist of much more than Singapore Airlines.
In a recent book, “Asian Godfathers”, Joe Studwell, a journalist, examines this failure in stark terms. The region's business scene, he says, remains dominated by old-fashioned, mediocre, sprawling conglomerates, run at the whims of ageing patriarchal owners. These firms' core competence, such as it is, is exploiting their cosy connections with governing elites. Their profits come from rent-seeking: being handed generous state contracts and concessions, or using their sway with officialdom to keep potential competitors out. If they need technology, they buy it from abroad. As a result, Mr Studwell says, the region has “no indigenous, large-scale companies producing world-class products and services.”
Similar things were once said of much of the rest of Asia—and sometimes still are. But somehow other countries' top businesses, even in India, the home of the licence Raj, have escaped this mediocrity trap. Whereas the export-led growth of South Korea and Taiwan comes mainly from indigenous firms making globally competitive goods with their own technology, much of South-East Asia's high-value exports are made by foreign companies. Thailand has built a successful motor industry by attracting multinationals. But it will constantly suffer the risk that these will move to somewhere like China, with lower costs and a bigger home market.
Look under the bonnet of what seems to be a well managed, local industrial firm in South-East Asia, such as Astra, an Indonesian carmaker, and you find that it is assembling Japanese cars under licence and is controlled by a Hong Kong group. Not many have got far beyond serving the home market. A recent study by the Boston Consulting Group (BCG) of the 100 largest multinationals from emerging economies (a category that excludes Singapore) contained only five from the whole region. By contrast there were 13 just from Brazil, which has only a third of South-East Asia's population and which until about a decade ago had no genuinely global firms to speak of (see chart 2).
Class distinctions
To be counted as world-class, a firm needs to be more than just well run and large. It should have a globally valued brand, or its own leading-edge technology, or a genuinely innovative and admired business method. These are demanding standards: even some of those in BCG's top 100 are really just plain big. In South-East Asia few companies meet them. Some come close, especially in Singapore, the region's most advanced country. Singapore Airlines is the world's fourth-largest international carrier and is perhaps the region's best-known brand around the world. Keppel and SembCorp, the world's two largest makers of offshore oil drilling-rigs, dominate their industry.
However, some of Singapore's tech stars are showing signs of fading, worries Garry Evans, an equity strategist at HSBC. Chartered Semiconductor and Creative, for example, are slipping behind rivals in places like Taiwan, which now has “a critical mass in technology and a very entrepreneurial culture,” he says.
In banking, the region has some impressive contenders, like Singapore's OCBC and Malaysia's Public Bank, which are expanding beyond their borders. But now these must contend with China's huge and increasingly muscle-flexing banks as well as Western ones with deep roots in the region, such as HSBC and Standard Chartered. As in other types of business, the region's local champions lack scale in a world where critical mass seems to matter ever more.
Admittedly, the region has some natural handicaps. The ten members of the Association of South-East Asian Nations (ASEAN) have a huge variety of languages, religions, political systems and histories. Even the most populous member, Indonesia, with 230m people, is itself enormously diverse, being made up of 17,000 islands and a rainbow assortment of cultural and religious traditions. By comparison, Brazilians may dance the forró in the north and the samba in the south, but theirs is a pretty homogeneous and monolingual country of 190m, all on one land mass.
That said, ASEAN's leaders could do much more to keep their lofty promises of European-style economic integration, to give local companies a sizeable home market from which to build world-beating businesses. Their failure to construct a genuine single market is shown up by the fact that ASEAN's members still do three times as much trade with non-members as they do among themselves. Internal tariffs have been cut, but as McKinsey, a management consultancy, noted in a report in 2004, product standards and other non-tariff barriers often differ among ASEAN countries, forcing manufacturers to make small production runs for each country.
All this lowers the competitiveness of local firms, as well as multinational companies operating in the region. Corruption is another great burden on business. That is true elsewhere in Asia too, but several South-East Asian countries—notably Indonesia—are afflicted by corrupt and unreliable judicial systems, making it difficult to enforce contracts.
Dicing with relegation
Although it is hard to generalise across Asia, another obstacle to developing world-class businesses is that the five main South-East Asian economies do worse than might be expected—that is, relative to their national incomes—in promoting technology and higher education. Tony Fernandes, the boss of AirAsia, a fast-expanding Malaysian airline and a contender for the “world-class” label, laments how South Korea, where the government has pumped money into research and training, has left his country trailing in so many ways. “We used to beat them at football—not now,” he groans.
Malaysia has also spent heavily on universities and the promotion of technology but its efforts have been stymied by the country's messy racial politics (including preferential university places for the Malay majority) and by the handing of state contracts and concessions to undeserving government cronies. Both the lack of fair competition between businesses and the failure to widen access to education may have a common underlying cause: that South-East Asian countries remain in the grip of narrow elites.
The problem betrays itself not just in the region's relative lack of memorable business names but in its basic economic statistics—in particular, labour productivity, the key to long-term growth. Productivity in China and India is growing much faster than South-East Asia's is. East Asia overtook the region in output per worker by 2000 and has continued to power ahead. Now South Asia is closing the gap (see chart 3). Not even hosting the factories of so many sophisticated multinationals seems to have made much difference to South-East Asia. With all those Indian and Chinese pairs of hands joining the global workforce, the region has no option but to seek to move beyond simply offering low wage costs and produce better-educated workers and more innovation.
It is not all the fault of governments. The region's unwieldy conglomerates could do more to help themselves achieve global scale by concentrating on fewer businesses. Some are doing so, but others still seem unable to resist poking their fingers into another pie. The food-and-drink arm of Charoen Pokphand, a Thai conglomerate, is in BCG's top 100; but the group is an unspectacular contender in industries from telecoms to convenience stores and is now moving into carmaking. San Miguel of the Philippines, a big beer-to-food conglomerate, recently talked of trying its hand at generating electricity. Synergy Drive, the absurdly named merger of three underperforming plantation firms controlled by the Malaysian government, is taking a stake in the giant Bakun hydro-dam in Borneo.
This dilettantism was once summed up damningly by Michael Porter, of Harvard Business School: “These companies don't have strategies, they do deals.” Gerry Ambrose in the Kuala Lumpur office of Aberdeen Asset Management laments that it is indeed hard to find Malaysian companies with “a business plan that will last ten years”. Many firms have improved their profitability since the 1997-98 crisis but that may not guarantee their long-term survival. Because even the best-run firms often have boards and shareholder lists dominated by the founding family and their friends, it is hard to believe that their thinking will change.
Of the “godfatherish” firms profiled in Mr Studwell's book, one that analysts say is among the best performers is YTL, a Malaysian conglomerate. Big in construction, the firm also owns a British water firm, Wessex Water, operates hotels and upmarket shopping malls, runs a high-speed rail link from central Kuala Lumpur to the city's airport and owns a chain of power stations. Its founder, Yeoh Tiong Lay, built a giant construction business with state contracts in the country's early post-independence period. In the 1990s, when his friend Mahathir Mohamad was prime minister, the firm got concessions to generate electricity using subsidised gas from the state oil firm, which the state electricity firm was obliged to buy.
Nice work if you can get it. But the founder's son, Francis Yeoh, who now runs the firm, insists that it has not just rested on its laurels. It has delivered, he argues, “a 55% annual compound growth in profits” since the mid-1980s and it now earns 70% of its revenues outside Malaysia. On February 22nd it declared a profit for the six months to December 31st of 688m ringgit ($202m), 24% more than a year before. The firm does have a core competence, says Mr Yeoh, which is to build and maintain infrastructure assets of first-world quality at third-world prices. Even the group's hotels and shopping malls should be seen as “unregulated infrastructure”, he argues, stretching the point somewhat.
As Asia continues to grow vertiginously, it will need a lot more infrastructure, regulated or not, and YTL, says Mr Yeoh, has shown it can provide it. In particular, he foresees juicy contracts from applying Wessex Water's skills at cleaning up rivers to the continent's murky waterways. This indeed sounds like a promising growth business. But there will be others—not least some sizeable Chinese water-treatment firms—which will be after those same contracts. So far Wessex Water is making decent profits in western England, but its potential to become a global leader is untested.
Hitherto, Malaysian companies have had a remarkable record of picking duds when they buy foreign firms. Laura Ashley, a fashion designer; Costain, a builder; Lec, a fridgemaker; and Agusta, a motorbike-maker: all were bought by Malaysian firms with less than glorious outcomes. Even so, if they continue to improve, YTL and the region's other conglomerates may yet break the mould. Other Asian world-beaters also began as divisions of sprawling, family-run groups but eventually escaped their orbit sufficiently to thrive. An executive at India's globally expanding Tata Steel, for instance, says that Tata Sons, from which it sprang, maintains its minority stake in the firm but these days leaves it to be run by professional managers.
Another hopeful sign for South-East Asia's corporate future is that it seems to be getting easier for those outside the closed circle of the politically well-connected to set up new businesses and challenge the incumbents. Mr Fernandes's AirAsia is the prime example. Started only six years ago, the airline now criss-crosses the region with a huge network of low-cost flights. Mr Fernandes, a former music-industry man, is still frantically adding routes: he expects to be allowed to start domestic flights in the Philippines and Vietnam soon. He has started a separate, low-cost, long-haul airline, AirAsiaX, which is flying from Kuala Lumpur to Gold Coast airport in Australia and Hangzhou near Shanghai. Flights to Melbourne, Amritsar and eventually London are on the way.
Though ASEAN has been slow to lower its barriers in some areas, in aviation they are coming down. Singapore and Malaysian Airlines' duopoly on the Kuala Lumpur-Singapore route has just been scrapped and, says Mr Fernandes, incumbent firms across the region are finding that their home governments are no longer protecting them. It could be said that, by linking the region's cities with cheap and frequent flights, Mr Fernandes has done more to turn South-East Asia into an integrated economic block than any ASEAN ministerial summit. In other once-coddled industries, too, governments are starting to dismantle monopolies. YTL's Mr Yeoh says there will soon be “no hiding place” for firms trying to live from old-fashioned rent-seeking.
The rise of China and India, with their huge home markets, may mean that it is too late for South-East Asia to become big in manufacturing. But it does still have the prospect of producing world-leading firms in other areas where it has an edge. Tourism and hospitality are obvious examples, especially as the region's neighbours become richer. South-East Asia could become both “the Mediterranean and the Caribbean of Asia”, enthuses YTL's Mr Yeoh.
Playing to your strengths
Apart from YTL, well regarded companies that could use tourism growth as a springboard to global greatness include hotel groups such as Singapore's Banyan Tree, casino operators like Malaysia's Genting and even hospital firms like Thailand's Bumrungrad, a growing competitor in “medical tourism”. However, as HSBC's Mr Evans points out, such firms have yet to demonstrate that they can transfer their vaunted “service mentality” to other parts of the world that do not have an abundance of cheap labour.
Natural resources are another promising source of future world-beaters. Following Brazil and, closer to home, Australia, South-East Asia is beginning to build global businesses by making the most of what nature has provided. Palm oil, of which most of the world's supply comes from Malaysia and Indonesia, is one example. Some plantation firms are simply hitching a ride on the boom in prices but IOI, a Malaysian plantation owner, is about 50% more efficient in terms of yield per hectare than its local rivals. If the government could push Synergy Drive, its new behemoth, to the same level of productivity, it would boost the economy.
The region already dominates some types of agricultural produce: Thailand and Vietnam are the world's two largest rice exporters, for example. Since the region has so much coastline and so many rivers, there is much scope for expanding fish-farming and seafood production. Thai Union, a giant tuna-packer, is already in BCG's top 100. Vietnam, the region's rising star, has several big seafood firms which, if they can resist the regionwide scourge of diversification, may one day reach similar heights. But to make the most of its fertile land and waters, the region needs more sophisticated food-processing industries and stronger brands, instead of exporting bulk commodities.
The reasons why South-East Asia has been slower than other regions to produce world-class businesses are complex and open to debate. But they do seem to be linked to the perseverance of narrow elites and to the countries' sluggishness in overcoming old rivalries and building an integrated regional market. As a handful of promising companies are showing, not all is lost. Even in today's fierce jungle, South-East Asia can still breed tigers.
China Discovers the Permissive Society
AP - Monday, March 3
BEIJING - The no-tell motels in Beijing’s university districts pulsate with sex.
Every weekend, lusty college couples make a beeline past greasy spoon restaurants and bootleg video game shops for the dim hotel lobbies to book three-hour blocks of privacy. Students fill half the simple but tidy rooms at the Cheng Lin Ming Guang Hotel, a 10-minute walk from Beijing Normal University.
China is in the midst of a sexual revolution, a byproduct of rising prosperity and looser government restrictions on private life. The relaxed attitudes about sex mark a historic turnaround from the days when love and sex were denounced as bourgeois decadence, and unisex Mao suits and drab austerity were the norm.
But the revolution is taking place largely behind closed doors, and the word “sex” or “xing” (pronounced shing) is spoken only among close friends, and then usually in a whisper.
As a result, sex education has not kept up with sexual activity, with some unwelcome consequences. High school girls make up 80 percent of the patients at Shanghai abortion clinics during one-week school holidays, state media reported last year.
As recently as the 1980s, a couple holding hands in public would draw stares. Now, a government that once had say over when and whom people could marry is more concerned about regulating interest rates. And rising incomes have allowed urban Chinese to pursue much more than mere survival.
While the countryside remains more traditional, at least outwardly, public benches in cities are filled at night with young couples necking openly. Hipsters pack sleek clubs to flirt, chain-smoke imported cigarettes and sip green tea mixed with whiskey. Vibrators are sold in vending machines and at ubiquitous “adult health product” stores. Even the Web site of the government’s Xinhua News Agency has a photo slideshow titled “Paris Hilton goes sexy for birthday party.”
Studies indicate that 60 to 70 percent of Chinese have had sex before marriage, up from 15 percent in 1989, according to Li Yinhe, a sex expert at the Chinese Academy of Social Sciences.
In that time, the average urban marriage age has crept steadily higher, reaching 31 for men in Shanghai last year. There has also been a notable shift in attitudes, particularly among those born in the booming ‘80s.
At the Pepper bar in Beijing, a 20-year-old manager who did not give her name said without hesitation that young women’s attitudes toward sex is casual. Her friends often show up and pick up men.
Cai Junjie, a strapping 23-year-old golf coach who calls himself Tank, saw no reason for a long mating ritual before sex.
“If two people want to be together, time isn’t an issue,” he said, still avoiding the word “sex” when talking to a stranger.
Chu Yanyang, an unemployed 21-year-old, said she once went to a bar known as “One-Night Stand,” just to see if it lived up to its reputation. It did.
“They’ll ... write their phone number on a little slip of paper. And if you drink a beer with him, then he’ll give you the slip of paper,” she said. “That way, you can get in touch if you want to hook up another day, or some people might even just leave together then and get a hotel room.”
Maintaining a relationship can be too much work, Chu added. “If when we eat I always put food on your plate for you and one day I don’t, then you might get mad and fuss at me. These little fights are really hard,” she said. “So you might have a one-night stand. It’s just so much easier.”
Those without their own apartments can turn to hourly rate motels. Dorm rooms in China are generally crowded with a half-dozen students each, while many follow tradition _ or economic necessity _ and live with their parents long after high school graduation.
On a lazy Sunday afternoon, one young woman flounced into the Cheng Lin Ming Guang Hotel, beau in tow, brushing past another couple in the lobby to negotiate loudly with the receptionist for her favourite room (No. 112) and a break on the rate ($12 for three hours).
At a shabby basement hotel around the corner, where every room is decorated with a poster of a scantily clad Western woman, a young couple straightened the sheets and blanket before leaving. A sign on the wall warned: “If the linens are too dirty, you will lose your deposit.”
Families and schools remain shy when talking about sex, and teenage sex has flourished in the gap between awkward discussions and silence.
Psychologist Deng Jun fields 15 to 20 calls a day, mostly about sex, on a hot line for teens she runs out of her office, tucked in a corner of the fifth floor of the dingy Beijing No. 2 Hospital. Most of her callers are high school or college age, though sometimes they are as young as 10.
“With society opening up, our attitudes about sex are changing,” the 52-year-old said. “(Adults) don’t approve of premarital sex ... because when you have sex, it brings a series of unavoidable problems. These problems, as they increase, become society’s problems.”
A vocational high school in Xinjiang, a region about 1,500 miles west of Beijing, briefly enacted a rule last year requiring female students to take pregnancy tests as part of their annual school physical. An outcry about privacy forced the school to retreat.
Abortion is readily available and viewed as a much better alternative to the searing shame of being an unwed teenage mother in China.
A walk-in abortion costs $140 at the Haidian Maternal and Child Health Hospital, a large public hospital in northwest Beijing. Too pricey? Skip the anesthesia and the price falls to $55.
Still, the rising number of abortions among younger Chinese alarms educators, who blame outdated sex education. Students learn about sexually transmitted diseases including AIDS, but the discussions about sex itself are vague and condom use is rarely addressed.
“They don’t talk directly about sexual relations,” said Li, the sex expert. “If you don’t talk directly about sex, it’s an incomplete sex education.”
Frisky blogger “Bamboo Shadows” embodies the contradictions of a changing China, with one foot entrenched in traditional values and the other swinging forward toward a modern kind of free love.
On her site, the Beijing resident openly discusses her breasts, orgasms and struggles to control arousal during yoga classes. But the husky-voiced tech worker, who refused to give her real name in an interview, illustrated in one posting that even in an increasingly permissive China, standards still exist.
She had wrapped her arm around her boyfriend’s waist while riding on the back of his bicycle, caressing him as he pedalled the streets of the Chinese capital. But later, she wrote, “He wanted to be very affectionate in public. I refused. I said we had just eaten and hadn’t brushed our teeth.”
China Discovers the Permissive Society
AP - Monday, March 3
BEIJING - The no-tell motels in Beijing’s university districts pulsate with sex.
Every weekend, lusty college couples make a beeline past greasy spoon restaurants and bootleg video game shops for the dim hotel lobbies to book three-hour blocks of privacy. Students fill half the simple but tidy rooms at the Cheng Lin Ming Guang Hotel, a 10-minute walk from Beijing Normal University.
China is in the midst of a sexual revolution, a byproduct of rising prosperity and looser government restrictions on private life. The relaxed attitudes about sex mark a historic turnaround from the days when love and sex were denounced as bourgeois decadence, and unisex Mao suits and drab austerity were the norm.
But the revolution is taking place largely behind closed doors, and the word “sex” or “xing” (pronounced shing) is spoken only among close friends, and then usually in a whisper.
As a result, sex education has not kept up with sexual activity, with some unwelcome consequences. High school girls make up 80 percent of the patients at Shanghai abortion clinics during one-week school holidays, state media reported last year.
As recently as the 1980s, a couple holding hands in public would draw stares. Now, a government that once had say over when and whom people could marry is more concerned about regulating interest rates. And rising incomes have allowed urban Chinese to pursue much more than mere survival.
While the countryside remains more traditional, at least outwardly, public benches in cities are filled at night with young couples necking openly. Hipsters pack sleek clubs to flirt, chain-smoke imported cigarettes and sip green tea mixed with whiskey. Vibrators are sold in vending machines and at ubiquitous “adult health product” stores. Even the Web site of the government’s Xinhua News Agency has a photo slideshow titled “Paris Hilton goes sexy for birthday party.”
Studies indicate that 60 to 70 percent of Chinese have had sex before marriage, up from 15 percent in 1989, according to Li Yinhe, a sex expert at the Chinese Academy of Social Sciences.
In that time, the average urban marriage age has crept steadily higher, reaching 31 for men in Shanghai last year. There has also been a notable shift in attitudes, particularly among those born in the booming ‘80s.
At the Pepper bar in Beijing, a 20-year-old manager who did not give her name said without hesitation that young women’s attitudes toward sex is casual. Her friends often show up and pick up men.
Cai Junjie, a strapping 23-year-old golf coach who calls himself Tank, saw no reason for a long mating ritual before sex.
“If two people want to be together, time isn’t an issue,” he said, still avoiding the word “sex” when talking to a stranger.
Chu Yanyang, an unemployed 21-year-old, said she once went to a bar known as “One-Night Stand,” just to see if it lived up to its reputation. It did.
“They’ll ... write their phone number on a little slip of paper. And if you drink a beer with him, then he’ll give you the slip of paper,” she said. “That way, you can get in touch if you want to hook up another day, or some people might even just leave together then and get a hotel room.”
Maintaining a relationship can be too much work, Chu added. “If when we eat I always put food on your plate for you and one day I don’t, then you might get mad and fuss at me. These little fights are really hard,” she said. “So you might have a one-night stand. It’s just so much easier.”
Those without their own apartments can turn to hourly rate motels. Dorm rooms in China are generally crowded with a half-dozen students each, while many follow tradition _ or economic necessity _ and live with their parents long after high school graduation.
On a lazy Sunday afternoon, one young woman flounced into the Cheng Lin Ming Guang Hotel, beau in tow, brushing past another couple in the lobby to negotiate loudly with the receptionist for her favourite room (No. 112) and a break on the rate ($12 for three hours).
At a shabby basement hotel around the corner, where every room is decorated with a poster of a scantily clad Western woman, a young couple straightened the sheets and blanket before leaving. A sign on the wall warned: “If the linens are too dirty, you will lose your deposit.”
Families and schools remain shy when talking about sex, and teenage sex has flourished in the gap between awkward discussions and silence.
Psychologist Deng Jun fields 15 to 20 calls a day, mostly about sex, on a hot line for teens she runs out of her office, tucked in a corner of the fifth floor of the dingy Beijing No. 2 Hospital. Most of her callers are high school or college age, though sometimes they are as young as 10.
“With society opening up, our attitudes about sex are changing,” the 52-year-old said. “(Adults) don’t approve of premarital sex ... because when you have sex, it brings a series of unavoidable problems. These problems, as they increase, become society’s problems.”
A vocational high school in Xinjiang, a region about 1,500 miles west of Beijing, briefly enacted a rule last year requiring female students to take pregnancy tests as part of their annual school physical. An outcry about privacy forced the school to retreat.
Abortion is readily available and viewed as a much better alternative to the searing shame of being an unwed teenage mother in China.
A walk-in abortion costs $140 at the Haidian Maternal and Child Health Hospital, a large public hospital in northwest Beijing. Too pricey? Skip the anesthesia and the price falls to $55.
Still, the rising number of abortions among younger Chinese alarms educators, who blame outdated sex education. Students learn about sexually transmitted diseases including AIDS, but the discussions about sex itself are vague and condom use is rarely addressed.
“They don’t talk directly about sexual relations,” said Li, the sex expert. “If you don’t talk directly about sex, it’s an incomplete sex education.”
Frisky blogger “Bamboo Shadows” embodies the contradictions of a changing China, with one foot entrenched in traditional values and the other swinging forward toward a modern kind of free love.
On her site, the Beijing resident openly discusses her breasts, orgasms and struggles to control arousal during yoga classes. But the husky-voiced tech worker, who refused to give her real name in an interview, illustrated in one posting that even in an increasingly permissive China, standards still exist.
She had wrapped her arm around her boyfriend’s waist while riding on the back of his bicycle, caressing him as he pedalled the streets of the Chinese capital. But later, she wrote, “He wanted to be very affectionate in public. I refused. I said we had just eaten and hadn’t brushed our teeth.”
Hong Kong Citizens Waking Up From The So-Called Service Economy Dream, Wonders Where All Factories Went.
Some Hong Kongers just woke up the other day and realized that there is no manufacturing left in Hong Kong.
Hong Kong’s economy is actually quite complicated, but the best way to describe it is as follows:
Hong Kong’s manufacturing is food preparation, like McDonald’s and Burger King.
Programmers in Hong Kong are not provided ample opportunity or good salary in IT.
Top students in Hong Kong are stuck selling real estate. The average students are pushing annuities at Wealth Management firms.
As people begin to unfold the credit derivatives and structured products, problems are surfacing about actual commodities delivery: gold, wheat, pigs, etc. … and who really owns the products?
Furthermore, Hong Kongers may need to start moving to the mainland to find work in the factories they once owned.
Dollar Falls to 3-Year Low on Speculation Debt Losses to Spread
March 3 (Bloomberg) -- The dollar declined to a three-year low against the yen on speculation banks will report more losses from the collapse of the U.S. subprime mortgage market.
The currency broke below 103 yen for the first time since January 2005 and approached a record low against the euro as stocks fell and the cost to protect corporate debt from default rose to a record high in Asia. The dollar also dropped before speeches by two Federal Reserve policy makers and an industry report that may show U.S. manufacturing contracted.
“The U.S. economy is weak and is the epicenter of the subprime loan crisis,” said Masafumi Yamamoto, head of foreign exchange strategy in Tokyo at Royal Bank of Scotland Group Plc, the world’s fourth biggest currency trader, and a former Bank of Japan currency trader. “The trend is for the dollar to weaken against the yen.”
The dollar fell to 102.65 yen, the lowest since Jan. 28, 2005, before trading at 102.77 at 7:01 a.m. in London, from 103.74 late in New York on Feb. 29. It slid to $1.5225 per euro from $1.5179 that day, when it reached $1.5239, the lowest since the common European currency’s debut in January 1999. The dollar may fall to 102 yen this week, Yamamoto forecast.
The yen gained against 15 of the 16 most-active currencies as credit market losses prompted investors to reduce holdings of higher-yielding assets financed with loans from Japan.
Non-Stop Buying
There is still potential for a “significant unwinding” of so-called carry trades, Barclays Capital strategists led by London-based David Woo wrote in a research note today. Barclays expects the dollar to hold above 100 yen.
Ambac Financial Group Inc., a bond insurer, also known as a monoline, said last week it will stop writing guarantees on new asset-backed securities for six months to avoid a credit rating downgrade. Japanese consumer finance firm Takefuji Corp. said today it may report losses of as much as 30 billion yen ($289 million) on subprime-related derivatives transactions. The currency gained to 157.10 per euro from 157.46.
“Investors are shunning risky assets and are buying the yen non-stop,” said Seiichiro Muta, director of foreign exchange in Tokyo at UBS, the world’s second-largest currency trader. “Everything is bad as the subprime and monoline crisis doesn’t seem to be over and stocks may decline.”
The yen may rise to 156.00 per euro today, Muta forecast.
Asian currencies slumped against the dollar on speculation a U.S. slowdown will spread to the region. South Korea’s won fell 0.8 percent to 946.85 per dollar, the biggest one-day decline in more than six months. The Singapore dollar declined 0.3 percent from late Asian trading on Feb. 29 to S$1.3969.
Default Risk
Credit-default swaps, contracts conceived to protect bondholders against default, rose to record highs in Japan and Australia. The MSCI Asia-Pacific index of regional shares fell 2.9 percent after UBS AG, Europe’s biggest bank by assets, predicted global financial companies may lose at least $600 billion from the collapse of the subprime market.
The U.S. currency tumbled 2.3 percent against the euro in February, its biggest monthly decline since September. The synthetic euro, which estimates the European currency’s value before 1999, reached the strongest since at least January 1989, when Bloomberg’s data on the measure begin, on Feb. 29.
While Treasury Secretary Henry Paulson reiterated last week that he favors a strong dollar, Fed Chairman Ben S. Bernanke said the decline was helping cut the U.S. trade deficit. Luxembourg Finance Minister Jean-Claude Juncker said last week he didn’t want to see “excessive volatility.” Japan’s Finance Minister Fukushiro Nukaga today declined to comment to reporters about foreign-exchange moves.
Record Low
The dollar fell to a record low against the currencies of six major trading partners. The U.S. Dollar Index traded on ICE Futures in New York slid to 73.531 today, the lowest since the gauge started in 1973. The Institute for Supply Management will say its manufacturing index declined to 48 in February from 50.7 in January, indicating a contraction, according to a Bloomberg News survey.
The dollar dropped to a record low of 1.0323 Swiss francs from 1.0412 and fell to C$0.9849 against the Canadian dollar from C$0.9878. Philadelphia Fed President Charles Plosser speaks on monetary policy in Arlington, Virginia at 8 a.m. local time today. Fed Governor Randall Kroszner will talk on risk management at 2 p.m. in Washington. Both vote on interest rates.
Futures traders increased their bets that the euro will gain against the dollar, figures from the Washington-based Commodity Futures Trading Commission show. The difference in the number of wagers by hedge funds and other large speculators on an advance in the euro compared with those on a decline -- so- called net longs -- was 31,778 on Feb. 26, compared with net longs of 14,730 a week earlier.
Subprime Loans
The yen gained 1.9 percent against South Africa’s rand to 13.0036 and rose 0.6 percent versus New Zealand’s dollar to 82.33.
Japan’s benchmark rate of 0.5 percent, the lowest among industrialized nations, compares with 8.25 percent in New Zealand and 11 percent in South Africa. In carry trades, investors get funds in a country with low borrowing costs and invest in one with higher rates, earning the spread between the two. The risk is that currency moves erase those profits.
The one-month 25-delta risk reversal rate for dollar-yen options widened to minus 3.35 percent from minus 2.95 percent at the end of last week. Delta measures the change in an option’s value relative to currency moves. A negative risk reversal rate indicates greater demand for yen call options that grant the right to buy over put options that grant the right to sell.
HSBC 'to unveil $16bn writedown'
2 March 2008
The UK's largest bank HSBC is expected to unveil about $16bn (£8.1bn) of losses for 2007, but will still make an annual profit, reports suggest.
The firm's annual results out on Monday will show that the bad debt charge is mostly related to the crumbling US housing market and consumer blues.
But it is still thought profits will rise to $25bn, from $22bn the year before and it will raise its dividend.
UK banks have so far fared better than their US rivals in the credit crisis.
HSBC is the last of the "big five" British banks to report its earnings for 2007.
Barclays, Royal Bank of Scotland (RBS), Lloyds TSB and HBOS, which was formed by the merger of Halifax and Bank of Scotland, have already filed their figures.
Together with a number of smaller High Street lenders, they have made a collective loss of about £5bn on the declining value of investments linked to the US sub-prime mortgage crisis before factoring in potential losses at HSBC, according to The Observer.
Under pressure
HSBC's $16bn bad debt writedown, forecast in reports in most of the Sunday newspapers, would be two thirds greater than the $10.6bn impairment provision for 2006.
The scale of the losses is expected to increase pressure on the bank's management from activist shareholders to overhaul its policy with regard to its troubled US arm HSBC Finance Corporation (HFC).
Knight Vinke Asset Management is pressing HSBC's chairman Stephen Green to sever ties with HFC and thus ditch all its exposure to struggling US housebuyers, according to reports in The Sunday Times and The Sunday Telegraph.
The investment group wants HSBC to focus on growing markets in Asia.
In line with its demands, the banking giant sold its French regional banking subsidiaries, which had 400 branches, for $3.2bn last week.
Brighter future?
HSBC is expected to reassure investors that its future is brighter by lifting its dividend payout to shareholders by 10% in line with its UK peers.
Analysts believe higher dividends suggest banks feel they are over the worst of the problems in the US housing market, which has been battered by record mortgage defaults, falling house prices and increased borrowing costs.
But there are fears that HSBC's troubles are spreading beyond its US mortgage business with US consumers struggling to repay credit card bills and personal loans.
Japan plans activist sovereign wealth fund
Leo Lewis, Asia Business Correspondent
Japan plans to set up an activist sovereign wealth fund, with a £10 billion share portfolio, aimed at keeping Japan Inc honest and shareholder-friendly, The Times has learnt.
The move comes amid unprecedented criticism of Japanese corporations for ignoring the demands of shareholders and slowly undoing recent market-driven reforms.
Predominantly targeting domestic investments, the activist fund's push for better performance would join calls by foreign investors for higher standards of corporate governance, better transparency and higher dividends. It is expected to grow in £10billion increments every few years depending on performance, and would draw on Japan's £500 billion cache of foreign currency reserves.
Senior government sources told The Times that a worldwide talent search was under way to find managers for the fund, which would be run “as an activist for taxpayers and shareholders”. Its planners hope that, in terms of investment decisions, the fund would maintain an arms-length relationship with government.
Around half the capital would be outsourced to fund-of-fund-style managers, and the fund's research panel has already been swamped with applications to administer the main fund.
“For too long, Japan's huge wealth has been poorly managed by the bureaucrats, who know absolutely nothing about returns,” Kotaro Tamura, one of several MPs spearheading plans for the sovereign wealth fund, said. “It is time to take that role from the amateurs and hand it to professionals. It is something we owe to the country's pensioners.”
The fund's blueprint is under discussion by a cross-party panel of MPs and will be presented to Yasuo Fukuda, the Prime Minister, within the next few weeks.
As legislation is prepared to establish the fund, it is expected to face fierce opposition, not least from the Finance Ministry. One of the fund's tacit champions, however, is Yoshimi Watanabe, the Financial Services Minister, who said last week that sovereign wealth funds had assumed a global presence that “cannot be ignored” and that he was discussing ways to “ensure a win-win relationship” between the fund itself and the targets of its investments.
Given the Government's precarious political status - it controls only one house in parliament - the planners' biggest area of concern is the reputation of sovereign funds around the world as opaque and manipulative. By touting the new fund's credentials as “the people's fund”, members of the planning committee said, the new scheme could be voted through.
When drawing up the main operating model for the fund, researchers visited sovereign wealth funds in Singapore, Abu Dhabi, China and Norway. Norway's example - by far the most transparent in its class - has emerged as the model most likely to be adopted in Japan.
Its proposed activism - already a highly controversial concept in Japan - might appeal to voters as what Mr Tamura described as “cost-free reform”. The presence of five opposition party members on the 20-strong planning committee of MPs and private sector experts is also expected to smooth its passage through parliament.
The plans come as private-sector activist funds in Japan have suffered a string of setbacks and listed companies have refused repeatedly to prioritise shareholders. This has triggered a capital flight from Japanese stocks, wiping trillions of yen in value from the market. Last year, 400 listed companies established poison-pill defence mechanisms. Many more have begun to rebuild “cross-shareholdings”, the informal alliances of supposedly competitive companies that were broken down under the reformist regime of Junichiro Koizumi, the former premier.
Buffett defends sovereign wealth funds
By Francesco Guerrera and Justin Baer in New York
Published: February 29 2008 23:10 | Last updated: March 2 2008 22:40
Warren Buffett blamed US economic policies for recent investments by sovereign wealth funds, saying their recent buying spree was America’s doing, not “some nefarious plot by foreign governments”.
In his closely-watched annual letter to shareholders, the billionaire investor revelaled he had chosen four unnamed candidates to become chief investment officer of Berkshire Hathaway, his conglomerate, when he dies or steps down.
The 22-page document – required reading for investors who follow Mr Buffett’s folksy nuggets of wisdom – also warned that the “party is over” for the insurance industry, predicting a sharp fall in margins in Berkshire’s core business in 2008.
The warning was borne out by Berskhire’s fourth quarter results, which fell 18 per cent.
Mr Buffett’s intervention in the debate over sovereign wealth funds comes as presidential candidates and members of Congress have expressed concerns at the lack of transparency of government-controlled investors.
But the “Sage of Omaha” said investments by sovereign funds, which have bought into several Wall Street banks and private equity groups, were a direct result of the US trade deficit, national debt and weak currency.
“This is our doing,” the letter said, adding that sovereign funds were recycling debt issued by the US.
“Our trade equation guarantees massive foreign investments in the US,” Mr Buffett said. “When we force-feed $2bn daily to the rest of the world they must invest in something here. Why should we complain when they choose stocks over bonds?”
Mr Buffett took aim at corporate America, scolding many companies for inflating short-term earnings by over-estimating the expected returns on their pension funds, and criticised financial institutions for their role in the current credit crunch.
He said the fall in US house prices had exposed “a huge amount of financial folly”.
“You only learn who has been swimming naked when the tide goes out – and what we are witnessing at some of our largest financial institutions is an ugly sight.”
On the issue of succession, the 77-year-old investor said that, after a year-long search, he had identified four, unnamed, candidates to manage Berkshire’s $140bn pool of investments when he dies or becomes incapacitated.
He said the candidates “all manage substantial sums currently, all have indicated a strong interest in coming to Berkshire if called”. He added that they were “young to middle-aged, well-to-do to rich and all wish to work for Berkshire for reasons that go beyond compensation”.
Mr Buffett repeated that there were also three unnamed candidates to replace him as chief executive of Berkshire.
Berkshire’s fourth quarter results showed net earnings of $2.9bn compared to $3.6bn in the same period last year. For the full year, net earnings were $13.2bn up from $11bn last year.
Copyright The Financial Times Limited 2008
Economist: China's stock market not to turn bearish
China's stock market, despite its fluctuation, will not turn bearish, said renowned Chinese economist Li Yining ahead of the annual session of the country's top advisory body.
"The stock market was bullish last year in general. But as the split-share structure reform has drawn to an end, it may undergo correction," said Li, 87, who is a member of the 11th National Committee of the Chinese People's Political Consultative Conference (CPPCC).
Stock market growth will be one of the focused topics among the country's political advisors, who will meet Monday afternoon for their annual full session at the Great Hall of the People in central Beijing.
China saw a round of bull stock market in 2007, with the key benchmark Shanghai Composite Index soaring from 2,728 points on January to 5,261 points, or 92.85 percent, on December 28.
In fact, the market has been on a bullish run for 29 months from June 6, 2005 to November 2007, longer than the general bullish market cycle of 17 to 24 months.
But it has dipped since last November, interlaid by several upturns that failed to turn the scale.
The Shanghai stock exchange closed at 4,349 points last Friday, the latest trading day, which was 1,775 points, or 28.98 percent lower than the historical record high last Oct. 16.
"The plunge was mainly caused by investors' jitters over the influence of the American subprime crisis, the macro control measures to cool the sizzling economy and refinancing plans of companies to be listed," said the economist, adding that lack of experience of the newcomers also fueled their anxiety.
An example is the mammoth trading debut by PetroChina last year, which was blamed to worsen the downward slump of Chinese share prices. On news of PetroChina's listing, China's major stock index dropped 2.31 percent on November 2.
There are two factors signaling whether a stock market is to turn bearish, according to Li. One is economic recession of a country and the other world influence to the country's stock market.
"China's economy is still on the rise, although the growth rate may slow down a little this year," He said. "The world stock market is not bearish and its influence to China's not-so-open stock market is limited."
Source:Xinhua
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