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SCMP Reporter

Get ready for stock market collapse

In the late 1920s, a commentator observed that even shoeshine boys in New York were buying shares.

Another claimed recessions were a thing of the past. On October 29, 1929, it all ended badly with a stock market crash.

Several indicators point to similar conditions today that warrant our attention.

Recently, markets have benefited from calm global politics, low interest rates, high liquidity and inflation tamed by China and India entering the global economy.

This perfect weather has spawned self-fulfilling euphoria-induced liquidity and nearly 10,000 hedge funds have sprouted in this fertile soil.

But a recent study has found that hedge funds on average earn little more than market indexes, and even less after fees, indicating that no real value is being created.

Some  savvy investors see a market top. On the mainland,  more than 400,000 brokerage accounts have opened per day in recent weeks, with few share purchases based on any fundamental analysis.

A clear indicator is that the same shares trade in Hong Kong at much lower price-earning multiples. And even the earnings are suspect.

New accounting standards being adopted worldwide allow firms to record assets at rising 'fair' values, thereby boosting balance sheets and earnings. But these are fair weather fair values and, with enforcement lax in many countries, book cooking is rampant.

The trigger that panicked markets in 1929 was restrictive trade policies. What will it be this time?

No one can predict the weather perfectly.

Is it 1928 or late 1929? It's hard to say, but storm clouds are clearly swirling. Consider selling soon.

Professor Gary Biddle, associate dean and chair professor of accounting at Hong Kong University of Science and Technology Business School

Fight lies with historical facts

Andrew Tay's letter ('No moral high ground', July 4) expressed  an interest in China making the denial of war crimes illegal, similar to some European countries where denying the Holocaust can land you in jail.

However,  the very freedoms which allow Mr Tay to even express an opinion about the Tiananmen massacre should also allow another man to deny the  Nanking massacre. Freedom of speech not only guarantees the protection of his words, but also the mere expression of opinions that are based on shaky facts.

To silence others for unpopular views not only reduces ourselves to their level, but also sets in motion a slippery slope, where the endpoint is the silencing of all views.

One is reminded of the case of David Irving, the Holocaust denier, who had his libel case shot down in a British court  due to his shoddy historical methods and the inability to back up his publications.

The same approach should be applied to deniers of Asian war crimes, whether Tiananmen or Nanking, by facing the facts head-on, with clear historical evidence.

Simon Au, Kowloon Tong

Scrap plan for Terminal 10

Christine Loh in her article 'Terminal logic' (June 28) is spot on with her very sound arguments as to why the proposed development of Container Terminal 10 is not in the best interests of Hong Kong.

She said it  would be an unnecessary concrete-pouring exercise given the inevitable development of the business of terminals across the border.

I also believe in the freedom of speech and ideas and therefore  invite the chief executive, or appropriate government official, to respond to Ms Loh's arguments through these columns, assuming they have good counter arguments.

Mike Allardice, Discovery Bay

Concerts go over the top

Bj?rn Lomborg has hit the nail right on the head in his article ('Live Earth concerts - tone deaf to harsh reality,' July 4).

Not long ago Bono, Sir Bob Geldof and their friends  dominated the headlines with their  Live Aid concerts aimed at drawing attention to the debt of African countries. Look how quickly that has all but faded.

Now it is the turn of the global warming brigade.

This just illustrates how we humans have short memories.

While I agree that preventing global warming is a very worthy cause and will save many lives in the future, we should not put this one issue above everything else. I wonder how long it could be before the threat of nuclear weapons knocks Al Gore and his global warming colleagues off the front pages.

John Yau, Tai Po

Recordings justified

David Akers-Jones ('Paul Morris was out of order,' July 3) complains of 'reprehensible conduct' by Hong Kong Institute of Education president Paul Morris in taping a 'private' telephone conversation between himself and then secretary for education Arthur Li Kwok-cheung.

While the contents of that conversation were embarrassing to Professor Li, nobody put words in his mouth. This was not a private conversation, but one between two public servants in their official capacities. Professor Morris was entirely within his rights to record the conversation, just as he would be to keep an archive of written correspondence on the matters at hand. Professor Li, who called the recordings 'totally inappropriate', and  Sir David seem to think that the spoken word of an official carries some privilege that the written word does not.

Recordings can play a key role in determining the truth of what was said, as the late Richard Nixon would affirm. Without such hard evidence, the public inquiry might not have made the progress it did.

Hong Kong is also rare among developed economies in not having legislation to require the keeping of public records, nor a freedom of information law to allow appropriate public access.

David M. Webb, Mid-Levels

Is Cathay a real HK airline?

I refer to the letter by Adrian Hardwick-Jones ('Disloyal Cathay,' July 3).

Your correspondent mentioned Cathay Pacific's historical monopoly of commercial aviation in Hong Kong and the attitude this engenders in its treatment of Hong Kong customers.

Cathay Pacific, a subsidiary of British-owned Swire, has long exploited the dominance it was granted under the former colonial government. It attempts to restrict the wider development of aviation in Hong Kong to avoid competition (for example, it lobbies against open skies for Hong Kong), gouged the Hong Kong traveller (for example,  compare fares to London where there is more competition against fares to say Karachi, which is less than half the distance) and discriminated against Hong Kong staff in its remuneration.

Compare this with Oasis, a Hong Kong-owned airline, which benefits the wider Hong Kong economy by bringing affordable business class and bargain economy long-haul air links to Hong Kong and pays its staff, including 'locals', the same market-driven rate.

Which airline should have the right to be considered Hong Kong's de facto flag carrier and to which should the government award  air traffic rights?

Aaron Lee, Kowloon Bay



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