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To: Alex who wrote (16392)	8/22/1998 2:55:00 PM
From: goldsnow	Respond to of 116822

Yeltsin shrugs off calls to quit over financial crisis By Marcus Warren in Moscow The cruiser Marshal Ustinov fires a missile during naval exercises watched by President Yeltsin PRESIDENT Yeltsin yesterday shrugged off calls for his resignation over the country's acute financial crisis. He described his mood as "excellent" and steadfastly refused to comment on Russia's economic peril. With the opposition in Moscow demanding that he step down after this week's devaluation of the rouble, Mr Yeltsin appeared unconcerned, and instead spent a relaxing day watching naval manoeuvres above the Arctic Circle. The Duma criticised the government for its handling of the country's finances and leading opposition figures insisted that the president resign during a rowdy emergency session of the parliament's lower house. Mr Yeltsin, fully aware that the constitution guarantees him almost unassailable powers, said: "Deputies must not forget there is still a president. Some people forget that." According to his spokesman, Mr Yeltsin told officers on board the nuclear-powered cruiser, Peter the Great: "Such is a president's work that in any one year I am rarely in a good mood. But today I am in an excellent mood." During the exercises carried out by Russia's Northern Fleet, a Delta-3 submarine also successfully launched a missile at the Kamchatka peninsula thousands of miles away on the Pacific coast. Mr Yeltsin's first public appearance since Monday's devaluation was a reminder to the opposition of its impotence. It can jump up and down and demand his resignation as much as it likes, but the military's commander-in-chief has no intention of standing down. The unenviable task of justifying government policy to a hostile Duma was left to his youthful prime minister, Sergei Kiriyenko, who warned deputies that the crisis had only just begun. The devaluation and restructuring of some of Russia's debts has already caused a run on some banks, a rush to get rid of roubles and many shops to raise prices. Events of the last few days follow a catastrophic decline on the Russian stock market and years of declining industrial production. Mr Kiriyenko, appointed prime minister only four months ago, told deputies: "We cannot afford the luxury of being a popular government. The bitter medicine we are taking now is the price we are paying for past indecision." Other ministers told the Duma that, after defaulting on some of its debts, Russia would no longer be able to borrow at home or abroad to support itself. Deputies provisionally passed a resolution criticising the government's performance as "unsatisfactory". However, the rhetoric from speakers was much harsher. Gennady Zyuganov, leader of Russia's Communist Party, said: "There has not been a devaluation of the rouble, but of the authorities and the president." The next speaker, the eccentric leader of Russia's far-Right Liberal Democratic Party, Vladimir Zhirinovsky, then launched into a hysterical tirade at America, Communists, the present government and its liberal opponents. His speech was broadcast in full on national television, further discrediting the Duma in the eyes of an already sceptical public. Russian television, which exercises careful self-censorship in such matters, did not show footage of Mr Yeltsin looking confused and plunging into long silences while being questioned by the press. telegraph.co.uk

To: Alex who wrote (16392)	8/23/1998 6:59:00 PM
From: goldsnow	Read Replies (1) \| Respond to of 116822

Exodus of money men as Shanghai's bubble bursts By Damien McElroy in Shanghai CHINA'S attempt to restore Shanghai to its former glory as the Far East's financial capital is floundering amid a property glut, a stock market collapse and a slump in foreign investment. China has withstood the worst of the economic tremors that have shaken emerging economies from Indonesia to Brazil and, last week, Russia. But conditions in Shanghai have worsened rapidly in the past year and its decline could cause currency devaluation as in other Asian countries. Western investors and entrepreneurs who moved to China's biggest city hoping for rich rewards are going home. Bruce Richardson, an American stockbroker who has lived in Shanghai for two and a half years, is taking a job at the Federal Reserve in Washington. "My clients have lost all their money. Any rise in share prices now will simply give foreign investors the opportunity to sell out at higher prices and lose less money," said Mr Richardson, chief representative for ABN AMRO Hoare Govett Asia, the Dutch stockbrokers. He is one of the hundreds of disillusioned investors who were drawn to Shanghai by the local government's determination to establish it as a financial centre to match Hong Kong, Tokyo, London and New York. Encouraged by cheap land sales and easy loans by state-owned banks, property developers have transformed the Shanghai skyline, especially in the Pudong district on the east bank of the Huangpu river, where glass and steel towers have risen from the swampy pig farms that once supplied the city's tables. Even if the Chinese economy had continued to maintain growth rates in double figures, as it did until 1996, the hundreds of office buildings built would have been hard to fill. But as economic activity slows and foreign investment dwindles because of the collapse in other Asian economies, Shanghai has a stock of empty property reminiscent of the over-building in pre-crash Bangkok or Tokyo. "In terms of over-developed real estate, Shanghai can't be beaten by anywhere," said Mr Richardson, whose job with the Fed will be to analyse Asian economies for signs of trouble. He said the Chinese government was repeating the mistakes that have prolonged Japan's slump for eight years. "By being unwilling to accept a market-driven deflation of property prices, the government is crashing the economy to save a sector", he said. First Pacific Davies, the property consultants, estimate that the number of office buildings rose ten-fold between 1994 and last year, driving vacancy rates from zero to more than 40 per cent for buildings of international standard. Across all classes of offices, the rate rises to more than 60 per cent. Sam Crispin, the firm's research director in Shanghai, said that vacancy rates would rise for another two years as more new buildings were completed. It could be five years before all new supply was absorbed. "Other parts of the region with similar problems have certainly been hit much harder than Shanghai. I think we are now at the point where Shanghai will either follow them into the abyss or tiptoe around the edge," he said. The burst in the property bubble is part of a much deeper malaise afflicting China's ambitious project to transform Shanghai. Investing in Chinese shares has been a bad experience for international investors, most of whom have lost interest in a market blighted by chronic mismanagement and poor standards of disclosure - legal obligations to disclose trading information. Less than a year old, the cavernous trading floor of the Shanghai stock exchange is something of a white elephant. During trading hours, its walls echo to the sound of tapping from the few brokers scattered among rows of computers. Only on special occasions does the hall fill up, when brokers are called in from their offices to look busy while dignitaries, most recently President Bill Clinton, are shown around. The erosion of confidence in Chinese stocks is reflected in the Shanghai B share index, the leading market index, which has moved steadily lower as investors pull out of the market. From a high of 106 points in December 1993, the measure slumped to 26 points a few days ago. The value of foreign investment in Chinese shares is less than œ2 billion. Traders are waiting for the index to drop to 15, when trading stops. "The Chinese market has failed in every respect to live up to investor expectations," one of the few money managers remaining in Shanghai said last week. "The management of Chinese companies is simply not up to the standard of comparable markets across the world. They simply took the money, did whatever they liked and said 'Thank you very much. Goodbye'." Andrew Hallworth, an English commercial lawyer, said Shanghai was heading for a necessary downturn. Rents as high as $1.70 per square metre a day had dropped to as low as 30 cents, sharply reducing the costs of maintaining a presence in Shanghai. The city's earlier growth had been deeply flawed. All foreign companies must have a Chinese partner, but many complained that they were pressured by Chinese authorities to undertake ventures without a full evaluation of the project or potential risks. "A lot of companies are taking the opportunity to consolidate various operations and make strategic acquisitions. A slowdown is not necessarily a bad thing in the long run," Mr Hallworth said. Mr Richardson agrees that Shanghai will bounce back, but only after painful adjustment. "I'll be back. It's too soon to file the last obituary of Shanghai but a very stern sicknote is in order," he said. telegraph.co.uk