HKMA Should Sit On A Screw & Turn Itself Round & Around

I really hate it when smart people suddenly caved in and kowtow to big companies. They are all idiots at HKMA, including the politicians who are supporting the newest resolution. The resolution on the Lehman bond investors sage in HK - those who have invested more than HK8m in these bonds are deemed as "professional investors", and would not get a cent back. The rest will get 70% back.

What a fucking stupid idea. If a person bought HK$40m worth of bonds, is he/she a professional investor? Why??? By the sheer size of the investment???

What if I am an idiot who puts up all my HK$8m in that one investment??? What if I am that idiot who puts in HK$8m in the fucking bonds, because it SAYS THERE ITS "BONDS", not stocks, not derivatives, not futures, not land banking, not ATM investments, not even gold coins... because its FUCKING BONDS, and its issued and "guaranteed" by Lehman Brothers, ... because its FUCKING TRIPLE AAA rated ... because HKMA also thought it was triple AAA rated and because HKMA also thought its Lehman Brothers.

Sue the shit out of the banks and HKMA, ... that is an inequitable resolution. A person who invested HK$8m, ends up losing every cent, and is now worth less than HK$1m ... compare that to someone who invested HK3m and now has HK$2m in net worth ... who is the professional investor?

A professional investor knows the risk involved, the bonds were sold by assholes who did not even know what the bonds were based on and how the money would be used. The banks selling the products themselves didn't know the full extent of the risk, or else they would have TOLD THE CLIENTS already.

People were buying them because they were BONDS. If the sales, the banks and even HKMA did not know the full extent of the risk... how do you expect the people who bought to know? Its misrepresentation.


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Friday, July 24, 2009

Celebrity investors of Lehman Brothers minibonds yesterday voiced their outrage that they may not see a cent in compensation as they are being classified as "professional investors."

Actress Meg Lam Kin-ming is likely to be one of the unlucky ones.

She bought about HK$10 million worth of Lehman-related products, including minibonds. "You are a professional investor once you've invested HK$8 million? How to assess?" she asked. "They [the bank] asked me to buy this and that back then. Yes, I bought a lot. But am I a professional investor?"

A professional investor is assessed on whether or not an individual's portfolio is more or less than HK$8 million, including securities holdings, according to the Securities and Futures Ordinance.

Some 29,000 Hong Kong minibond investors will be refunded about 70 percent of their original investments by banks, financial regulators announced on Wednesday.

About 2,000 investors are not qualified under the repurchase scheme as they are either "professional" or "experienced," Secretary for Financial Services and the Treasury Ceajer Chan Ka-keung said yesterday.

Other big-name entertainers caught up in the investment nightmare include superstar Jacky Cheung Hok-yau, funny man Eric Tsang Chi- wai and former actress Maria Chung Wai-bing. The media speculated that Cheung invested as much as HK$40 million in the high-risk product, while Tsang and Chung were estimated to have invested more than HK$10 million each.

Tsang said he invested in minibonds, but he could accept it even if he is not able to get his money back. He believes the most important thing is that the elderly can get their money refunded.

Banks will not compensate customers who have, in the three years preceding their first purchase of minibonds, executed five or more transactions in leveraged products, structured products, or a combination of these products, according to the Securities and Futures Commission.

Lawmaker Kam Nai-wai also said the arrangement was unfair as some purchases made by professional investors could involve misselling by banks.

Ceajer Chan said the arrangement was reached by banks and regulators, and investors should make inquiries to banks for details. "If investors who have not benefited from the program complain, the regulators will handle it," he said.

p/s photo: Jeanette Aw

Negative Equity In HK - A Precursor & Benchmark

The number of Hong Kong homeowners in negative equity quadrupled to nearly 11,000 in the last quarter of 2008 as the financial crisis took its toll on property prices. And analysts expect the figure to double this year as property prices fall by a widely expected 10 to 15 percent. Residential mortgage loans in negative equity increased to 10,949 at the end of December from 2,568 at the end of September 2008, according to the Hong Kong Monetary Authority.

What is negative equity: it means the amount you would still be owing after you sell the property and pay off your mortgage. For example, if you bought a house for 600,000 and you borrowed 500,000, which meant that you paid 100,000 as downpayment. Now the house is only worth 450,000 hence your negative equity would be 500,000 - 450,000 = 50,000. Negative equity is 50,000 but in actuality you have already lost 100,000 (downpayment) + 50,000 = 150,000 (not including the many monthly payments may have already made on the property).

HKMA chief executive Joseph Yam Chi-kwong said the increase was anticipated and that it will continue. "But I don't expect the situation will be as bad as in 1998 to 2003. Property prices are tending to remain stable at a certain level," he said.

While the developments are to be expected, what is more important is to see the negative equity figure as a benchmark as a severity of the recession. We must remember that Hong Kong saw a peak of 105,697 negative equity cases in June 2003 amid the SARS outbreak. So 11,000 is still very acceptable. But the the flip side is that the number in negative equity will rise exponentially and very swiftly if property prices were to slide in greater quantum for the next 6 months. Possibly another 10% slide in price would bring the negative equity figures close to the 2003 SARS level.

Pan Asian Mortgage Advisory economist Alvin Ho predicts the number of negative-equity homeowners will increase to more than 20,000 this year if property prices continue to decline. Real estate prices in the secondary market dropped 20 percent to an average of HK$3,410 per square foot in the fourth quarter from last year's peak of HK$4,251 psf, according to Midland Realty. The HKMA said the aggregate value of mortgages in negative equity rose 313 percent to HK$24.8 billion in the fourth quarter from the previous quarter. The unsecured portion of these loans rose to HK$2.7 billion. The loan-to- value ratio of the loans increased to 112 percent from 107 percent. The three-month delinquency ratio of negative equity mortgages fell to 0.05 percent from 0.08 percent.

Meanwhile, Yam said companies in Hong Kong have more than HK$100 billion in syndicated loans that are due to expire this year. The HKMA will take appropriate action and "the government should keep an open mind" to help financing, he said. "Foreign banks based in Europe and America may have to handle their own problems at headquarters by deleveraging. Their foreign business will then be affected." However, Chinese University associate finance professor Raymond So Wai-man warned that the government will come "under great pressure if it helps companies refinance debt."

Yam said there is a risk that protectionism could spread from trade to finance. As an example, countries are no longer buying US Treasury bonds. The HKMA intends to cancel its temporary provision of additional funds to banks at the end of March but will review the facility at that time to decide if it needs to be extended.

Amidst all the planning and forecasting, HK should remember that its monetary policy, property price and hence stock market are tied to their currency peg. The USD has been injected with a huge array of new "fundamentals" over the last 6 months - HKMA should really reconsider the HK dolar peg because the "integrity, outlook and volatility of the USD" going forward will be more like a horror movie. You cannot have your currency tied to highly risky, highly indefensible monetary expansionary policies somewhere else... the USD by virtue of their actions over the last 6 months have basically sentenced the dollar to a long drawn out period of weakness and losing stature as a reserve currency.

Morgan Stanley Asia Not So Bearish

Probably still the best strategic house in Asia, Morgan Stanley Asia said Asian stock markets and economies can escape the worst of the global downturn, with China, Hong Kong and Taiwan best placed to ride through the turbulence. Equity strategists at the brokerage added to their ``overweight'' position in Taiwan in their model portfolio of stocks and raised South Korea to ``equal-weight'' from ``underweight,'' a report today said. Malaysia was cut to ``underweight'' from ``overweight.''

``Asia's fundamentals are far stronger. A combination of easier monetary and fiscal policy and lower commodity prices should enable Asia to avoid the worst of the global downturn.''

China and Japan have slashed borrowing costs in the past two weeks to ease the economic fallout from the global credit crunch that is pushing some countries into a recession. The turmoil has frozen credit markets and triggered a worldwide rout for equities, wiping out more than $25 trillion of market value this year.

``If the worst of the global liquidity crisis is behind us, macro strength is probably going to become a key market driver,'' the report said. ``This should favor Greater China. A key difference between Asia today and in 1997-98 is the emergence of China as a key driver of growth.'' China's growth will slow to 9.3 percent in 2009, from 9.7 percent this year, the World Bank last month, predicting that the country is well positioned to withstand financial market turmoil. The central bank cut interest rates for the first time in six years on Sept. 15, following up with two more reductions since. On Oct. 29, the key one-year lending rate was cut to 6.66 percent from 6.93 percent. China is the ``strongest'' to cope with the global slowdown while Australia, Malaysia and India ``face challenges,'' Morgan Stanley said.

Malaysia's ``external macro exposure and limited policy flexibility'' makes it vulnerable to the global slowdown. South Korea's upgrade comes as Morgan Stanley added Samsung Electronics Co. to its portfolio, saying Asia's biggest maker of chips and handsets is ``best positioned'' to ``enjoy earnings growth into 2010.''

On Oct. 7, the International Monetary Fund said the world economy would expand by 3 percent in 2009, paring the 3.9 percent forecast made in July. Emerging markets will account for 100 percent of the global economic growth next year, mainly Brazil, Russia, India, China and other Asian economies including South Korea, the IMF said yesterday.

p/s photos: Warattaya Nikulha

HK Govenment Did The Smart Thing

Finance Asia: As the global economy twists and turns in a downward spiral, the Hong Kong government announced yesterday that it is appointing a task force to study the matter. Before you groan "we don’t need a task force, we need action", consider that if the government didn’t put together such a group to question how it should handle the global financial meltdown, observers would in hindsight question if the chief executive had done the right thing by his people.

In recent weeks, for example, Hong Kong’s regulators have been swamped by thousands of retail investor complaints that structured products backed by Lehman Brothers, which have since lost most of their value, were being misrepresented. A task force could help sort out what action, if any at all, needs to be taken in such situations – as well as a myriad of other potential problems that could crop up that need to balance out the rights of investors with the rights of financial institutions. And consider Bank of East Asia.

In late September, Hong Kong-listed mid-size lender Bank of East Asia had to stave off a run on deposits. Account holders rushed to withdraw their money despite continued assurances from regulators and management that the fifth largest bank in Hong Kong was financially stable. A task force can’t stop such a run per se, but it may help the government project a more assured voice that helps keep hysteria at bay and hopefully makes people think twice about taking banking advice from text messages, as many apparently did in the BEA case. But a task force is all about its members – and the list of enlisted folks is impressive.

The government has appointed 10 people, including Morgan Stanley Asia chairman Stephen Roach and Standard Chartered chairman Mervyn Davies, to the group assigned with the task of helping the city come to grips with the global financial crisis. Chief executive Donald Tsang will chair the first meeting, which will take place on November 3. Financial secretary John C Tsang will serve as deputy chairman. "The challenges ahead of us are daunting,” says chief executive Tsang in a press release. “The damage that the financial tsunami has inflicted on the global economy has yet to be fully revealed. We need to evaluate the situation, consider ways to respond, identify new opportunities, and ultimately enhance our international competitiveness." David Burton, the head of the International Monetary Fund in Asia Pacific, will attend the first meeting to update members on the global impact of the current financial crisis. The stated aims of the group are to assess the impact of what the government is calling “the financial tsunami” on the local economy and consider ways to respond. It will also formulate a work plan for the coming few months.

Other members of the task force make up a veritable Who’s Who of Hong Kong, including: Li & Fung’s chairman Victor Fung; HSBC's group general manager and global co-head of commercial banking Margaret Leung; KPMG partner Ayesha Macpherson; Johnson Electric Holdings chairman Patrick Wang; real estate agency Centaline's chairman Shih Wing-ching; the chairman of Roctec Futures Trading Co, K C Leong; Mathias Woo, the executive director of charitable international experimental theatre company Zuni Icosahedron; and Chinese University of Hong Kong vice-chancellor and president Lawrence J Lau.

It’s a balanced list spanning industry, real estate, the banking sector, charity, the government and academia. For sure, task forces are often known for simply presenting ideas that are never implemented, but they are also groups that simply by listening help the public vent frustration and they sometimes do actually come up with good policy ideas. Importantly, they can help bureaucrats think things through from more than just one perspective. Given the speed with which this financial crisis is unfolding, the proof of what type of task force this one will be will come soon enough.

Comments: Malaysia should learn to call upon "financial experts" and not just 4th floor or the same old same old.... there are plenty of financial strategists who can come up with solid solutions and ideas. You just need to also pay them, no national service mentality. Pay for quality and pay for insights. Or is it that vested interests are all over the place that we dare not recruit independent brilliant thinkers, as we cannot implement plans without ruining or stepping all over our vested interests? The smartest people in the world surround themselves with people smarter than themselves. Ronald Reagan was at best an actor but he had good oratory skills and recruited smart people - he was still the best US President for the last 40 years, though I really liked Bill Clinton as well.

p/s photos: Panward Hemmanee (you can catch her in Bangkok Dangerous with Nic Cage & Charlie Young)

The Asian Response

• 10 ASEAN nations planning for a crisis fund to tap from if they face severe liquidity crunch due to global financial crisis; Fund can also be used to purchase bad assets, recapitalize troubled financial institutions and private companies; ASEAN+3, ADB, IMF will contribute to the fund while World Bank has contributed $10bn; also include plans for stand-by liquidity facilities
• In spite of limited exposure to US bank losses, risks from external funding crunch, higher borrowing costs, bank panics and deposit withdrawals are growing for banks and corporates in Korea, HK and Taiwan
• Asian central banks had been injecting liquidity into banking system and cutting rates (discount/policy rate) and/or bank reserve requirements to ease liquidity squeeze and spike in short-term rates (swap, overnight, inter-bank rates and spreads) since Sep; Some banned short-selling, guaranteeing deposits, considering fiscal stimulus; following global central bank intervention, these rates have somewhat eased in recent days
  
• Australia: $7.3bn stimulus for pensioners, middle and low-income groups, first-time home buyers; additional stimulus may follow; deposit guarantees; cut overnight cash rate to 6% from 7%, offering 6-mo/1-yr repos; Term Deposit lending facility, expanded types of collateral, loan maturity under bank lending facility as difference b/w inter-bank and overnight indexed swap rate surged; doubled swap agreement with Fed from $10bn to $20bn; banned short selling; to purchase $3.2 bn in residential-backed mortgage securities to help small lenders offer home loans
• Japan: supplementary budget for fiscal stimulus; providing unlimited dollar funds to banks at a fixed rate against pooled collateral until Jan-09 under swap agreement with Fed; eased rates under lending facility, expanded range of bonds under repos, suspended program of selling bank shares; Injecting liquidity amid spike in Yen overnight LIBOR; banks' exposure to Lehman had led to decline in stock prices and short halt in trading on Sep 15
• India: Raised cap and credit cost on external borrowing of firms; cut interest rate 100pbs to 8%; conducting 14 day Repos to help banks provide credit to MFs; allowed banks to lend to MFs against CDs; Allowed Savings bond holders to borrow from banks against govt paper; to infuse capital into commercial banks to raise CAR up to 12%; cut bank reserve ratio thrice in Oct from 9% to 6.5% (first time in 5 yrs); raised FII limit in corporate bonds; raised interest rate on non-resident deposits by 50bps following similar move in Sep; eased limits on banks to raise foreign capital, restrictions on FII equity investment; eased Liquidity Adjustment Facility; continues to sell FX reserves
• HK: to use forex reserves to guarantee bank deposits, set up a fund for banks to access capital; Cut base rate by 150bps to 2% twice in Oct to contain jump in HIBOR; providing additional liquidity to banks via 3-mo repo window, expanded acceptable collateral
• Korea: cut 7-day repo rate 75bps to 4.25% and lowered the base rate 75bps on loans to SMEs amid high commercial paper and loan refinancing costs, household debt; up to $100 bn to guarantee maturing foreign currency debt; to use forex reserves to inject $30 bn liquidity in won-dollar swap market after an initial $10bn; might buy govt bonds from the market to reduce USD shortage; temporary ban on short selling
• Taiwan: Guaranteed bank deposits; Cut discount rate on 10-day loans to 3.25% on Oct 9 (second time in 2 weeks following first cut since 2003), cut reserve ratio (first time in 8 yrs) and ratio for passbook deposits; injecting liquidity into foreign-currency interbank market; lending via repos to insurance companies w/ extended maturity up to 180 days; banned short selling; instructed 4 major funds and state-owned banks to buy shares after stock market fell to 3-yr low on Sep 15
• Indonesia: allowed commercial banks to use central bank debt and govt bonds as secondary reserves; extended FX Swap tenor to 1 month; passage of foreign currency via banks for firms; abolished limit of daily balance position; eased foreign currency min reserve req; Cut bank reserve ratio 1.58bps to 7.5%; exempted banks from mark-to-market rule, eased rules/cap for firms to buy back shares; Suspended trading on Oct 8/9 following 10% slide in stock market; banned short selling for Oct; injected over 3bn via 6-day repo; lowered overnight repo rate, adjusted rate of liquidity facility; might increase infrastructure spending, fiscal stimulus for exporting firms, households
• New Zealand: overnight Cash Rate cut 100bps to 6.5%; introduced opt-in deposit guarantee scheme; accepting (longer term) bank paper in daily market operations, ABSs from local banks for swapping foreign cash into NZ dollars
• China: Chinese banks reluctant to extend loans to foreign banks in the interbank market; reduced 1-yr lending rate (second time in 3 weeks, first since 2002) by 27bp to 6.93% and 10yr deposit rate to 3.87% and cut bank reserve requirements by 50bp to 17%; eliminated stamp duty on stock purchases with plans to buy shares in state-owned banks; to introduce short selling and margin trading to ease pressure on share prices
• Singapore: guaranteed deposits; Injecting liquidity via market operations; prepared to provide further liquidity if necessary and also to individual banks amid spike in 1-mo and 3-mo SIBOR, BEA bank run, CDS also rising; but rates have eased somewhat following central bank measures
• Malaysia: guaranteed deposits; Might inject liquidity, move interest rates if necessary; planning for an economic stabilization stimulus
  
• Pakistan: declining capital inflows/outflows in inter-bank and open market causing currency depreciation; central bank injected $100-200 bn, raised limit on investment bonds and term finance certificates under banks' statutory requirement
• Easing commodity prices, peaking of inflation, growing risks to exports, economic growth might also shift central banks' bias towards monetary easing; Taiwan, Pakistan, Vietnam had earlier intervened in stock market by narrowing trading band, introducing stabilization fund to contain volatility; India, S.Korea, Thailand, Philippines, Indonesian intervening in forex market to contain downward pressure on currency (led by capital outflows, decline in external balances)

Comments: Malaysia and Singapore are still the last to act. Hinting that their fundamentals are more solid than the rest. Safe to say that there is "no attack" on the currency so far. The difference is that Singapore was adamant in defending the strength of the Sing dollar - which could very well bite them in the back as their property side is headed for a substantive fall.

p/s photos: Haruna Yabuki

HK's Missing Legacy Part Deux

Sir Jack Cater's Legacy

The Missing Legacy was first written in a blog of mine dated 7 February 2006 - it was on the passing of Sir John Cowperthwaite, the person most responsible for HK's reputation as the freest economy/capitalism in the world. Cowperthwaite's passing did not get much press coverage at all in HK media, and that kinda pissed me off because a group of people who can forget so easily their "roots" and "how they got here" are doomed to lose the blueprint set by Cowperthwaite.

Now another old gwailo died, and his contribution to HK is no less than Cowperthwaite. Sir Jack Cater died on Guernsey on 14 April 2006 aged 84. He was the founding head of HK's infamous Independent Commission Against Corruption (ICAC), which took radical steps to combat graft in the police force in the 1970s. Cater went on to become HK's Chief Secretary, Acting Governor and Commissioner in London. Bribery had long been endemic in Hong Kong's police and civil service, but was thought of as being confined to the Chinese lower ranks, rather than expatriate officers. Calls to eradicate it were largely ignored by governors before Maclehose, who arrived in 1971. Maclehose lacked the political will to tackle the problem despite strong urgings by Cater . If you were to do a net search, you will find Jack Cater's passing only being solemnly mentioned within the HK's government admin portal at www.news.gov.hk ... how soon we forget!

Cater even threatened to resigned in 1973 when trying to bring down Chief Superintendent Peter Godber. Godber fled HK while under investigation for amassing a fortune of several million pounds, much of it banked in Vancouver. Cater needed to strike at the top, even at one of his own, to further reinforce the dire need for eradication of corruption in HK. The developments forced the hand of Maclehose. Jack Cater was asked to form an independent anti-corruption unit with the support of a former Special Branch officer, John Prendergast.

The establishment and independence of ICAC is crucial to HK's economy. While Cowperthwaite had eradicated bureaucracy, you still needed "pure meritocracy" in the financial economic system to uphold its integrity and transparency. Only with those factors can HK gain an ever growing reputation as a true financial center - attracting professionals and companies to invest.

Cater's reputation for determined leadership had been established during the period of civil unrest in Hong Kong in 1967. He cared deeply about his work and about those closest to him, and he encouraged the careers of talented young officials - including women, who in earlier days had generally been denied promotion. In the first year of its operation, 1974, the ICAC handled 1,798 complaints of police involvement in bribery and extortion. It was said that more than a third of all Chinese policemen were members of triad gangs which controlled prostitution, drug-running and gambling across the Territory - rackets which, as Cater pointed out, raked in more than three times the profits of the Hongkong & Shanghai Bank.

By October 1977 the Commission's uncompromising methods (it acted on anonymous tip-offs, and allowed no presumption of innocence) had caused such anger in the Police Force that 2,000 officers marched through the streets to present a protest petition, and a group of CID men stormed the ICAC's offices. Fearing a breakdown of order, Maclehose felt forced to declare an amnesty for all but the most heinous offences. In spite of this setback, the ICAC's work continued with unflagging determination. Investigations proceeded into other government departments, notably public works, education (parents were often asked for bribes to enrol children in schools of their choice) and health (hospital patients were forced to pay up for bedpans). It was indeed a cradle-to-grave system, with bribes demanded even for burial sites. Among those most grateful for the clean-up were the drivers of Hong Kong's battered fleet of minibuses, whose fares had for many years been preyed upon by bent policemen.

The ICAC was often accused of heavy-handedness, but its intervention provoked a culture change which still stands Hong Kong in good stead while corruption remains rife in other parts of Asia. Though Cater moved on in 1978 to the top civil service post of Chief Secretary, it was at the ICAC that he made his most significant contribution. Cater was Chief Secretary from 1978 to 1981. With a rapidly growing economy, it was a golden era for HK. Cater was several times Acting Governor, and was in line to succeed Maclehose in 1982; but Margaret Thatcher was persuaded to appoint a senior diplomat, Sir Edward Youde, to commence negotiations for the eventual handover to China. Instead Cater became HK's Commissioner in London until 1984. He then returned to Hong Kong to work in the private sector, joining China Light & Power Co - the electricity generator for Kowloon and the New Territories - and becoming head of Hong Kong Nuclear Investment Co, which was China Light's participation with Beijing in a nuclear power station venture at Daya Bay in Guangdong province. He was president of Hong Kong's Agency for Voluntary Service, a member of the Court of the University of Hong Kong and an international director of the United World Colleges, participating in the foundation of Hong Kong's own College at Shatin in the New Territories.

Again, another passing of an important gwailo being largely ignored by HK's media. Is it a gagging issue; were media companies trying not to agitate China's political HQ by not bringing up the "glory days" of British colonial influence? How many more "important gwailo septua/octo-generians" must die before HK people recognises its roots, and pay the according tributes and gratitude that are due. One can just imagine the gulf between HK and Singapore as financial centers if "true meritocracy" did not prevail in HK. Will Cater and Cowperthwaite ever make the books of HK's recent history. The Chinese have an oft-quoted saying, "when drinking water, one must never forget its source", how they got here. Just because some of them involved people who are not Chinese does not matter, and should not matter.

The Missing Legacy - HK Wake Up!

Recently, a gwailo passed away without much of a mention in HK papers. Now, I have to say that I am biased as I think the majority of the bunch of British expats being posted to HK basically had a holiday for the past 50 years. HK did become a financial center and its citizens benefited enormously for the last 30 years. It put HK on the map. Property prices went through the roof. HK became an international city. However, HK would NOT be where it is (economically) if it were not for a guy name John Cowperthwaite (JC). JC was HK's financial secretary from the crucial formative years of 1961-1971. He passed away on January 21, 2006 at the ripe old age of 90. The sad thing is that HK media and HK people in general, failed to give due credit to this man. Sure, HK people worked hard to get to where they are, but as we all know, the structure and gameplan must be there to allow "good things" to happen in an economy. In his first budget speech he said: "In the long run, the aggregate of decisions of individual businessmen, exercising individual judgment in a free economy, even if often mistaken, is less likely to do harm than the centralised decisions of a government, and certainly the harm is likely to be counteracted faster."

JC, very much a disciple of Adam Smith and not a modern monetarist, put in the structure and rules to promote HK's now famous laissez-faire economics. Britain at that time was moving towards a more socialist and welfare state, and it would have been very easy for JC to replicate that for HK. Can you imagine that - having a bunch of whinging "me,me", unionised, welfare dependent Chinese in Asia!? Instead, JC took it upon himself to do "less" by eliminating tariffs, lowered the tax rate to a maximum of 15%, cut the bureaucratic red tape that stifles business. He called his policies "positive non-intervention". To have the courage and political will to do that for HK - that should mean the world to the people of HK. In 1960, the average per capita income in Hong Kong was 28 percent of that in Britain; by 1996, it had risen to 137 percent of that in Britain. Now the per capita income of HK almost mirrors that of the US.

Sir John Cowperthwaite was knighted in 1968, and what he did for HK should be taught in schools and universities in HK. I wonder how many roads, libraries, scholarships or university halls are named after JC? After the Asian financial implosion in 1997, HK suffered and stuttered particularly when compared to Singapore. It looks like Singapore has taken a leaf from the handiwork of JC - less is more. Instead, HK powers to be have put in more legislation and rules, which combined, have put HK on the backfoot. Two examples, the rise and rise of hedge funds in Asia - Singapore has managed to attract a lot more of them than HK, ask any fellow professionals why. The other is the rise and rise of REITs, and though HK has had a headstart, Singapore is putting in the right moves, making REITs dividends non-taxable. Again, we can expect more international REITs to come to list in Singapore in the months ahead.

HK has to learn from its mistakes but also gain lessons on things it did right before. A good way to start is to fully appreciate the things Sir John Cowperthwaite did for HK's economy, and replicate that. The fact that his passing was largely ignored in HK says a lot about where HK's economy is headed.