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T e x
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let's try this...

here's an interesting, competent post from someone identified as a senior reporter for Asia Times Online.

The structure of "the story" comes off as what is known in the trade as "suspended salient interest." That's as opposed to (for example) the "inverted pyramid" of the straight news story...and even the classic treatment of "the feature story."

What's the "take-away," here? (and here's the url: http://www.atimes.com/atimes/China_Business/KC31Cb01.html )

quote:
China Business
Mar 31, 2009


Hong Kong remembers to party
By Olivia Chung

HONG KONG - Business executives in Hong Kong, their families and overseas guests shrugged aside pollution-induced health warnings and the HK$100 (US$13) per liter price tag for beer over the weekend to cheer anything that moved at the city's top annual celebration of two-legged sport - the Cathay Pacific/Credit Suisse International Rugby Sevens.

As Fuji skipper Emosi Vucago ran in tries to lead his team to an unexpected 26-24 victory over South Africa in the most famous tournament for rugby union's fast-paced shortened version, harder to shrug aside were signs of downturn in practically every economic activity in a city whose existence is based on squeezing cash from every aspect of international trade, now savaged in the global downturn.

As bankruptcies mount, even government efforts to head off a forecast 2%-3% decline in gross domestic product this year will



further diminish Hong Kong's exotic business facade - gangs of workers are being hired in a job-creation and safety scheme to tear down street signs of companies that have gone bust.

More durable Hong Kong icons, such as international lender HSBC and local billionaires Li Ka-shing and Lee Shau-kee, though still in business, are among those who have lost their golden touch in the shrinking local and global economy.

Rugby-tournament backer Cathay Pacific International Airways has had a pilot's view of the crash. The carrier's base, Hong Kong International Airport, has seen business nosedive, cargo throughput dropping 19.7% in February from a year earlier after a 28.2% decline in December. The airport's passenger traffic in February collapsed 13.7%.

"It is unlikely that this downward trend will reverse in the short term," according to Airport Authority chief executive Stanley Hui Hon-chung.

As a result, Cathay, which also suffered self-inflicted wounds by taking a wrong bet on currency movements, lost HK$8.56 billion last year and 2008 is shaping up badly. The carrier's traffic data for February show a 21.2% plunge for Northeast Asia, a 14% drop for the lucrative North America routes, an overall 7.4% fall in passengers and a 16.5% decline in cargo and mail tonnes carried, all compared with a year earlier. Year to date, cargo and mail is down 19.4% and North America passengers carried down 15%.

Cathay directors will bank no bonuses from last year, while investors, their shares already at a third of their value of four months before the 2008 rugby tournament, learned this month they will get no final dividend.

At least Cathay is still supporting the city's annual rugby bash. Goldman Sachs and disgraced insurer American International Group this year withdrew from their regular sevens-tournament sponsorship. Citigroup and Royal Bank of Scotland also said they would be reducing their hospitality. (The struggling Scottish lender did however sponsor Saturday's Earth Hour event in Hong Kong, which encouraged people to turn off their lights for one hour, FinanceAsia.com reported.)

Goldman's Asia business lost US$1.75 billion in the 12 months to November 28, and Hong Kong jobs were among the near 5,000 positions it is reported to have axed in the past year. Other financial institutions cutting Hong Kong staff numbers include Cazenove, JPMorgan Chase, USB and CLSA. Standard Chartered Bank cut 200 jobs in Hong Kong in December. DBS, Southeast Asia's biggest lender, has trimmed 900 jobs at its Singapore base and in Hong Kong.

Perhaps cuts by Hong Kong and Shanghai Banking Corporation are the most deeply felt. The local arm of now London-based HSBC Holdings and an institution entrenched in the fabric of many Hong Kong lives, the bank last September started to ax 100 Hong Kong jobs, with a further 450 losses announced before the end of the year as the global financial crisis deepened.

HSBC shares, normally a steady provider of tax-free dividends, are an important income source for many Hong Kong people who also park their pay checks with HSBC - the bank dominates retail lending in the city. Buying even endured (while more-knowing heads took profits) after HSBC publicly signaled the impending global subprime crisis with provisions for US losses in its March 2007 earnings report.

The shares gained more than 10% between that report and the end of October 2007 - then crashed, and by this March fell to just over HK$30.55 from a peak above HK$150 as full-year profits tumbled 70% in 2008. The bank this month slashed dividends by about a third, cutting directly into incomes of numerous Hong Kong families - though retail investors clogged the bank's website last week to ensure a stake in the lender's US$18.4 billion fund-raising share issue.

With China's exports to the US collapsing, other once-iconic Hong Kong institutions and their leaders are looking similarly haggard. Hong Kong's richest man, the legendary billionaire Li Ka-shing, last week reported a 43% collapse in full-year profits at Hutchison Whampoa.

Fewer ships unloaded in 2008 at the 300 berths operated by the company's Hutchison Port across 25 countries. Pre-tax earnings at the unit, the world's leading container-terminal operator, rose 3% to HK$13.2 billion (US$1.7 billion), but thanks to asset sales that were worth as much as HK$548 million in the first half alone.

Hong Kong, the world's third-busiest port after Singapore and Shanghai, reflects Hutchison's woes. Declines in total port cargo container throughput steepened to 23.2% in January from 16.2% in December. Overall, Hong Kong's exports fell 21.8% in January, the most in 50 years, after shrinking 11.4% in December. Imports fell 27.1% in January from a year earlier.

More than just cargo from China sustains the economy of Hong Kong. In excess of half, or 16.86 million, of the 29.5 million people who visited the city last year came from the mainland, up by 8.9% on 2007. That growth cracked in the fourth quarter, when total visitor numbers fell 0.9% against the last quarter of 2007. Visitor spending in Hong Kong, which accounts for 20% of retail sales in the city, slowed to 5.8% last year from 16.4% growth in 2007.

That has been bad news for everything from hotels to gold shops to restaurants. Closures include Kowloon's popular Gallant Restaurant, whose existence pre-dates by a couple of years Chinese leader Deng Xiaoping's revolutionary first steps in opening up China to the outside world. Gallant's shutdown threw 260 people out of work, joining people from across a range of industries, from broadcasters TVB and ATV and security services company G4S, who have had their jobs axed.

Hong Kong's unemployment rate, as low as 3.2% last August, rose to 5% in the December to February period and is heading towards the 8.3% recorded after the spring 2003 outbreak of the flue-like SARS stopped Hong Kong travel and business activity in its tracks, bankrupting many businesses.

Credit Suisse analysts Dong Tao and Christiaan Tuntono are forecasting 7% unemployment by the end of 2009. Citigroup economist Cheng Cheng-mount expects an above 6% rate by the middle of the year.

The tale of misery is reflected in personal bankruptcy petitions, up 18% in February from a month earlier and hitting the 1,500 mark last seen during the SARS outbreak, according to the Official Receiver's Office. Declared bankruptcy orders surged 120% to 1,675 in February compared with January. The Receiver's office expects to handle 12,000 bankruptcy cases this year, which would be a 7.4% increase over 2008.

The downturn is forcing Hong Kongers, whose spending declined 3.2% in the last three months of 2008, to hold back on their greatest addiction, betting on four-legged sport in the form of horse-racing. Attendance at the city's first race meeting in the Year of the Ox, on January 28, dropped 3.6% to 83,000 compared with the equivalent meeting last year (still more than double the capacity for fans at the sevens tournament final). Betting turnover at the race meeting slumped about 7.5% to HK$1 billion.

John Chan, present chairman of the Jockey Club, the only organization licensed to take bets in Hong Kong, acknowledged in January that the season's betting turnover had dropped by 5% year-on-year so far. The club is the city's largest single taxpayer, contributing HK$13 billion in 2007/08, or about 6.5% of all taxes collected by the Inland Revenue Department.

Declining revenue may also be bad news for a plethora of institutions and individuals who benefit from racegoer's betting habits. According to its website, the club over the past decade has donated an annual average of HK$1 billion to charities and community projects.

The government is seeking to bolster the economy by refunding taxes and raising infrastructure spending. As early as October 2007, Hong Kong chief executive Donald Tsang vowed to create 250,000 new jobs through 10 major infrastructure projects, which he claimed would add HK$100 billion annually to the economy when finished.

They included a 50-kilometer bridge spanning the vast mouth of the Pearl River to Macau and Zhuhai, a rail link between the airports of Hong Kong and neighboring Shenzhen, and a high-speed rail link to Guangzhou, provincial capital of Guangdong, home to the bulk of exports that flow out of the mainland and through Hong Kong. The estimated HK$250 billion cost of these projects - if they go ahead - will be split between Hong Kong, mainland governments and the private sector.

The government plans to spend HK$40 billion on infrastructure in the fiscal year starting in April, providing, it says, about 50,000 job opportunities. That will help pick up slack in building-related industries, hurt by a 38% drop last year in the number of houses being built in Hong Kong.

But it does not impress Qian Wang, at JP Morgan. Most of the jobs created this year, she said, "would be targeted at young and disabled persons and/or for the construction sector, where wages are lower than those in the financial service and trade sectors. Hence, discretionary consumption is likely to remain subdued although consumption of stable goods is likely to benefit somewhat."

Unionist legislator Leung Yiu-chung also pointed out that "most of the jobs are related to the construction sector, which will not benefit the unemployed in the banking and finance sector. And thousands of temporary jobs included in the measures are not enough."

Certainly property developer and billionaire Lee Shau-kee is among those keen to see a turnaround. First-half profit at his flagship Henderson Land Development, announced in mid-March, shriveled 87% to HK$1.17 billion as sales, including apartments, almost halved and investment holdings declined. (Rival Sino Land reported a 12% gain in underlying first-half profit as its property sales increased 41%.)

Henderson, half-owner of Hong Kong's tallest building, the harbor-dominating International Financial Center in Central district, faces a tough year. Prime office rents, which fell 14% in the last three months of 2008 from the third quarter, could fall a further 38% in Central this year, property agency DTZ said. By the end of 2010, top office rents could plunge 60%, says CLSA Asia-Pacific.

Even so, and in line with the party atmosphere generated by the rugby tournament, Lee may have seen reasons to cheer last week. Centaline Property Agency reported that prices for luxury homes - those worth at least HK$10 million - had risen an average 2.1% this year. One development built by Li Ka-shing's Cheung Kong (Holdings) showed gains just short of 20%. Even so, luxury prices remain 35% down from mid-2008, while rents are reportedly down 23%.

Confidence in Hong Kong's trade sector, if still fragile, is also improving, Reuters reports, citing a Hong Kong Trade Development Council quarterly Export Confidence Index, which rose to 25.8 in the first quarter from 22.3 three months earlier. Anything below the 50 mark signifies exporters are pessimistic, but the slight gain indicates the trade slump could be bottoming out, Reuters said.

Stock markets are reflecting some of this optimism - Asia stocks were up 7.5% last week, and the Hong Kong benchmark Hang Seng Index bounced back to above 14,000 last week from below 11,500 at the beginning of the month. HSBC shares have recovered about 30% to above HK$42.

Bank staff are also still seeing money coming into the city. Among them, "Joyce", who was reluctant to give her real name, has hung on to her job, albeit with earnings tumbling from about HK$150,000 a month to around HK$50,000. "Now, I've got new clients from the mainland," she said, even though "its takes much longer to close deals" as financial products are explained.

The sevens tournament organizers were also upbeat, saying income from this year's event matched last year, according to Bloomberg report on March 27, citing Allan Payne, executive director of the Hong Kong Rugby Football Union.

The event brought in HK$240 million from visitors to the city in 2008, and HK$200 million from residents, the report quoted Payne as saying, citing the Hong Kong Tourism Board.

Signs of hope, then, are appearing, although rugby-fan enthusiasm delivered an unwelcome financial knock to the city's red light Wan Chai district when police had to use batons and pepper spray to subdue a brawl of at least 50 people on the eve of the sevens, according to the South China Morning Post.

For the area's bar owners and workers already seeing a fall-off in custom from heavy-tipping, bonus-happy bankers, it was another unsought setback only a day after closure of Wan Chai's hugely popular Fenwick's bar. The shutdown, albeit for license issues rather than lack of custom for its speciality "Tequila rock'n'rolls", added another 40 people to the city's jobless tally.

Olivia Chung is a senior Asia Times Online reporter.

(Copyright 2009 Asia Times Online (Holdings) Ltd. All rights reserved. Please contact us about sales, syndication and republishing.)



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(Feb 18,'09)

The great escape
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(24 hours to 11:59pm ET, Mar 29, 2009)









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Nashoba Holba Chepulechi
Adventures in microcapitalism...

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wallymac
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Was this posted as a News story or a commentary?

Almost as bad as what passes for a good interview now a days. Most interviews I see today are more about the interviewer making a statement than an attempt to illict information from the interviewee.

Posts: 3255 | From: Los Angeles California | Registered: Jan 2006  |  IP: Logged | Report this post to a Moderator
glassman
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great article,

it just seems to me like she hasn't de-fragged her hard drive in awhile...

maybe she has ADHD without the learning disability?

--------------------
Don't envy the happiness of those who live in a fool's paradise.

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