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Strategies & Market Trends : HONG KONG -- Ignore unavailable to you. Want to Upgrade?

To: WONG who wrote (2592)	12/16/1998 9:02:00 PM
From: Ramsey Su	Read Replies (3) \| Respond to of 2951

To all who may be interested. The following is a email from a friend in HK. I think HK has been rich for so long that they are in a stage of denial. Chinese new year in Feb will mark the turning point. I suspect when businesses are closing left and right while personal savings start dwindling, they may take a longer look at the tough road ahead for the pearl of the orient. Ramsey The economy is getting very confusing now. Interest rate is dropping, property market is getting a lot of support from the gov't and new flat sales has gone up but lots of large companies continue to lay off people because everybody is expecting huge losses unless they cut costs. Car sales are really bad and tourism recovery is very slow. British Airways is offering return ticket to London at HK$7500 for next Easter which is 25% less than last year. Restaurants are not the only one suffering. The textile industry is pressuring gov't to increase quota for cheap import labour. They say they can't compete unless production costs are lowered. I think many people in HK still have money saved up from the past and most of us can still enjoy life. One thing that worries me most is that if interest rate continues to drop, even people with savings can't live on interest earnings (especially retired workers). Also lower interest rate will encourages people to exchange their money into foreign currency such as US$ or UK Pound. This will lead to a weaker HK$ and will eventually collapse the pegged rate exchange system. Retail trade gets it first big break this week as temperature drop below 15C, people will at least be more interested in buying winter clothings. I think X'mas and Chinese New Year will make people forget about the poor economy and indulge themselves for one or two more months. Early next March will be the worst time for HK. The quality of life is also deteriorating in HK. Drinking water from China is heavily polluted, air quality is dropping, medical malpractices are increasing, fatal traffic accidents are becoming very serious, food poisoning, gang wars at discos and bars.... you just can't feel at ease. Some good news : car parks are lowering their rates, more shopping centres are offering free parking, gas stations are cutting prices, if you come back this month hotels are cheaper and you can still win big money from horse racing.

To: WONG who wrote (2592)	12/20/1998 1:47:00 AM
From: Tom	Read Replies (1) \| Respond to of 2951

Agree, WONG. And appreciate your notes on the topic. Singapore is a very good investment. And I say that with the utmost certainty. I think one may be able to get the Straits Times at least 4% cheaper though. I think it will get there in the not too distant future. No great revelation, I know. Still, I'll wait a bit. I'd like also to think that the prosperous Singaporeans will react to their current economic situation tenaciously, not wishing to relinquish all that's been gained over the last three decades. ----- "They speak Mandarin and say a few patriotic things about how happy they are about the handover, and then they rip you off." A Beijing native on the sales tactics employed by struggling HK retailers trying to cash-in on shoppers from the mainland. Oh, my! Say it ain't so.

To: WONG who wrote (2592)	1/4/1999 1:04:00 PM
From: Tom	Respond to of 2951

Hong Kong v. Singapore December 16th WONG writes: Four Reasons to put money in Singapore (At least some of it...) 1) HK$ still pegged to the greenback, interest rate adjustments have to adhere to the moves made by the US. In the past 3 months, Singapore has reduced interest rates by 2%, HK only 3/4%. 2) HK GDP is -5%, whereas Singapore can still maintain +2.3%. 3) HK has a budget deficit of HK$40-50 billion, Singapore has a surplus of S$3.1 billion (more room for increased government spending). 4) Singapore has imposed across the board salary reductions, rent reductions and pension plan premium reductions. Making it very attractive for business to operate there. ----- December 24th FEER editorial: IT'S ALL ABOUT COST Hong Kong's dulled edge Maybe Hong Kong has belatedly woken up to reality. Reports earlier this week were that the government will review civil service wages and consider lay-offs. Yes, this is the same government that earlier, in the midst of the deepening gloom, upped government salaries by about 5%, sending a confusing message to the private sector. It's also the same government that continues to run television ads on retraining the unemployed for jobs as domestic helpers. And the same city that has debated wage cuts for foreign maids. Local maids, lower wages for foreign maids -- neither contributes to growth in the real economy. In other words, this is a city confused about adapting to the financial crisis. So we'll wait to see if the government wage pow-wow actually pans out. More interesting has been the reaction of Hong Kong's rival, Singapore, to the crisis. Singapore has urged companies to cut their total wage bills by 15%. For its part, beginning in January the (Singapore)government will halve employers' contributions to the Central Provident Fund from 20% of employees' monthly pay. As a consequence, even if you work for a company that meets the 15% target, your take-home pay may be barely affected. And for a city long-known for government-led initiatives, the market itself has been quick to pare costs. A business-class hotel room goes for around $130 a night, compared with about $200 in Hong Kong. For 60 cents you can get a bowl of noodles in some Singapore food courts. Indeed, while about $1,200 will fetch a comfortable three-bedroom apartment in a complex with a swimming pool and tennis court near the National University of Singapore, twice the sum in a like locale in Hong Kong gets you a space one-third smaller with no recreational amenities. So is it any wonder that Caltex is moving its global headquarters to Singapore? Instead of allowing prices to adapt down, Hong Kong appears intent on burnishing its high-rent reputation. In fact, there was almost a palpable sense of relief that real-estate speculation had resurfaced on the back of lower interest rates. Hong Kong Chief Executive Tung Chee-hwa has said that "we will be moving sideways along the bottom for some time before we get the recovery going." Are we so sure it's not a false bottom?