More Hong Kong companies say business impacted by mass protests

I’m saying that free market tends to lead to your definition of “phoney capitalism” just as unbridled capitalism tends to lead to massive poverty-wealth divide that will destabilise the society

The idea of creating competition is not new to Singapore as Singapore Inc tried to do that under Goh era. 2 Broadcast stations, competition in public transport including train lines, privatising shop houses to let market decide secondary price and rental etc

I leave it open for us to contemplate if such idealistic pursuit of competitive environment actually works in real life, without understanding the incentive nature of man, global competing forces, or structural constraints, not to mention policy goals.

Hotel staff told to go on leave as tourists shun Hong Kong
Published Sep 19, 2019, 5:00 am SGT

HONG KONG • Protests in Hong Kong are driving away visitors, and the city's hotel workers are paying the price.

About 77 per cent of people working in hotels have been told to take unpaid leave of up to three days, while 46 per cent expect their monthly income to be reduced by as much as HK$3,000 (S$527), according to a survey by the Hotels, Food and Beverage Employees Association. About 43 per cent believe hotels will cut jobs if the situation worsens.............

Read more : https://www.straitstimes.com/asia/hotel-...ts-shun-hk

SCMP has a series of insightful articles that talk about the protests in HK. Might be more credible from a HK based newspaper i reckon.

Hongkongers pay a price for their low taxes through the world’s most expensive homes and smallest living space. Here’s why

In a new series delving beyond the social unrest in Hong Kong to survey the city’s deep-rooted problems, the Post is focusing on the role of housing in causing great disaffection in society.
In this first instalment, we examine how the issue of high land prices is linked to government financing and the low-tax environment.

https://www.scmp.com/business/article/30...sive-homes

(25-09-2019, 10:00 PM)weijian Wrote: SCMP has a series of insightful articles that talk about the protests in HK. Might be more credible from a HK based newspaper i reckon.

Hongkongers pay a price for their low taxes through the world’s most expensive homes and smallest living space. Here’s why

In a new series delving beyond the social unrest in Hong Kong to survey the city’s deep-rooted problems, the Post is focusing on the role of housing in causing great disaffection in society.
In this first instalment, we examine how the issue of high land prices is linked to government financing and the low-tax environment.

https://www.scmp.com/business/article/30...sive-homes

Unfortunately, the article makes a spurious linkage between high land prices and low taxes. The HK Government has largely failed to spend the money generated by high land prices - they have instead used it to build up enormous reserves of over $2 trillion, and spent much of the rest on white-elephant construction projects. In the 24 years before 1997 (the handover) the colonial government, with the same low taxes, built 9 new towns, where 2.4 million people now live. Average flat production in the last 10 years before the handover was about 70,000 per year, of which typically 15,000 to 20,000 were HOS (government subsidised for sale, equivalent to HDB) and 25,000 government rental. Since the handover, the HK government has studied 6 new towns, but not one has actually started construction. Annual flat production has dwindled to about 25,000 a year, total, with only about 500 HOS flats built per year between 2009 and 2018. Pre-handover there were the same low taxes, massive building of flats, and limited build-up of cash reserves. After handover, flat building, particularly government subsidised flats, has dropped enormously, property and land prices have skyrocketed, and the biggest single beneficiary, financially, has been the Hong Kong government. However, they have simply stuffed much of the money under the mattress. So the claim that the HK government needs high land prices to keep taxes low is nonsense.

(26-09-2019, 06:04 AM)Dosser Wrote:

(25-09-2019, 10:00 PM)weijian Wrote: SCMP has a series of insightful articles that talk about the protests in HK. Might be more credible from a HK based newspaper i reckon.

Hongkongers pay a price for their low taxes through the world’s most expensive homes and smallest living space. Here’s why

In a new series delving beyond the social unrest in Hong Kong to survey the city’s deep-rooted problems, the Post is focusing on the role of housing in causing great disaffection in society.
In this first instalment, we examine how the issue of high land prices is linked to government financing and the low-tax environment.

https://www.scmp.com/business/article/30...sive-homes

Unfortunately, the article makes a spurious linkage between high land prices and low taxes. The HK Government has largely failed to spend the money generated by high land prices - they have instead used it to build up enormous reserves of over $2 trillion, and spent much of the rest on white-elephant construction projects. In the 24 years before 1997 (the handover) the colonial government, with the same low taxes, built 9 new towns, where 2.4 million people now live. Average flat production in the last 10 years before the handover was about 70,000 per year, of which typically 15,000 to 20,000 were HOS (government subsidised for sale, equivalent to HDB) and 25,000 government rental. Since the handover, the HK government has studied 6 new towns, but not one has actually started construction. Annual flat production has dwindled to about 25,000 a year, total, with only about 500 HOS flats built per year between 2009 and 2018. Pre-handover there were the same low taxes, massive building of flats, and limited build-up of cash reserves. After handover, flat building, particularly government subsidised flats, has dropped enormously, property and land prices have skyrocketed, and the biggest single beneficiary, financially, has been the Hong Kong government. However, they have simply stuffed much of the money under the mattress. So the claim that the HK government needs high land prices to keep taxes low is nonsense.

Hi Dosser,
I had posted the link to the "first installment" of articles. The 2nd installment talks about role of tycoons. I reckon there will be more to come.

As you suspected, society/economic problems are complex and can't have simple root causes. I like to see it as blind men touching different part of the elephant and trying to figure out what it is eventually after combining everything it has touched (has long nose, has flapping ears, has 4 thick feet...). All these attributes make an elephant but a single one doesnt. And we haven't talk about how these different attributes interact with each other.

I didn't know HK reserves are so huge and after googling it, it seems like the 2trillion figure is not far off. Even their own economist are criticizing it. I reckon the scars of 1997 are still there ("Never Again")

https://www.scmp.com/business/companies/...s-actually

i think HKMA was already well prepared during the AFC days -
"Billionaire financier George Soros has praised the Hong Kong government for thwarting his attempts to undermine the local currency and stock market in 1998 but maintained he had every right to do so.
...
The financier made his comments to China Central Television while in Shanghai on Sunday to give a speech at Fudan University.
'They actually did a very good job defending the Hong Kong dollar, so they deserve credit. And my attack, if you call it that, was without success."
https://www.scmp.com/article/683788/soro...ar-attacks

from the same article - "The attack on the Hong Kong dollar raised fears the government would have to break the peg to the US dollar." considering the HKMA firepower has ballooned since then, some hedge fund is still betting on the case that the peg will fail? hmmmmmm

(26-09-2019, 12:54 PM)weijian Wrote:

(26-09-2019, 06:04 AM)Dosser Wrote:

(25-09-2019, 10:00 PM)weijian Wrote: SCMP has a series of insightful articles that talk about the protests in HK. Might be more credible from a HK based newspaper i reckon.

Hongkongers pay a price for their low taxes through the world’s most expensive homes and smallest living space. Here’s why

In a new series delving beyond the social unrest in Hong Kong to survey the city’s deep-rooted problems, the Post is focusing on the role of housing in causing great disaffection in society.
In this first instalment, we examine how the issue of high land prices is linked to government financing and the low-tax environment.

https://www.scmp.com/business/article/30...sive-homes

Unfortunately, the article makes a spurious linkage between high land prices and low taxes. The HK Government has largely failed to spend the money generated by high land prices - they have instead used it to build up enormous reserves of over $2 trillion, and spent much of the rest on white-elephant construction projects. In the 24 years before 1997 (the handover) the colonial government, with the same low taxes, built 9 new towns, where 2.4 million people now live. Average flat production in the last 10 years before the handover was about 70,000 per year, of which typically 15,000 to 20,000 were HOS (government subsidised for sale, equivalent to HDB) and 25,000 government rental. Since the handover, the HK government has studied 6 new towns, but not one has actually started construction. Annual flat production has dwindled to about 25,000 a year, total, with only about 500 HOS flats built per year between 2009 and 2018. Pre-handover there were the same low taxes, massive building of flats, and limited build-up of cash reserves. After handover, flat building, particularly government subsidised flats, has dropped enormously, property and land prices have skyrocketed, and the biggest single beneficiary, financially, has been the Hong Kong government. However, they have simply stuffed much of the money under the mattress. So the claim that the HK government needs high land prices to keep taxes low is nonsense.

Hi Dosser,
I had posted the link to the "first installment" of articles. The 2nd installment talks about role of tycoons. I reckon there will be more to come.

As you suspected, society/economic problems are complex and can't have simple root causes. I like to see it as blind men touching different part of the elephant and trying to figure out what it is eventually after combining everything it has touched (has long nose, has flapping ears, has 4 thick feet...). All these attributes make an elephant but a single one doesnt. And we haven't talk about how these different attributes interact with each other.

I didn't know HK reserves are so huge and after googling it, it seems like the 2trillion figure is not far off. Even their own economist are criticizing it. I reckon the scars of 1997 are still there ("Never Again")

https://www.scmp.com/business/companies/...s-actually

Hi Weijian,

As any businessman knows, you can build a business on high price, low volume (mostly luxury goods) or low price, high volume (mass market). The Hong Kong government's approach to land sales over the last 10 to 15 years has been to go for high prices, with low volume. This benefits:

1. The government coffers, which, as your quoted article shows, are full to overflowing. I should have said that my quoted $2 trillion was in HK$; whether it is $2 trillion in HK$ or US$, it is still an unimaginably large sum
   
2. The property developers and their shareholders: their land banks increase in value every year with no effort on their part
   
3. The civil service, who can have an easy life without confronting vested interests in trying to acquire land for mass market development
   
4. Old guys like me, who bought property there before it skyrocketed
   

The people who have effectively lost their futures, as a result of this, have been those under 30 - 35 years old. It costs typically about HK$6 million (over S$1m) to buy a second hand ex HOS 500 square foot flat in the New Territories, much more for a new flat or one on Hong Kong Island. How is a young person, unless they are in a top profession and/or from a well-off family, ever going to be afford to pay even the deposit on a tiny flat? This has been slowly brewing ever since the HK property market came out of its post AFC/SARS depression - and now it has reached boiling point.

My knowledge is limited, but I have yet to know of any large-scale violent unrest/uprising involving people with relatively good standard of living. On the surface, they may complain about political corruption, environmental issues, or stuff that appear unrelated to standard of living. But people who turn violent have always been those at the bottom of the income/wealth pyramid.

My present take on HK's real estate policies is that Beijing will eventually introduce social/housing reform measures. Just as they are doing in Xinjiang. 

In so doing, Beijing may alienate the few billionaire land owners. But that is a small price to pay. China now has far more economic resources and international business savvy, compared to 30 years ago when it first opened for business, to no longer need the assistance/acquaintance of the billionaires. Beijing has little to gain, and far more to lose, from allowing the billionaires to maintain the status quo.

I don't know what Beijing will do. But since all real estate leases expire in 2047, this gives Beijing a good opportunity to introduce land reforms then. But HK may be as good as gone if Beijing sits on their hands until 2047. So perhaps changes will coming sooner rather than later.

And so I'm bearish on HK real estate. I think Jardine/Mandarin Oriental missed a tremendous opportunity to monetise their Lot 1 land at what would have been windfall valuations.

NWD has already been reported to be donating land. They probably know what's coming. Perhaps even thinking that such a move may win favours from Beijing.

https://www.scmp.com/business/article/30...-ease-hong

---

If Beijing does introduce social/housing reforms, whether through promises or actions, I'm pretty sure most of the protesters will consider it a win, and end violence. There will certainly be some hardcore protesters insisting on their 5 demands. But without a mass of support, they will lack the (moral) support of whatever damage and disruption they intend. Life will return to normal shortly after, and so shall the Chinese tourists.

And so, I'm bullish on some of the HK-listed retailers. Particularly the ones that have been badly beaten in recent months, with a healthy balance sheet, and good record of profits and dividends.

Studying is ok, buying is not.

Need to exercise maximum control if you wanted to invest in HK now.

Patient.



After the worst is over (we will know when the worst is over),
we just need to have the courage to buy.

Meanwhile, let's pray for the safety of everyone.

make sense?

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感恩 

With the uncertainties in HK continuing, more and more HK residents and MNCs with regional HQs based in HK would be relocating. Certain sectors and companies in SG can become direct or indirect beneficiaries. Intuitively, I can think of relocation services providers, banks, housing agents, residential property owners, foreign schools, etc.