Long Lost Twins? Sean Bean vs. Thomas Montag

Long lost twin brothers? Click pictures for links.

Sean Bean (Actor) Thomas Montag (Merrill Lynch, newly hired Head of Global Sales & Trading)

A "Feel Good" Video by Sick Puppies

Found this pretty cool video by "Sick Puppies".

"Obama's Tax Evasion"

Admittedly, I haven't been following the US elections closely. However, this Wall Street Journal editorial (4/21/08) sums up Obama's tax stance nicely, and presents factual backup (see graph below) that raising taxes leads to lower tax revenues, while reducing taxes leads to increased tax revenues. Below are a few of Obama's key tax policy points:

• He is "open" to raising capital gains taxes from the current 15% to 28%, which would affect the 100 million Americans owning stock and contradicts his campaign rhetoric, "I not only have pledged not to raise taxes, I've been the first candidate in this race to specifically say I would cut their [the middle class, who earns below 200-250K apparently] taxes."
• Lift the cap on wages subject to the payroll tax. That cap was $97,500 in 2007 and is $102,000 this year. "Those are a heck of a lot of people between $97,000 and $200[,000] and $250,000," said Mr. Gibson. "If you raise the payroll taxes, that's going to raise taxes on them."
  

Barry, thanks for making my voting decision easier!
Link to WSJ forum specific to this article

See here for historical evidence that reducing Capital Gains taxes results in higher tax income for the government as % of GDP

"Honeymoon will be short for Taiwan stocks"

In contrast to the vast majority of bulls on the Taiwan market since the presidential election, here is an article which tries to counter the bandwagon mentality.

This is in the context of:

• Taiwan Dollar has appreciated 7% vs USD this year, 2nd best in Asia
• Taiwan real estate has surged since the elections on Mar 22, in some places up 18%, due to speculation that foreign (HK & Mainland) investors would come in. Next Monday, a contingency of high profile mainland property developers are taking a tour of the island and potentially place some bets. Li Ka-Shing, the HK real estate mogul, has also recently announced similar interests in investing in Taiwan. His son, Richard Li, visited Taiwan in March to view property investment opportunities. Investing legend Jim Rogers has also begun investing in the island on expectations of improved cross-strait relations.
• Taiwan stock market has risen almost 10% since January vs. about a -3% loss for the Dow Jones, and a -8% loss for the Nasdaq (Click on below to enlarge image).
  

HK Real Estate - LOHAS

The Game
In early March, I experienced my first taste of Hong Kong's real estate fervor, no matter if it's just the tail end of the boom. I went to visit the "Show Flat" (the sample apartment) for Cheung Kong's yet-to-be-completed new "integrated living development" - The Capitol. A major backer for the 10-year project is MTR, Hong Kong's railway developer (also diversified into additional residential/commercial projects). The location is in Eastern Kowloon, at a MTR stop under development called Lohas Park. The Show Flat's location was in TST, not the actual site location - this is probably due to convenience factor, but also due to the fact that the site is in smelling distance of a garbage dump (so I hear).

Note: LOHAS stands for "Lifestyles of Health and Sustainability", and is a global "movement" for healthier, environmentally-friendly living.

The Sell
That said, the Show Flat was only available to view in person for three days, Fri-Sun. After waiting in line for 1.5 hours, you enter a dark room to watch a marketing film to get you further brainwashed. Following this, you proceed through numerous elaborately put together rooms with miniature models of the actual apartment complex and all its amenities (bowling alley, party rooms, swimming pool, MTR station, parks, etc.). At the end of the procession you finally get to see two of the four different apartment show flats (one was 950 sf, one was over 1,100).

Note that the Show Flat's layout and appliances are not representative of the actual apartment you may be buying - they use better brand appliances and have taken the liberty to remove certain walls. These rooms were packed with potential buyers *cough, speculators*

This first-phase apartment (5 towers) will be available for move-in in early 2009, coinciding with the MTR station's completion. Note that you will be listening for construction noise through 2015, as they build out the 21,500 apartments in 50 towers in the next 8-12 phases!

See here for marketing materials

The Close
The best part (said facetiously) of the visit is the large room you visit after you exit the rooms. The room is completely filled with little tables and little chairs which are occupied by agents and potential buyers. I sat down with the agent I came with, and was promptly approached by two of her seniors, one who had obviously been given the role of the "Closer". Little did I know this was the intent of the entire day.

The Closer pitched me the "no risk" investment move of putting down HKD50,000 for the "right" to bid on apartments, once the list was to come out the following week. If you didn't put this money in, apparently you couldn't have first dibs on those apartments. The way it was explained to me, once you saw the apartment prices and decided you didn't want to act, the $50K would be refunded asap. Further, the $50K wasn't even a real charge on your credit card, it was supposed to be just a "hold". (I later found out that I did get charged, and didn't get refunded until 3.5 weeks later).

Prices:
Although I didn't buy in, I did learn about the purchase process - once you decide you want to buy, you only have to put down 5% to "own" the apartment. Following this, you make 3 additional 5% payments before you actually have to get a mortgage. During this few months' time period, you are free to sell/flip the apartment and pocket the proceeds.

They ended up selling almost all of the 2,096 units in phase 1, with the outstanding 20 going to auction. My agent recently told me that her clients' of this building have been offered a 10% premium but have turned it down, suggesting more potential upside.

Tips for capitalizing on RMB (CNY, Chinese Yuan, Renminbi, Chinese Dollar) appreciation in Hong Kong

The Hong Kong dollar is declining in value due to its unfortunate pegging to the US dollar, and the US dollar's extreme weakness against most other currencies. The RMB is at all time highs, thanks to its gradual, semi-moderated appreciation against a basket of foreign currencies. The RMB is still kept artificially cheap, which gives China's exports a price advantage. However, it's continued steam-letting by the central bank means a more or less guaranteed return should you buy the currency today. The RMB appreciated about 7% against the US dollar in 2007, and has gone up 4% since Jan 08. Forecasts predict it should do a total of 8-10% for FY08.
Therefore, how do YOU capitalize on this?
Buy RMB, of course. But there are a few options as to how to best do this.

Which Hong Kong bank has the best conversion rate?
Usually the HK banks are pretty much even, but I've learned that some banks (Shanghai Commercial Bank) offer better rates when you have a branch manager convert for you.

Which Hong Kong bank offers the best interest rate*?
Usually, local banks will offer better rates vs the global players, to attract deposits. A pretty blatant example of the variance in RMB interest rates is seen when comparing Wing Hang Bank to HSBC.

• HSBC offers a 0.5% interest rate (click here for all HSBC deposit rates) on RMB deposits of over 5,000. If you are under 5,000, you actually pay HSBC RMB50/month and get zero interest! Shanghai Commercial offers 0.70%, Wing Hang offers a 0.75% interest rate on RMB deposits over 1,000.
• For fixed RMB deposits 1-3 months, HSBC offers just 0.575%, Shanghai Commercial offers 0.80%, while Wing Hang offers 0.83%.

Which Hong Kong bank is the easiest to deal with?
Local banks are more paper-based, vs. web-based HSBC. Expect worse English but fast service, vs. HSBC's millions of customers waiting at the tellers and calling up the hotlines.

Other considerations
If you ever want to transfer RMB from one account to another, across different banks, you will have to withdraw cash to do so. There is currently no electronic transfer of RMB to RMB accounts in HK. Therefore, it's best to make the right decision upfront about which bank to stick with, or else get used to carrying wads of RMB 100 dollar bills from bank to bank, and dealing with the tellers counting and checking them one by one. Depending on the bank, they will check the condition and authenticity of the RMB with varying degrees of anality. The central bank, Bank of China apparently will not accept any bills that are torn or have any dirt/marks on Mao's face.
Shanghai Commerical Bank: Checks each bill on both sides, one with a fluorescent lamp to check for a special square-shaped stamp invisible to the naked eye. Anality rating of 5/5
Wing Hang Bank: Checks each bill on both sides, but does it expeditiously. No luminescent devices are used. Anality rating of 4/5. I had some bills rejected at Shanghai Commercial which were accepted at Wing Hang. Several dirty bills which were rejected, but then accepted after I used a wet paper towel to clean.
HSBC: Pretty loose. The bills they hand out are often soiled and torn, which causes the bills to be rejected by the other banks. Anality rating of 2/5.
Note: If you do get your bills rejected at other banks, you can still deposit them at HSBC or exchange with them for new bills.

How do you do it?
You can convert up to HKD 20,000 per day to RMB. Not sure if this is per account or per person - I tend to think there is no monitoring mechanism to prevent converting 20K per account per day.

*If you really want to get both the appreciation and the interest accumulation, then visit a branch in China to open an account. Then you get a 3+% interest rate instead of this sub-1% BS. You can set up wiring from HK to China accounts. However, getting the money from China to HK is somewhat more problematic - there are caps on getting that money out, unless you withdraw bricks of cash.
"Withdrawals from (local) Chinese banks are often limited, ranging from around RMB2,500 (US$350) to RMB6,000 (US$840) per withdrawal. However, some banks allow customers to make several withdraws in one day." - Chinese Economic Review, April 2008

For HSBC, a foreign bank, "Account holders can only withdraw US$50,000 in cash every year, with a current monthly limit of US$30,000 and an effective daily limit of US$7,900." - Chinese Economic Review, April 2008

Don't Touch the Birds!

Location: Taipei, Taiwan @ Guandu Nature Park

Just a few typical car accidents in HK

From scanning local news stories you can get a glimpse of the vast wealth in Hong Kong:

"April 2, 2008
Two women hurt in head-on collision between car and taxi

A Porsche and a taxi collided head-on in Shau Kei Wan yesterday, injuring two people. The Porsche was making an illegal right turn from the eastbound lane of Shau Kei Wan Road into Ngoi Man Street when the collision happened at 11.34am, police said. Two women passengers in the taxi, aged 55 and 80, suffered minor injuries and were treated at Eastern Hospital. Both drivers were unhurt. In a separate accident, a red Ferrari was damaged when it hit the anti-crash barrier of the Nga Cheung Road flyover in Yau Ma Tei at 11.58pm on Monday. The 39-year-old driver, who was not hurt, passed a breathalyser test."

Original article here, but you need subscription to view.

The most expensive license plate in the world

Referring to the "This is how they roll in Hong Kong" post, under the "Hong Kong" label, here is a photo of a Hong Kong car which has both the local HK license plate (yellow) and the one that lets you cross into China (black). The latter is the one that costs about USD 50K.