HK$567 billion floods into HK

HK$567 billion floods into HK
Dennis Eng and Maria Chan
Nov 20, 2009

A total of HK$567.5 billion flowed into Hong Kong from October 1 last year to last Friday in what Hong Kong Monetary Authority chief executive Norman Chan Tak-lam described as an unprecedented situation.

The huge inflow, especially since the beginning of this year, targeted mainly stock and property investments, Chan said. A splurge on stocks has boosted the Hang Seng Index from a low of 11,345 in March to a close of 22,643 yesterday.

Property prices have also risen – about 30 per cent on average – this year, with prices for some luxury properties setting new records despite little evidence that Hong Kong has shrugged off its recessionary woes.

The surge in the stock market is most evident in the gains registered by the Exchange Fund, a reserve that backs the local currency. The fund reported a HK$96.9 billion gain in the first nine months of this year, more than offsetting the HK$75 billion fall last year. In the third quarter alone, the fund recorded a rise of HK$71.9 billion, with equity investment income accounting for 57.7 per cent of the total. The government pocketed HK$25.6 billion in investment gains for the first nine months.

Chan said the fund continued to perform well last month but declined to predict if the full-year figure would top HK$100 billion. The fund’s investment holdings mainly include stocks and bonds. Chan said he would consider further diversifying the fund’s investments, possibly including the mainland currency, to help stabilise the rate of return.

“There are still many uncertainties,” he said. Chan attributed the flood of liquidity to measures introduced to help prop up the ailing economy but warned of ballooning asset prices as a result.

“There are some potential risks, including inflation and an asset bubble,” Chan said.

“I am not worried about governments pulling out too soon, but rather that it will be too late.”

He said it was a matter of time before central banks around the world withdrew those measures. But maintaining the measures for too long risked more fund inflows, further inflating asset prices. Interest rates could also rise if the flood of funds left Hong Kong, posing dangers to economic growth and hurting homebuyers who were enjoying record-low borrowing costs.

The huge funds inflow has dragged down the three-month Hibor – the interest rate banks impose to lend funds to one another – to 0.12 per cent. Chan advised aspiring homebuyers to evaluate their ability to make mortgage repayments if the rate rose.

In an attempt to head off possible risks from an interest rate rise, the authority recently required banks to lend no more than 60 per cent of the value of properties selling for more than HK$20 million. But there were no plans to impose this requirement for mass-market housing, Chan said. Banks can usually lend up to 70 per cent of a property’s value.

The record-low borrowing costs and ample liquidity have seen funds flow from bank deposits to assets like stocks and properties in an attempt to generate higher returns.

Buoyed by the increased activity, the stock and property markets are expected to earn the government more in stamp duty than the HK$25 billion it estimated for this financial year.

KPMG tax partner Jennifer Wong How-yee said the government could reap an additional HK$11 billion in stamp duty paid on stock transactions and an extra HK$5 billion on duties for properties.

Revenue from the sale of land and the payment of land premiums by developers could also exceed expectations. Just HK$4.1 billion of the estimated HK$16.5 billion in land income has been realised, although this does not include HK$9.59 billion in land premium that Henderson Land and New World Development will add to public coffers for their Lok Wo Sha site in Wu Kai Sha.

Two sites in Tai Po will also be auctioned at the end of next month and are expected to fetch up to HK$12.4 billion.

But Agnes Chan Sui-kuen, a tax partner at accounting firm Ernst & Young, said the package of relief measures announced in May that cost the government HK$16.8 billion was expected to largely cancel out any extra revenue flowing in. The government estimated a deficit of HK$39.87 billion in its budget for 2009-10. In the six months to September 30, the administration reported a deficit of HK$64.78 billion.

The financial year runs from April 1 to March 31.

Economic data suggests the impact of the global financial meltdown on Hong Kong was not as severe as the Asian financial crisis more than a decade ago. At that time, the city’s gross domestic product shrank 8.9 per cent from the third quarter of 1997 to the end of 1998. Between the second quarter of last year and the first quarter of this year, GDP contracted 7.8 per cent.


“If there is one trait that virtually all effective leaders have, it is motivation. They are driven to achieve beyond expectations – their own and everyone else’s. The key word here is achieve. Plenty of people are motivated by external factors such as a big salary or the status that comes from having an impressive title or being part of a prestigious company. By contrast, those with leadership potential are motivated by a deeply embedded desire to achieve for the sake of achievement.”

~ Daniel Goleman

Road accident victim reveals pain of living as a tetraplegic

Yvonne Tsui and Paggie Leung
Nov 17, 2009

“It takes me more courage to survive than to die,” Lok Wai-kin, a former firefighter who has been a tetraplegic since a road accident in 2004, said outside the Court of First Instance yesterday.

Lok made the painful summation of how difficult his life was after reaching an out-of-court settlement on a HK$42.56 million claim against the driver and the owner of the car that ran into his motorcycle on Route Twisk in February 2004, leaving him paralysed from the neck down.

Lok, now 34, sustained severe injuries that left him in a coma for two days from which he awoke to find he could only move his head and shrug his shoulders, with no control or feeling over any other part of his body.

After three years in hospital, Lok still requires 24-hour care and a home that can house his bulky wheelchair and a gurney upon which he lies to shower.

“I wanted a mercy killing,” said Lok outside court yesterday, recalling days spent lying in a hospital bed. “All I could do was stare at the ceiling. You better save your tears for when someone is there because otherwise they just hurt your eyes.”

When asked if he was married, he replied: “Almost.” He said he let his girlfriend, aged 25 at the time, go because he thought a life with him would be so unfair to her. He has since lost contact with her.

Lok also lost his job.

“I wanted to be a fireman so badly that I sat for the recruitment tests twice before I was enrolled,” he said.

But he said he had not given up on life. “I can no longer save people, but I can talk to people,” he said. “I tell people my story and show them how they should treasure their lives.

“I have to live and this requires more courage [than dying]. If I died, I would not have to face so many problems. [If] I can survive like this, those who are healthy and able should treasure their lives.”

Lok filed his claim for damages against driver Chow Shing-woon and car owner Chow Shing-kai in 2007. The two defendants were adjudged liable to pay damages on February 23, 2007.

An out-of-court settlement was reached on the amount of damages yesterday but it is to remain confidential. It is, however, believed to be one of the largest such settlements in Hong Kong’s legal history.

Lok’s barrister, Andrew S.Y. Li, yesterday asked Recorder Benjamin Yu SC to approve the settlement.

“For [Lok], it has been an arduous journey to get to this point,” Li said. “Although he realises that whatever compensation he may get, he will never get his previous life back, he wants society to know that if you drive carelessly or recklessly, like the defendant in this case, it may not affect your own life but you may wreck the life of another person.”

Chow Shing-woon had been convicted of careless driving and fined HK$1,200, the lawyer said in court.

Yu approved the settlement.

Insurance firms pay at least some damages in most such cases, lawyers said, and the driver might also be liable for compensation.

Under the Motor Vehicles Insurance (Third Party Risks) Ordinance, a driver must be insured for third-party death or injury. Third-party liability for such accidents in Hong Kong is capped at HK$100 million. In addition to compulsory coverage for third-party bodily injury and death, a portion of that sum may be applied to third-party property losses.

The Ancient Tea Horse Road

For thousands of years, there was an ancient road treaded by human feet and horse hoofs in the mountains of Southwest China, bridging the Chinese hinterland and the Qinghai-Tibet Plateau. Along the unpaved and often rugged road, tea, salt and sugar flowed into Tibet, while horses, cows, furs, musk and other local products came out. The ancient commercial passage, dubbed the “Ancient Tea-Horse Road”, first appeared during the Tang Dynasty (618-907), and lasted until the 1960s when Tibetan highways were constructed. Meanwhile, the road also promoted exchanges in culture, religion and ethnic migration, resembling the refulgence of the Silk Road.

The road stretched across more than 4,000 kilometers mainly in Southwest China’s Sichuan and Yunnan provinces and the Tibetan Autonomous Region. Just as the Silk Road, the Ancient Tea-Horse Road disappeared with the dawn of modern civilization, but both routes have played very important roles in the development of China. Different Chinese ethnic cultures, such as the Dai, Yi, Han, Bai, Naxi and Tibetans, have met, fused and developed along the historic road.

The road ran across the Hengduan Mountains and the Qinghai-Tibet Plateau — an area of the most complicated geological conditions and most diversified organisms. Besides its cultural and historic value, the road was also highly appreciated by adventurers and scientists.

Tea and horses blazed the way

According to Tibetan classics, people of the Tibetan ethnic group in western Sichuan Province and northwestern Yunnan Province had access to famous types of tea from the Central Plains during the Tang Dynasty. In the Song Dynasty (960-1279), people of Yunnan and Sichuan provinces exchanged tea for Tibetan horses.

On one hand, the effects of tea in promoting digestion and eliminating grease from eating too much meat lured many Tibetans. Not only the nobles, but also the general populace took delight in drinking tea. On the other hand, horses were also very important for the Han people. The result was the flourishing of the tea-horse trade.

Pu-erh tea is most favored by the Tibetan people. Since the butter tea made of Pu-erh tea is highly esteemed both in taste and color, it was named after its producing area — Pu-erh County in Yunnan Province, which is one of the cradles of China’s “tea culture”. During the Tang Dynasty, Pu-erh tea was grown in areas flanking the Lancang River. It was described as having a bitter taste at first, then sweet.

In order to preserve Pu-erh tea and to facilitate its trade with merchants travelling the Ancient Tea-Horse Road, a method was developed which led to the steaming of Pu-erh Tea and then compressing it into various shapes – usually a type of bowl shape or a “brick”. This type of tea is known as Tuocha Tea. The word Tuocha sometimes spelled “Tuo Cha”, or “Tuo Tea”, the meaning is block of tea. Tuocha Tea can also be known by different names such as “beeng cha” (or “bing cha” or “ping cha”), and “fang cha”. These names simply refer to the type of shape into which the Tuocha Tea is pressed – eg bing cha is “biscuit shaped” and fang cha is “square shaped”.

During the World War II, when Myanmar fell into the hands of the Japanese, the Yunnan-Myanmar Highway — then China’s only international thoroughfare — was cut off. The Ancient Tea-Horse Road, extending from Lijiang in Yunnan, to Kangding in Xikang, and then to Tibet and even further into India, was revived and became a major trade route. With the opening of the Yunnan-Tibetan and Sichuan-Tibetan highways in the 1960s, the road declined. Some sections of the famous road, however, are still used for transport purposes. Today, the road comes to the fore again with the development of tourism in Yunnan and Sichuan provinces, as well as in the Tibetan Autonomous Region.

The road passes through subtropical forests and picturesque lakes and turbulent rivers, such as Lancang, Nujiang, Minjiang and Yarlung Zangbo. Heading west from the Hengduan Mountains, one has to cross many peaks — each towering 4,000-5,000 meters above sea level. But tea and horses have blazed a trail despite the challenges posed by mountains and forests. Roads devoted to the tea-horse trade linked ethnic groups living in areas near the roads, making them members of the great Chinese nation.

Six major routes

A Chinese expert researching the Ancient Tea-Horse Road recently found a complete map of the road drawn more than 150 years ago by a French missionary. The map reveals that the road traversed a series of towering mountains, with rivers flowing in between from the south to the north. Roughly speaking, there were six main routes:

Route One:

Begins in Xishuangbanna and Simao, home of Pu-erh tea via Kunming to other Province in China into Beijing.

Route Two:

Begins in Pu-erh (via Simao, Jinhong, Menghai to Daluo) in Yunnan Province into Burma, then from Burma into Thailand, Singapore, Malaysia and Hongkong.

Route Three:

Begins in Pu-erh via Xiaguan, Lijiang, Zhongdian into Tibet, then from Lhasa into Nepal and India.

Route Four:

Begins in Pu-erh via Jiangcheng in Yunnan into Vietman, then from Vietman into Tibet and Europe.

Route Five:

Begins in Pu-erh via Simao, Lanchang, Menglian in Yunnan into Burma.

Route Six:

Begins in Pu-erh via Mengla in Yunnan into Burma.

Tens of thousands of traveling horses and yaks created a definite path with their hoofs on the once-indiscernible road. Today, although even such traces of the ancient road are fading away, its cultural and historic values remain.

Sembawang Music Centre to close

CD shop chain filing for bankruptcy after succumbing to rising rents and poor business
By Shuli Sudderuddin

It has been a mainstay in the music retail industry here for more than 20 years, but Sembawang Music Centre will soon sing its swansong.

The plug is being pulled after the CD shop chain succumbed to rising rents and poor business.

Said owner and founder Dave Boo, 56: ‘We’ve liquidated the company and are filing for bankruptcy. Right now, all our energy is on clearing our stock and making as many sales as we can.’

He declined to say how much he owes creditors, adding only that it is very little.

Sembawang’s three outlets at Raffles City, Thomson Plaza and Plaza Singapura are holding sales touting 75 per cent savings.

The outlet at Plaza Singapura will be the last to close, in a few weeks’ time.

Mr Boo started the company in 1986 at age 33 as he was an avid music lover.

It was a small record store in Sembawang, patronised largely by soldiers from New Zealand who were stationed nearby.

Over time, the business grew. In 2004, Sembawang Music Centre was Singapore’s largest music retail chain, generating about $20 million in turnover.

That year, it became a listed company.

At its peak, it had 24 outlets.

Looking back, Mr Boo said: ‘We expanded too fast. In about 2005 or 2006, I bought the business back from the oil and gas company which owned it.’

The oil and gas firm had offered money for expansion and became a shareholder.

‘I started shutting down the outlets that were not doing so well,’ said Mr Boo after he regained control.

The strategy was not enough to save the chain.

‘Rents were too high. In Sembawang, I used to pay $4,000 to $6,000 for a 1,000 sq ft shop. For a 600 sq ft place in Raffles City, I now pay about $10,000 to $12,000 a month,’ he said.

And the industry is declining.

In April, The Sunday Times reported that sales at Sembawang Music Centre had shrunk by about 20 per cent every year since 2003.

Another music retailer, HMV, is moving to a smaller 12,000 sq ft store at [email protected] from its current 17,000 sq ft space at The Heeren.

Music giant Tower Records closed in 2006, leaving other brands like Gramophone and That CD Shop to fight for market share.

‘There are so many formats of media available now. People can just download music and movies and they don’t have to buy them any more. We couldn’t survive like that,’ Mr Boo said.

However, he credits his staff for maintaining their fighting spirit to the very end.

He said wistfully: ‘Right now, we are trying to sell all we can. I can’t think of anything beyond this, but once the last shop closes, hopefully someone will hire me as an employee.’

Certainly, buyers like Mr Daniel Ong, 29, a research scientist, will miss Sembawang.

‘I find that it’s cheaper than the bigger chains and it also carries more Chinese and Japanese music than other stores,’ he said.

‘There are so many formats of media available now. People can just download music and movies and they don’t have to buy them any more. We couldn’t survive like that.’

MR DAVE BOO, owner and founder of Sembawang Music Centre