Bad living conditions for many in HKG, raises virus risk

During the 2003 SARS period, more than 40 residents of Amoy Gardens, a middle-class, high-rise private housing estate, died and 329 were infected . The investigators found severe watery diarrhea from infected people carried the virus into other people’s apartments in the form of tiny aerosols that were probably drawn by exhaust fans into the air from the building’s sewage system.  

The coronavirus began spreading in a Hong Kong hotel after it was introduced by an infected doctor visiting from Guangdong. From there, it passed to other hotel guests, who took it with them on airplanes to Canada, Ireland, the U.S., Vietnam and Singapore, illustrating the city’s potential to cultivate and disseminate pathogens internationally.  

 

Economic Shock  

 

SARS infected 1,755 people in Hong Kong, killing 300, and caused economic losses totaling HK$3.8 billion ($490 million) in two months alone as tourist arrivals dwindled and businesses from restaurants to taxi cabs slumped.  

 

Last year, 56.5 million people transited the city’s airport -- 65 % more than in 2002. By the time SARS petered out in August 2003, the virus had spread to more than two dozen countries and three regions, causing 8,096 cases and 774 deaths.  

 

Hong Kong acts as a transit point from China to Hong Kong, and Hong Kong to the world, That virus was discovered in a goose in Guangdong in 1996, seven years before it infected members of a Hong Kong family who had traveled to mainland China. The bird flu strain then spread across Asia and into Europe and Africa.  

 

Since SARS, Hong Kong established a Centre for Health Protection in June 2004 with a HK$500 million donation from the Hong Kong Jockey Club. The center now has an annual budget of about HK$1.6 billion. The government has also established a HK$500 million research fund for the control of infectious diseases after the SARS outbreak in 2003. That’s strengthened the city’s ability to detect and respond to emerging infectious disease threats.  

 

While newer laboratory testing tools have made surveillance more efficient, the city’s growing population and status as an international hub have increased the challenge of detecting potential threats. Cities are where some infectious diseases love to move between people nice and efficiently.  

 

Hong Kong has added more than 400,000 people the past decade. Many newcomers usually travels frequently to the Mainland and willing to sacrifice personal space for higher earning potential in the world’s 10th-largest banking center and third-busiest container port.  

 

‘Cage Homes’

Hong Kong electrician Chan is one of them, he shares a mold-stained toilet with his neighbors, says he’d move out if it weren’t for the rising cost of accommodation.  Chan’s one-room dwelling is smaller than some single-person cells in the city’s correctional centers, which are typically 62 square feet at Stanley prison and 77 square feet at the Lai Chi Kok Reception Centre.

These Cramped living space in ‘cage homes,’  has become the reluctant choice for thousands of Hong Kong people.   Even as officials pledge to improve the affordability of housing, a scarcity of land, long waiting lists for public housing and the constant influx of people mean prices will stay high in the short term.  Chan barely survives on a monthly wage of HK$11,000 ($1,418) -- close to the HK$12,000 median income in Hong Kong -- after paying his bills and sending money to his family in mainland China.

And If you have seen these "cage homes", you'll know how lucky you are!

WMP ,China's version of a Ponzi Scheme??? 3

The Risk 
More than half of off-balance-sheet wealth-management products are linked to asset pools rather than specific investments, making it impossible to know the real returns. The maturity mismatch, poor transparency and lack of clarity about bank responsibility add to the risks.

The wealth-management products are actually a type of investment products. It is different from deposits, and investors must shoulder some risks. The question is do they know the risk. Apparently not right, if not why would anyone rush in? But shouldn't the bank tell them? 

Some banks display a sentence about the risks on a screen at the entrance to their branches. Still, investors have sought and received compensation for losses in the past.

Full Repayment  

For the first default of such a product, the principal was repaid in full after regulators stepped in and a guarantee firm bought the assets.  It was believed that Huaxia was the distributor and affiliated with the issuer.

Bank of Communications Co. also is compensating investors for a wealth-management product whose value dropped 20 % in two years. With these as the precedent, how would investors learn, it almost seems safe !!!!

Many believe -The big question is not only how do banks meet their ever-growing obligations, but also how to make hundreds of millions of investors realize that these are not real deposits. The best solution is to just stop the bank from selling such products in the first place...lol....

WMP- China's version of a Ponzi Scheme ??? 2

The WMP market has grew so huge, that should something goes wrong,  Chinese banks have their reputation on the line, and they face the risk of compensating investors because of pressure from the general public.  

Chinese banks, almost all state-controlled, have relied on such products to beef up their deposit base and finance long-term loans, some of which are held off their balance sheets and repackaged into assets to be sold to investors. Banks time the distribution and maturity date for the last days of the month so that the money can be returned to a saver’s deposit account and await purchase of new wealth-management products on the first day of the following month. That allows it to be considered a deposit on the bank’s balance sheet at month-end.  

Risk Perceptions 

Problem is it seems lenders and wealth-management investors have inconsistent perceptions of risk. While banks say the products’ returns are volatile and should reflect market realities, most customers regard them as de facto deposits and expect to make yields irrespective of all dangers.

The central bank on June 20 allowed the worst cash crunch in at least a decade and warned lenders to avoid raising short-term money to finance long-term loans as part of efforts to crack down on issuance of the products.  

While the two-week surge in borrowing costs was designed to reduce risky positions, the initial impact was to drive investors out of a plunging stock market and further into the shadow-banking system as lenders offered higher yields to attract savers’ money to ease their own liquidity shortage.  

Under certain conditions, the music must stop when investors lose confidence and stop their buying or withdraw from WMPs. The rollover of a large share of WMPs weighs heavily on formal banks’ reputations, because many investors firmly believe that banks won’t close down and they can always get their money back.

 

WMP( wealth-management products) - China's version of a Ponzi Scheme??? 1

Due to China’s credit crunch in June, millions of Chinese divert a large share of their savings into wealth-management products, known as WMPs. Many blame it on government's efforts to curb property speculation and bolster the stock market, which has lost almost 40 % of its value since 2010. Though offered by banks, WMPs are considered part of China’s shadow-banking system, estimated at $6 trillion, or 69 %of gross domestic product.  

So what's the attraction of these WMP?

Higher Rates  

Simply because they provide higher rates of return. WMPs is rather like time deposits to investors, except that most of them don’t have their principal guaranteed by banks. About half invest in low-risk deposits, bonds and money markets. The rest venture into riskier areas including stocks, derivatives and loans to local governments and property developers.  As investors increases, financial firms need even more induction of cash to pay off maturing products, resulting in mounting risks that prompted many experts to call them a “Ponzi scheme”. 

Property Restrictions  

China’s home-purchase restrictions over the past two years have also led families to invest in WMPs and trusts. Unlike investors in trusts, buyers of wealth-management products are mostly normal bank savers who are less savvy about investments and can’t afford to incur large losses. An investor with as little as 50,000 yuan can buy WMPs that have maturities ranging from a few days to as long as a year. For trusts, investors need at least 20 times more cash and an investment horizon exceeding a year. 

Facebook what's happening???

Facebook shares have been lagging the broader market since day 1.  Facebook attracts plenty of users, but the stock continues to have trouble with shareholders. Even its top executives are selling shares. The most prominent of the recent insider sellers is Facebook (FB) COO Sheryl Sandberg, who sold almost 170,000 shares. She also sold almost 7,000 shares from her family trust.

Insider buying and selling is fairly common in the corporate world, but that's a fair point. Given that Facebook shares have traded below their IPO price since hitting the market and trail the broader market's performance by a good amount, why wouldn't company executives buy up shares to encourage a little faith among investors? That actually speaks volumes right?

Some people think that Facebook doesn't have much staying power as a social media platform. Ask around & you'll bound to hear someone said they do have a FB account but they have not log in for ages!

Others argued that Facebook has a strong competitive edge -- except perhaps against Google.

But even if Facebook has billions of users, it's continuing to struggle to become a viable business, which is of ultimate importance to investors.  But Billions of users aren't enough, you got to be able to make some money right?

Free Shipping from Amazon...?

Guess what??? Free shipping offer to Singapore for orders above US$125 was announced on the Amazon website on June 8. Amazon says that only goods it sells, and not those from third-party sellers, will qualify for the AmazonGlobal Saver Shipping programme.  Free shipping makes a lot of sense and would save fans of Amazon a lot of money.

However not everyone is impressed by Amazon's free shipping programme because of its caveats. There are too many restrictions. Under this new scheme, goods sold by Amazon which are in stock will arrive in 11 to 14 days. Items weighing 9kg or more, gift cards, Kindle devices and some over-sized items, do not qualify for the free-shipping scheme. One needs to spend US$125 just to get free shipping, & not everyone will want to buy eight to 10 books at a go. Oh well, it's a business so what you expect?

The art of art investment: Herbert Vogel and Dorothy

Thought of collecting art as an investment?  Seems it's becoming popular here. Well if you are thinking of doing that , perhaps you should find out what veteran art investors do.

Herbert Vogel and his wife Dorothy,  are famous America art collectors. They do not fit the usual profile of your usual art collector, they are not rich! Haha... which is like many of us. Herbert was a high-school dropout & later worked as a postal worker. Dorothy was a librarian in a public library, and they lived in a tiny one-bedroom apartment all their lives. 

Yet, they managed to amass a collection of almost 5,000 sculptures, paintings and prints, worth about US$400 million, which they then donated to 51 museums across the country. Through their extensive collecting history, Low and the Vogels offered some valuable insights to art lovers and value investors everywhere on how to create wealth and beauty: 

Buy for the long term

They followed the classic strategy of "buy and hold". They are not interested in quick profits, thus, they purchased with the intention to keeping them for the long term. 

Buy for love, not profit & Look for investments which are new and original  

The Vogels never buy an artwork simply because they believed it would appreciate in value. Instead, they bought them because they appreciated their beauty and the value they added to their lives.  

Know the market & when to buy  

Given their limited funds, they were extremely savvy with their investments - and they made it a point to understand the market well.