Voices and Trends in Global Business,July 2013

Apple has been slowing iPhone production,said Brian Blair,a senior research analyst at Wedge Partners.We believe there's been a 20% haircut to iPhone production.Most of the component suppliers will stay the same,despite the cuts. Apple's been cutting because they've been watching market leader Samsung,which hasn't been selling as many smart phones as they thought they would.The market for high end smart phones is slowing,and Apple's been responding to that. The IMF has cut its annualised global growth forecast from 3.3% in April to 3.1% in July.Their forecasts for commodity prices,as well as Russian,Brazilian and Spanish growth,were also lowered.The cause of the revision is the downturn in emerging markets and the lengthy Euro-zone recession. Hong Kong property agents marched against government price curbs over the weekend.Up to 5500 agents demonstrated,appalled at the fact that Q2 real estate transactions were at a two decade low because of new taxes and marketing restrictions.About a third of estate agents stand to lose their jobs in consequence. The government measures are making things worse,according to Michael Kilbaner of Jones Lang Lasalle.The rise in property prices both reflects and impacts the strength of the economy.A lot of the movement is really in tier one and upper echelon tier two property.A two bedroom flat in Hong Kong goes for a half million US dollars,with a similar price in Beijing.

Asian Market Voices

We probably don't need QE3,or more Federal Reserve asset purchases,in the view of Tim Riddell,Head of Global Markets Research at Australian bank ANZ.I expect a relatively positive end to the third quarter.
It's not over for Greece.They've got a lot of problems.
Mario Draghi has shifted the whole focus of the European Central Bank.He's really doing a good job.
The Shanghai market could be a big shifter into the next quarter.We could get a 10.5% rebound going into the next month or two.The downside risk is only 2-4%.The skew to me is,look to get involved.
I think China's home prices have bottomed,said Nicole Wong,Head of Real Property Research at CLSA.Today 92% of buyers are end users,as opposed to investors,versus 50-60% a few years ago.The supply is getting a little bit tight at this time.
The new governent will have to think about the next few years.A lot of the tightening will stay just a warning.Supply is plummeting and demand is quite stable.Those developers with positive cash flow will be in the best position.
Another rate cut will make money in the bank feel more and more painful.
CLSA stands for Credit Lyonnais Securities Asia.It claims to be Asia's leading and longest running independent brokerage and investment group.The Hong Kong-based firm offers investment banking,equity broking and asset management to global corporate and insitutional clients.Credit Agricole is their main shareholder.

Thriving in China:Hang Lung Properties,Ltd.

Ronnie C. Chan,Chairman of Hang Lung Properties,Ltd.,a Hong Kong-based developer,owner and manager of upscale real estate,thinks the government is finally heading in the right direction after 10 years,releasing more land for sale.We are not forced to sell,with more than 10 billion dollars in cash.I don't think this is the time to sell.
We want to be in commercial.The problem is,the government is building a lot of subsidised housing,driving residential developers into the commercial field.Wages are a big issue,not construction costs.
We're building five mega malls,but China can still pass increases on us.There are no fixed contracts in China.We are opening one in Xinan.It is fully leased six months ahead of opening.
As for expanding outside of China,Mr.Chan says he doesn't think he is smart or foolish enough to look elsewhere.
Hang Lung Properties is a constituent stock of Hong Kong's Hang Seng Index.It is one of the largest real estate companies in the world.Its holdings in Hong Kong and mainland China include malls,office buildings and both serviced and non-serviced apartments.
iShares MSCI Hong Kong Index Fund(EWH)

Analyst:NASDAQ Exchange May Be Acquired By Asians

Ed Ditmire,Capital Markets Analyst at Macquarie Group Limited,thinks the NASDAQ/OMX Group,the Times Square-based stock exchange,is characterized by efficiency and lower growth,with an equity emphasis.It is pressured by the forthcoming merger of Deutsche Boerse-NYSE/Euronext,but seems to be more of a target than an acquirer.
A large Asian exchange such as Hong Kong may go after NASDAQ/OMX.After all,Hong Kong uses the NASDAQ trading system.
Mr.Ditmire is very positive on the stock exchange sector.There are better business trends now,with more mergers and acquisitions.It's hard to rule out any deal as having no merit.
NASDAQ/OMX is reportedly considering a range of options to respond to the NYSE deal,from launching a rival bid for NYSE with a partner,to buying another exchange,as well as possibly selling itself.The company fears being marginalised.
Macquarie Group Limited is a full service financial firm with 15,500 employees.It is based in Sydney,Australia and has 300 billion dollars under management.
Macquarie Group Limited(MQG),NASDAQ/OMX Group(NDAQ)

Newsletter Editor Favors Hong Kong

Mark Skousen,PhD,editor of the subscription newsletter Forecasts&Strategy,is in a bullish investing mood.Dr.Skousen is fully invested now.He likes the low interest rate and low inflation environment,as well as the Federal Reserve's easy money policy.It's an opportunity to take advantage of a unique situation,in his view.
Dr.Skousen favors the iShares Hong Kong exchange-traded fund,among others.Hong Kong is the center of growth in Asia,he points out.The fund is trading at only fifteen times earnings,so he thinks it's a good buy.It also pays a 3% dividend,the economist notes.
Mark Skousen was a CIA economic analyst from 1972-75,and has taught at Columbia University.A frequent guest on business television,he started his newsletter in 1980 and has written more than 24 books.
iShares Hong Kong fund(EWH)

HSBC Sees Steady Growth

British bank HSBC's profits have doubled.Peter Wong,CEO of the bank's Asia-Pac division,says that this year the growth is quite sustainable.The loan growth has not had its full impact yet.Hong Kong is definitely a pocket of strength.So are Malaysia,Singapore,mainland China,India and Australia.Over the next couple of years,European GDP will be pretty low,affecting China,but China will still have a GDP of 10% this year and 8.5-9% in 2011.
HSBC has done a lot of background work to list in mainland China's stock market.China says it is a high priority.HSBC continues to build 15-20 branches a year in China.In India,they are gonna buy RBS assets,but mainly HSBC is growing organically.In China,HSBC has invested in ICBC and Ping An Insurance.
HSBC is very cautious in its mortgages.Customers do not pay more than 15% of their income.HSBC's portfolio is quite secure.
If Hong Kong continues to increase,it will form a bubble.It is stable for now,in Peter Wong's estimation.
HSBC Holdings,plc(HBC)

Asia Learning Fast

Ron Arculli,Chairman of Hong Kong Exchanges and Clearing,says that one thing we need to learn in Asia is to professionalize management.We're learning fast,but we need to get there in order to keep our position.Language is an issue for foreigners in Asia,but you can operate here without the language.Initially,you might want a local partner if you are shy,if you are cautious,but if you are professional,you will be respected,Mr.Arculli believes.
At the heart of it,in Mr.Arculli's view,they are all Asians.It is variations on a theme.It really is the preservation of the basic family structure,Mr.Arculli observed.
According to a KPMG survey,85% of global construction firms expect a moderate to significant increase in opportunities in the Asia-Pacific region on account of government stimulus programs.Insights such as those stated above can help those companies take advantage of these prospects.

Asian Assets Sought

A number of banks have expressed interest in Asian assets of Royal Bank of Scotland Group.Among those interested are Standard Chartered,HSBC Holdings and Australia&New Zealand Banking Group,or ANZ.RBS is divesting commercial and retail units in eight Asian locales,such as Hong Kong,China and India.RBS has been in talks with the prospective buyers.ANZ has gone as far as to sell shares in order to raise capital to fund such purchases,among other purposes.In better times,the RBS assets might well go for a less attractive price than today.

Oriental Travel Route Opened

Free passage across the Taiwan Strait,which divides Taiwan from mainland China,is once again possible for both aircraft and ships.The trip is about 100 miles,or 160.93 kilometers.Negotiators reached the agreement by limiting talks to economic matters.Political disagreement continues to separate the neighbors.China regards Taiwan as a breakaway province,while Taiwan sees itself as an independent nation.The direct route will abolish lengthy detours to Hong Kong and Okinawa,Japan that were necessitated by the closure of the Taiwan Strait,reducing the cost of commerce in both time and money.

Financial Centres Appraised

The Global Financial Centres Index has been released.The index is based on a statistical model and the opinions of experts.Factors considered include excellence of access,skill level of staff,and proportionality of regulatory regime.The rankings were:1.London,2.New York,3.Hong Kong,4.Singapore and 5.Zurich.Dubai and Shanghai are centres to watch.Singapore is gaining on Hong Kong,and centres at the bottom,such as Moscow,are continuing to climb.