Latest around Asia

It has been awhile posting the latest economic observations around Asia. Time again for an update.

Before Christmas while I was in KL and Singapore, on the surface people were just coming and going like busy bees working at office towers. One thing I did noticed though, the influence of KFC, Starbucks and MacDonald's were everywhere. KFC was visited by mostly locals with their kids. Maybe the cost was cheap. I did not venture into one as I am grease avert. Starbucks, it was just everywhere! One could hardly miss seeing one as each Starbucks seemed to be its own neighbour sometimes. It possessed some of the prominent spots and mostly visited by foreigners (by the Petronas Towers, not so much as in Signapore; locals and foreigners alike crowded the space). Maybe they have inkling of tasteless coffee and Westernized fat on the muffins and pastries. OK, I admit that I sometimes frequent Starbucks in Shanghai but because it serves as a convenience store for me when I am in a rush or my temporary meeting room. You see, Starbucks does not kick people out. OK, where am I going with this? KFC, Starbucks and MacDonald's are ingrained in the Asian culture. One just cannot get away not seeing one anywhere. I see fat unhealthy kids growing up like a football player, no not a slim trim receiver but a gigantic center or tackle - not muscles but fat. But then the balance sheet of those companies in Asia might perform well.

Residential buildings in KL and Singapore. In KL, I was basically "stuck" to the downtown core around the Petronas Towers. There were numerous residential buildings, fancy looking ones, 30+ stories high with best views of the towers. Empty! I counted at least 3 buildings empty. And some that were occupied, only a few unites. And in Singapore, going along the East Coast Highway to the airport. Empty residential buildings. Yet, both countries seem to continue to build on commercial and residential buildings. Where's the money coming from to finance these projects? Who will occupy these buildings when completed? I find it hard to accept that the gov'ts only using this type of strategy to keep people employ. "Build it they will come" strategy seems a bit over used. If people have no money, who will come? Singapore's Orchard Road now is a mess. Currently, right on top of the Orchard Road MRT sub-way station, a huge residential and commercial project is underway. By putting this new complex up, this corner will be the most congested in Singapore, probably even worse than the one in HK's Causeway Bay where Sogo is. So if one is to visit Singapore, stay away from visiting Orchard Road section from Orchard MRT station all the way to Dhoby Ghaut MRT station. You just cannot walk on that section. Traffic flow, pedestrians that is, moves along the shops. One side of the street is pack and the other side where there is a park, empty. I could count how many pedestrian walking two blocks in front of me.

Sales Sales Sales everywhere... At the initial US meltdown, I did not see any sale signs in stores, Singapore in particular. But all of a sudden, everything in KL and Singapore were over 50% off. 50% or more off! In Malls and on the street level shops, everything was on sale. From a men's store perspective, I found it odd that Zegna and Hugo Boss in KL were having anywhere from 30% to 50% off. And the stores were following the seasonal changes in North America. OK, how many people will want to buy a heavy jacket or winter suit when a tourist was wearing shorts and flip flop. Obviously, it was a flop to be selling winter clothing. Huge inventory build-up. Deep discount. Ouch!

The only place seems immune to luxury brand sales is here in Shanghai. From Citic Square to Plaza 66 to Portman, all the major luxury brands do not have sale signs. Sales? People walk in still pay full price. OK. Where is the money coming front? The other night, I saw two Bentley and a Porsche Cayenne cruising by all within 1 minute. Then F430, Lamborghini, come to think about it, have not seen any Maserati. Getting that rich in here needs connections. There are always connections or you get nothing. Unless you have something they want badly, then they will pay and give; otherwise, if you have something you want from them, you pay... suckers. And pay dearly. Basically, outsiders exploit the needy ones here; and the insiders exploit the needy outsiders.

The Expo is coming soon to this city. The enthusiasm is only locally. Outside of this town, the "what"? Just like the big O this Summer north of here, only major enthusiasm there; not here. China is too big to have everyone excited on one big thing, mainly because everyone needs to make a living. And with such International exposure, "control" is a major issue. The big "Propa--g@nd@" still play a big part. Lots of money is being spent on the upcoming Expo. The site, every time we passed by to the Pudong airport, slowing taking shape. All the steels, all the workers, all the concrete; there are also lots of highway infrastructure work, subway work. Shanghai will have about 14 lines crisscrossing the entire city with its surrounding areas. These areas used to be considered outside of Shanghai, now it's under Shanghai's jurisdiction. Just cannot see where all those money are coming from to build and build. Surely, there must be a finite amount. Or are we running a P0nzi scheme here with someone "cooking the book" at the Indian's Pr!cew@terh0use office. Maybe not far from the truth.

Now a summary around this place and the Pearl Delta:

- DLA Piper one of the largest law firms in the world with office here in Shanghai is offering graduated law students "work". It's a new hiring scheme; you get to work for experience, 4 hours a day, with no pay.

- Conflicting Chinese national analyst evaluations as to how the real estate market will go in China this year; some said the worst is still yet to come, some were optimistic that things will turn around on the 2nd half this year. Right... If no one has money to buy and developers have no money from the banks and with all those empty buildings and all those 5-star hotels/offices, we are expecting that many investors? Yeah, ah, ok.

- With Chinese New Year coming, lots of counterfeit paper money out there; they are so high quality bank machines have a hard time picking them out. There are people selling these counterfeit paper money on a Chinese-based e-bay type site. A RMB100 note is selling for RMB10 to RMB15.

- Have you heard the latest bridge building project? The one that will link up the Pearl Delta: Hong Kong, Macau area. No need to take a ferry; this is a very ambitious project. With the economy tanking in Hong Kong and Macau, the Chinese gov't as well as the SAR gov'ts are pushing for a fast track approval process. Yikes. I hate to see the feasibility study on this. With most islands along the coast lines being "excavated" for other mainland building projects, where does this project get all the basic "ingredients" for the building blocks? Also, the weather pattern changed so much along the coast what shelters will be provided during typhoon season as well as abrupt weather pattern like sudden hails and tornadoes? Yes, lots of those. And the workers, who will train them to ensure the building standards are followed? Not wanting to be on that bridge when it is ready.

- Hong Kong's hospital management seems to be getting dumber and dumber by the days. The last while have seen: piling two to three bodies in a fridge in the morgues, confused record keeping making people cremated other people's relatives, a person was injected with the wrong chemos straight up the spine and killed, a woman had the wrong breast removed from cancer, a cart full of blood samples were shoved into a room because of Saturday and Sunday, a man died of heart attacks in front of a hospital because management refused to help and tell the patient's relative to call 999 instead and the latest again, using garbage bags to store bodies in a hospital. The latest, a hospital lost a dead baby because it was wrapped in garbage bag and placed in the same storage unit as another excessive huge person. The police suspected that the baby's body has been dumped to the landfill. Monday, they will go to the landfill to look. And this happened over 2 weeks ago now. All this goof ups, no one got fired. Just verbal warning or no promotion for 3 years. Can you believe that?

- This city's policy is trying to pop-up the residential real estate market. It is beginning to relax how much you can borrow from your retirement money; apparently you can borrow as much as RMB800,000 to buy a second home. More debt. Yikes.