Archive for the ‘Hong Kong’ Category

I have an Asian Palette.  I am not sure how one defines it, but for me, it means a rice-based diet, cooked vegetables, soy sauce and anti-butter.  I’m quite sure this is not the definition of asian palette, btw.

I thought I will write about some food/drinks which are generally not western-palette friendly.  Not yet, anyways.  Which means I am not going to write about Peking Duck, or Dumplings, or Boba tea… 

The first item is Hong Kong Style Milk Tea.


It even has a Wikipedia page here!

My favorite Chinese food blog, Cha Siu Bao, recently did a write-up on the HK Style Milk Tea competition. 

There is nothing especially new about this.  It is a derivation from the English milk tea, only better (in the opinion of the Asian Palette!). 


Instead of English breakfast tea, each restaurant selects their own unique blend of tea leaves.  What’s uniform about it is that the tea is very rich (tea is boiled for a few minutes), very smooth (very fine filter using what’s nicknamed as “pantyhose”), a bit thick (using evaporated milk), and very sweet (lots and lots of sugar). 

You drink this milk tea with almost any food.  It’s for lunch, afternoon tea, dinner…  and breakfast.   One interesting variation is what we call “yin yang”, which means coffee + milk tea.  Yep, coffee and tea all in one!

Where to get this in the US: chinatown.  Most Chinese bakeries and “hong kong style western food” restaurants (will explain in a later post).  Just ask for “hong kong style milk tea” and someone will hopefully point you in the right direction!


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Parallel to the downturn of hedge funds in the US, Hong Kong’s most weathly and not-so-wealthy have been hit hard by a couple of structured products: the “accumulator” and the “mini-bonds”. 

The accumulators are sold to wealthy individuals and are defined here by an earlier article in the WSJ:

Called an “accumulator,” it is essentially a contract that obliges investors to purchase a security, currency or commodity at a fixed price — often set at a discount to prevailing market rates — at regular intervals. When the market price is above the fixed purchase price, the investor makes money. When it falls below the fixed price, the investor loses, sometimes quite a lot. Contract terms typically last a year.

It is a structured derivative product that was originally conceived in the UK for corporate use (so companies can acquire shares in another without moving stock price up significantly).  Similarly to the Hedge Funds, these accumulators ar losely regulated by the HK SEC-equivalent as long as they are sold to people with HKD8mn+ in assets, which is equivalent to US$1mn.  Approximately $25bn have been poured into these risky products, according to various sources.  Investors can reap up to 31% ROI, but risking losses of more than 100%. 

The mini-bonds, on the other hand, were sold to the masses.  The Economist has a nice summary here with the definition:


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Discovery had a 4-day series called Koppel: People’s Republic of Capitalism.  I missed the first two episodes, and am hoping they will do a rerun.  Then, USA (i think) has Beyond Beijing; documentary about the six Olympic Cities besides Beijing. 

These two series cannot be any more different.  Koppel’s is the typical US-centric view: talking about auto makers and their threats, corruption, challenging (though cautiously) human right issues.  Beyond Beijing, on the other hand, seems to be straight from CCTV, a propaganda. 

Can someone pls import some better documentaries from Asia?  I’d suggest approaching TVB or ATV in Hong Kong.  Much more objective perspective, in my opinion.

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A lot of people have predicted the long-term demise of Hong Kong. For the longest time, Hong Kong was the conduit to mainland China for the rest of the world.  The argument goes that as China opens up, Hong Kong’s position will be diluted, and Shanghai will eventually overshadow the city.

I beg to differ.  If we look at Hong Kong’s development on an absolute and not relative basis (to other Chinese cities), I believe it will benefit tremendously from China’s growth, the same way it has over the past few years.  Language (officially trilingual), location (the harbor is an important asset), rule of law, servicing mentality, and universal education will give Hong Kong a competitive advantage sustainable for at least a couple of decades, if not longer. 

Sitting between the East and West for decades, Hong Kong has the unique ability to penetrate both cultures.  As such, its position will be enhanced and not diminished as China opens up to the world. 

Such is the opinion of a Hong Kong native (disclaimer!).

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Valuation Gaps

A short cheatsheet to start:
A-shares are stocks traded in RMB on local Chinese stock exchanges – only PRC investors and qualified international investors are allowed to trade.  B-shares are stocks traded in foreign currencies on local Chinese stock exchanges – these have to be traded off legal foreign currency accounts (mostly foreigners and expats).  Then there are H-shares (specifically the Red Chips) which are PRC companies listed in the HK stock exchange.  PRC individuals were not allowed to trade H-shares (reform in progress).  Some PRC companies also list as ADRs on Nasdaq and other foreign exchanges.

Finance 101 will tell us there each share of a company has a fundamental value based on future cash flow.  Assuming full liquidity between global exchanges, then one would assume that one share of the same company should have equal value, whether it’s listed as A, B, H shares, or as ADR.   What explains the valuation gap between these markets, and will the gap narrow over time? 

Here are a couple of articles on the topic:
Share Structure Gives Foreigners Better Deal (Philip Bowring, Herald Tribune, 2001)
Plan B For The Chinese Markets (Vivian Kwok, Forbes, 2007)

Valuation for A shares have historically (and remain to be so) been much higher than that for B and H shares.  Some argue that global investors place higher risk premium than domestic investors.  My guess is that it is a simple supply-demand imbalance.  For PRC individuals who are getting increasingly weathly, there is just way too much capital and too few investible assets.   When demand exceeds supply, prices are driven up, leading to spiralling effect due to speculation.  I suspect this valuation gap will persist, although perhaps narrowing a bit with opening of H-share markets to PRC investors.

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Learning Chinese

Some interesting tidbits about learning the Chinese language:

1. In China, kids learn pinyin before they learn to read and write.  Pinyin is a phonetic system based on the alphabets, and the method by which most foreigners learn Chinese.  I find this quite intriguing because that means Chinese kids learn to write and read the alphabets before their native language. 

2. Most Chinese type in pinyin using the western keyboard.  As you might have heard the same pinyin (or, pronounciation) can be converted into more than one character, so after you type the pinyin in, you have to pick from a list of suggested characters.   This certainly makes learning Chinese easier – you won’t ever have to learn how to write the characters; just how to recognize them. 

3. In Hong Kong, we speak Cantonese, which is a dialect.  We learn how to write the same way that Mandarin speakers do – how we write is how Mandarin is spoken.  Which is confusing because we can pronounce all written Chinese in Cantonese but we never speak to one another in that manner.  Thus, when I speak Mandarin, I’d first have to translate it into written Chinese (in terms of sentence structure and vocabulary), then change the pronounciation of each word to Mandarin.  Yep, very confusing.

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Ten years later

HKJuly 1st marked the tenth year anniversary of the handover of Hong Kong from Britain to China.  1997 seems like such a long time ago – The handover of Hong Kong has a very personal impact; in fact, the handover had a very significant social impact on those who lived through the transition.  I’d leave the intellectual discussion for later, but for me and my family, it was the catalyst for us moving to the U.S..  Sometimes I wonder whether on balance, it’s a positive thing.  On one hand, I have gotten an international education and global exposure.  On another front, I have uprooted myself and am living in a foreign city – if you have lived abroad, you’d know what I mean. You’d no longer have the social support system and familiarity that makes a place home. 

In retrospect, the handover probably happened at a very opportune time.  China is developing, and on the rise.  The Tiananmen student movement in 1989, in my opinion, contributed greatly to the policies adopted by the Chinese government today.  It would have been a very different story if the handover happened in the 60’s, 70’s or even the 80’s.  I was flipping through an old article in the NYT written in 1997, where the author wonders whether after the handover, Hong Kong will be more like China, or China more like Hong Kong.  As in most things, it’s always a bit of both. 

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