Ode to Sir Don
quamnet.com
Hooray for Donald, Sir. Since he prided himself on relieving the premises on the Hongkong economy during the dark days of August 1998, there have been two, in particular, commentaries who have taken him to task. These two columnists are excellent reads and contain a great deal of good common sense, one of course is Stephen Vines who contributes to Quamnet and the other is Jake Vander Kamp, who writes a daily column for the SCMP. They are incidentally both good friends of mine.
I do not consider that they should be allowed to get away with their criticism of market intervention by the Monetary Authority at a time when there had been a crisis of confidence in Hongkong. This can lead to a further deepening, and one which can plunge the whole economy into the abyss, and the consequences can be quite horrific if one does not stem the bleeding at its initial outset.
Of course I am not a Thatcherita, a person who seeks to privatise all and sundry, and then leave it to the next generation in order to unravel the chaos which the policies have bred, greed, corruption, nepotism and the unrestrained search for profit, for the managers rather than for the consumers. This has been a major problem in the UK, and this has not yet been corrected, look just at the railways, and then at the various utilities, and now look at the chaos in California, when the electricity generation had been put at the disposal of private interests.
But again I am not a Socialist, although I do believe that it is the community's responsibility to look after and care for these less fortunate than the norm. As a teenager, I had actually been the chairman of our local Young Conservative Association, although this did not prevent me from canvassing for the Socialist candidate in our neighbouring constituency, who was at that times the captain of our local nearby union team, of which I was a player.
I am certainly not against the government using whatever powers it can find to pursue the well-being of the majority of the population especially of those less fortunate members, and as such any move which would stop the bleeding and pain as quickly as possible was more than acceptable to me, and whether or not this action might have broached any high and mighty principle becomes irrelevant. Especially because the principle itself has never yet been proven except in the exception.
The Government intervention during 1998 served this purpose, and the response and reaction were greater than had even been hoped for, as it included not only Hongkong, but the renascence of confidence was contagious and spread throughout South East Asia where this case of foot-in-mouth had become contagious.
The proof of the pudding is in the eating. There is no doubt that the response to the intervention become a delicious Summer Pudding.
However I do quibble about two things. I can see, and could see no reason at that time for the intervention mechanism going into the futures market, as this extended the cost and as it extended the time over which the curve would need. Despite protest short-selling is not harmful to the index and to share prices, as a short-seller must become a buyer, just when there appears to be a death of this animal. This will actually excite a response to a cascade of selling, when without it there would be a dull thump, Perhaps short-selling should be confined to only marketable securities, as otherwise there can be hell to pay.
At this stage I must confess that as a broker during the 1960s and 1970s I had become an active witness to two cases in which a buyer, and both of these buyers were among my clients, had cornered that whole of the available stock. In fact they had apparently bought, or knew who had bought it, more than 100% of the shares in issue. On each occasion the Stock Exchange had had to intervene.
I also believe that the Exchange fund should not be in any particular hurray to sell its stakes, as I believe that this will become essential during the next boom in share prices when the providers of MPF will need to scramble to increase their Hongkong good-quality investments. This stockpile will not sufficient to contain it but it will at least be a sop for the necessary purchasers, and will quite quickly be sold out at an excessive price. Also as a shareholder in the Government, although perhaps only a partially enfranchise one as elections of moment are reserved for the privileged, I would much sooner have my funds invested in good equities rather than in a basket of currencies, which is unlikely to be inflation resistant. I still regard a long-term investment in HSBC to be infinitely preferable to a long-term holding in cash or near-cash, and history of the past fifty years enforces me in this belief.
There could be some questions over the inexperienced management of the Exchange fund, and this was evidenced very much too forcibly when they connived with potential sinking and submersion of Hongkong Telecoms, despite the wishes of the vast majority of HK Telecoms' shareholders, who had cried in a mute voice not be become affianced to the novices at PCCW. Apparently Richard Li has a fairy godfather who gave him a brand-new building set, but he has as yet not been able to complete even this erection. His other building experience is already making him the laughing-stock of Shek O, where his overruns and overspending have become ridiculous and for experience he forsake a potentially unrewarding university career to work for Daddy¡¦s pals, and the minimal salary and a spare desk are a cheap price to pay for being able to count one of the world¡¦s thirty wealthiest mean as a client.
But that is beside and point, a mere digression, except that would it not be nice to become a director of PCCW. Despite having notched up a huge and almost supernormal and supernatural loss for the past year, or even since it had been publicly listed, is now the most munificent of paymasters, rewarding its tame directors with splendid castles on the peak.
To revert to the subject, there is nothing one can say about privatization necessarily being bad. Last year the government was able to offload part of its capital expenditure on MTR, and by getting listed it is in a position to gather further injections of capital. However I would become worried if the government's share in MTR were reduced to a minority with other private companies being able to determine the course of the MTR. If MTR were to become privately controlled, then I would be extremely worried about the safety of passengers, as corporations will inevitably cut costs in order to magnify their profits. One has only last year seen the greed of private individuals when they delved below public works to find a catacomb of shortpiling, and the quality of finishing or public housing is also a mother for indigestion, and among potential buyer and tenants of one of extreme disdain, bordering on total rejection. The private builders were able to take as much rope as they humanly could. Goodness knows what would happen if the rest of the utilities were placed into private hands without being subject to stringent controls.
Hooray Donald, Sir, and let us hope that Anthony, now to be known as Ah Chung, can follow in your footsteps, and let us wish you the best of luck and presence of perseverance in your new role. [End] |
