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Strategies & Market Trends : Asia Forum -- Ignore unavailable to you. Want to Upgrade?

To: Dayuhan who wrote (6393)	9/13/1998 9:49:00 PM
From: Sam	Respond to of 9980

Steve, Thank you for the the first hopeful post in a long time. We SI posters tend to get caught in a kind of tunnel vision which confuses the [stock] market with [real] Market, where people are actually producing, buying and selling things. Ain't necessarily so. Regards, Sam

To: Dayuhan who wrote (6393)	9/13/1998 10:36:00 PM
From: Derrick P.	Read Replies (2) \| Respond to of 9980

Steven, Sam, hate to end the optimism party so early, but lower real estate prices in HK is similar to what happened in Japan ten years ago, and that did not end up with good results. The suffering in the property collapse is borne largely by the tycoons, and the beneficiaries are far more numerous. In HK the movement in property prices is widely viewed less as a collapse then as a restoration of sanity in property pricing. Taken to an extreme, rents could collapse to little or nothing, but what would that say about HK. Bert Dohmen has a very low opinion of how China is and will handle HK. He believes that all those skyscrapers will one day end up as empty monuments to the capitalist era. Dohmen in an excellent market analyst, no 'the sky is falling' type. I take everything he says very seriously at this point. Well Sam at least we had five minutes of optimism. Best Regards, Derrick

To: Dayuhan who wrote (6393)	9/13/1998 11:07:00 PM
From: Ron Bower	Respond to of 9980

Steven, Thank you. This is the perception and opinion that I had come up with from news and a couple of brief phone conversations with the CEO of one of the companies I'm in. It's great to have confirmation from another source. Thanks again, Ron

To: Dayuhan who wrote (6393)	9/14/1998 2:48:00 AM
From: MikeM54321	Read Replies (1) \| Respond to of 9980

"Another observation is that while outsiders see the reduction in property values as "asset deflation", an item of terror, people in HK see it as manna from heaven.....This has led to a substantial increase in disposable income and business liquidity, and is actually encouraging consumer spending. My friend pointed out (and I suspect that he is right) that over the last 5 years the inflated cost of space has become a very real disincentive to business and a drag on the economy." Steven, Very interesting observations and a view I haven't read before. Thanks for posting it. I enjoy the comments, on this thread, coming directly from the Tigers. MikeM(From Florida)

To: Dayuhan who wrote (6393)	9/14/1998 11:40:00 AM
From: Ramsey Su	Read Replies (2) \| Respond to of 9980

Steven, just want to throw in my 2 cents regarding RE in HK ..... A few years ago, HK government was reporting another surplus year while personal and corporate income tax are both far below international averages. I was wondering why? It was explained to me that real estate is actually the hidden form of taxation in HK. The number one revenue source for the HK government was from land sales (I don't have recent numbers but can only assume this remains same). The HK government controls the supply of housing units each year, holding the card to half the supply/demand equation. Since everyone needs housing, be it ownership or renting, high RE value equates higher taxes. Through out the RE boom years, the government has always released less units than demand, keeping the prices artificially high. On one hand, HK has a limited supply of land. On the other hand, HK actually has a limitless supply. Whereas 10 acres is hardly enough for Bill Gates garage in the US, the same could provide housing for thousands, stacked 60 stories high. Further more, if they need more land, just fill in the ocean. After the takeover, one of Tung's first policy decisions was to release more housing units. Many blame that move as the cause of HK's real estate crash. In reality, this can be viewed upon as a tax reform, reducing taxes of the lower tax bracket at the expense of the high bracket taxpayers. Your friend had stated the positive effect of the real estate "crash". While politically correct and socially equitable, it has a devastating effect to the paper wealth of HK. Since RE and the stock market are the two biggest assets for the people of HK, some opined that the crash of these two categories is in essence a devaluation of the HK$. Instead of a typical devaluation, where a holder holds the same amount of $$ which is only worth a fraction of the before value, HK$ remained the same but individuals' net worth had just been wiped out by 30+%. Still very difficult to figure out HK's future. Could you shed some light on what type of deals your friend claims the deal makers are doing? Are these "numbers games" type deals or are they ones that will have some positive impact to the economy? Ramsey