Asia.view
Immeasurable loss
Nov 12th 2008
From Economist.com
The collapse in Hong Kong takes a mysterious form
AS WRETCHED as plunging securities prices have made people in Europe and America, many can content themselves, as odd as this may seem, with knowing just how much they have lost. That is in sharp contrast to Hong Kong where, for some peculiar reason, investors are particularly fond of oddball securities with opaque pricing and monstrously complex structures. A consequence of this preference is that the rich and the not-so-very rich share a similar problem: trying to figure out where they stand (and whether they can get help).
Among the wealthy, the primary instrument of wealth destruction is a security referred to by the people who sell it as an “accumulator”, and by the people who bought it by the sound-alike phrase, “I kill you later”. It is a contract providing the right to purchase securities for below-market prices over time in exchange for a capped potential return and an uncapped loss. Why a security that limits gains but not losses held any appeal speaks volumes about the mentality (at least until recently) of the local investors, with their love of a special deal and their boundless optimism.
With great difficulty, the Hong Kong securities’ regulator has estimated, using surveys and a notional value, that US$23 billion-worth of these contracts were sold. Because they are private agreements, determining the exact amount is difficult—but it is painfully clear that many were sold and lots of money was lost. There is also no way to tell who lost money, other than to say that at the time of the sale, they were probably rich.
There are, however, suspicions. Various tycoons are popping up in the local media as having been hit particularly hard, setting off huge runs in major companies under the assumption that large family holdings must be liquidated. That, in turn, has elicited denials. So far the big losers are keeping quiet: Hong Kong tycoon etiquette allows for all sorts of transactions that suggest close attachments and knowing too much (mistresses, shady deals, insider trading), but no self-respecting tycoon wants to be revealed as knowing too little—not yet, anyway.
A different sentiment exists among the 40,000 not-very-rich people in Hong Kong who paid an estimated HK$13 billion ($1.6 billion) for a product that has come to be known as a Lehman “minibond”. The title is misleading. These were typically securities that yielded 5-7%, at a time when banks paid less than 1% for deposits, and were guaranteed by Lehman but had staggeringly complex underlying structures tied to collateralised debt obligations (CDOs) of numerous financial institutions.
Among Lehman’s responsibilities was paying interest to securities holders. When it failed to do so post-bankruptcy, many of the bonds went into default, and more will likely do so in the near future. The underlying value of the securities behind the CDO remains a mystery, says Albert Ho, a lawyer and member of Hong Kong’s Democratic Party, which has become involved in the issue. But he adds that with the market value of the CDO itself essentially worthless (at least at the moment), and the collateral uncertain, many people have good reason to feel that they have lost everything. Sadly, they may be right.
Unlike the tycoons involved with accumulators, however, this group is not particularly embarrassed to be associated with the loss—quite the opposite. They want recompense, and have begun holding vigils outside of Bank of China Hong Kong, DBS, and Dah Sing Bank, three of the largest sellers. The political heat is growing on the banks and the local government.
There is no question that the prospectus tied to these securities carried abundant warning about lack of principle protection. Even a cursory glance at the legal offering documents tied to the securities would have shown the complexity underlying the return. Traditionally, Hong Kong has leaned toward free-market principles for investors, providing only the most minimal amount of deposit insurance and no other guarantees. Under this approach, the minibond holders are sunk unless they are patient, and the payments and collateral underlying the CDO prove to be substantial. Market-oriented resolutions, however, are going out of style.
Whatever might be thought of vigils in Hong Kong, there is a sense they are not playing well in protest-sensitive Beijing, which approves of free markets only to a point. Mr Ho says the literature provided to buyers did not detail risks, and, he adds, even many of the sellers had no understanding of the product—which is an understatement, given its structure. Banks aren’t particularly popular at the moment, and it appears unlikely that they will deny responsibility and argue caveat emptor. Settlement talk is in the air. If it is sizeable, expect even embarrassed tycoons to shed their own inhibitions about being revealed as fools, rationalising that at the moment, smart doesn’t pay.
新加坡公民
《獨立報》發自北京的報道說，國際著名女演員鞏俐宣誓成為新加坡公民，被憤怒的中國人譴責為叛國。
該報說，43歲的鞏俐是中國女性的象徵，正如海倫﹒米蘭之於英國﹔凱瑟琳﹒德納夫之於法國，因此她決定成為新加坡公民肯定惹來麻煩。
報道說，中國國營媒體刊登了鞏俐在新加坡與另外149人做入籍宣誓時把手放在心上的照片。鞏俐的丈夫是新加坡人，他們在1996年結婚。
《獨立報》說，網民在互聯網的論壇上大肆抨擊鞏俐的做法。
中國電影集團在網上說鞏俐在國際上被目為中國的榮譽，如果她以新加坡明星的身份在海外繼續獲獎，將讓中國影迷不高興。Acer(宏碁)电脑在西欧是第一销售大户
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