Thursday, May 30, 2013

The Deal of the Art


Look at that price tag. Not THAT’s creative!

The inaugural edition of Art Basel Hong Kong has now come and gone. The general consensus is that the contemporary art fair was a resounding success. The branding with Art Basel (in previous years, the annual event was known simply as Art HK) had a clear impact on the image and positioning of the fair. The galleries attending were more carefully selected. Celebrities such as Kate Moss flew in to have a look around. The detailing of how the space was laid out was just a tad more polished than before. All in all, it felt like an important step forward in helping Hong Kong set itself further apart from other rival cities in Asia as the continent’s most open, cosmopolitan hub for international culture.
Naturally, this being Hong Kong, the event was perfumed liberally with the distinct fragrance of money. There was an uptick in the visibility of luxury brand sponsors. The Intelligence Squared debate that took place during the fair posed the theme “The Market is the Best Judge of Art’s Quality” (Note: the consensus before and after the debate was “no”). However, the buying mood wasn’t frenzied, as has been the case in recent years with Asian wine auctions, real estate or luxury products. Buying activity was measured and studied. And there were plenty of attendees from the general public present simply to enjoy the art, have the kids run around a bit, and escape the humidity and thunderstorms that dominated last week’s weather. If Hong Kong can continue to grow its art appreciation market without resorting to hot money fever (or worse, the use of art as a vehicle for money laundering), it will indeed be an artful achievement.  

Monday, May 27, 2013

Forbes: Asia’s Most Powerful Women

China’s First Lady at #54. Flexing arm candy.

Here is the link to the Forbes magazine list of 100 most powerful women for 2013. The table below is a distillation of the Asian women from the list. It’s an interesting mix of political, business, non-profit and NGO organizations.



Sunday, May 26, 2013

A Bus Detour from the Road to Riches


Let me take you on the road less traveled.

This South China Morning Post article profiles a young finance professional who gave up a promising career as a future Hong Kong one-percenter to pursue a self-proclaimed dream – to be a full-time local bus driver. Gary Leung, 26, decided that chasing money and luxury did not represent a “fulfilled life” for him, despite a strong educational background that had prepared him to be a financial analyst. So he enrolled for an additional 18 days of driver training and then took the wheel of a KMB vehicle. He says that he hopes to inspire people to think differently about their lives and what moves them (pun intended). His story has gone viral online, with some people criticizing him that he can make this choice because he has the privileged background to do so.  Whatever his true motivations, it’s a thought provoking case study of an alternative lifestyle choice. All aboard?

Thursday, May 23, 2013

Writing About Riches

Oh look, a sale on books about us!

Here’s a link to an Elle Magazine article written by Janice Y.K. Lee, bestselling author of The Piano Teacher, that profiles some of Asia’s super rich. The piece includes amusing anecdotes about people partyin’ with the English Queen and concocting imaginative ways to keep a maid staff busy. It also has useful statistics about the rise of the region’s uber-class. Most interestingly for me, she highlights the growing trend of well-written literature that focuses on the skyrocketing Asian wealth. The novels are inescapably either poignant, border on satire, or balance between the two. She highlights Five Star Billionaire by Malaysian Tash Aw, How to Get Filthy Rich in Rising Asia by Mohsin Amid (Pakistan), and Crazy Rich Asians by Kevin Kwan (Singapore). Given how new wealth is upturning societies, family dynamics and morality across Asia, it’s not surprising that this topic is inspiring new writings and readers looking for fresh story lines and characterizations that are, well, rich.

Sunday, May 19, 2013

From Toils of War, Vietnamese Women Tycoons

You’ve come a long way, baby.


This SCMP Sunday Magazine article (originally published in The Guardian in the UK), shines a spotlight on a feature of Southeast Asia that is plainly obvious to those who know the region well: its women are some of the most industrious and hard working people anywhere. Vietnam’s recent war history further accentuates this aspect of society. The conflict killed perhaps three million people – mostly young men – a generation ago. The war was followed by acute hardships and hunger borne from bad collectivist economic policies. As a result, young women learned from childhood how to channel their energies to make a living and fight for themselves. Today, roughly 25% of all private enterprises are owned by women, though most of them are small family businesses.

The SCMP/Guardian article profiles three particularly successful women. Their stories are stirring, even if each of the individuals have chosen to memorialize their achievements with a cringe-worthy nouveau riche blend of neoclassical mansions and personal accoutrements.  Modesty is not a weapon of choice in the war to put a ravaged history into the distant past.

Tuesday, May 14, 2013

Wealthy Chinese Students - All Aboard!

Give us your huddled masses ladened with fistfuls of yuan

Top US boarding schools have long enjoyed an enviable reputation as the preserve of some of the world’s best and brightest students. Naturally, as Asia’s prosperity has outpaced the rest of the world over the past few years, applications from the region - particularly China – have swollen epidemically. Acceptance rates to the best schools have plummeted into the single digits, making high school applications as challenging as top ivy league universities. The rush of demand from Chinese applicants has presented the well-established boarding schools with both an opportunity and a problem. Clearly, they can cherry pick incredibly talented individuals to fill their student ranks. However, the schools are double-constrained by size and a desire to maintain diversity in the student body. International students tend to be capped at the 15-20% range. Several admissions officers have also expressed concerns that students from Asia tend to be narrowly dimensioned and have limited English-language skills. As a result, acceptances for Asia students have not nearly kept pace with the snowballing piles of applications from the region.
 
One of the schools looking to fill this demand gap is Leman Manhattan Preparatory School. As reported in this New York Times article, Leman has introduced a boarding component to its program. Of the international 40 or so incoming students this fall, 27 are from China. That represents a whopping 20% of the entire class. The students will be housed in newly-converted studio apartments near Wall Street. And, mind you, these are not your typical austere student dormitories that reek of mold and stale Cheetos. They are located in a luxury building above a Tiffany store, and feature marble bathrooms and beanbags.  The cost? $67.000 a year for tuition, room and board. This compares to c. $50,000 for the top boarding schools in the New England and surrounding Northeast states. Ouch. But New York City is not cheap, especially if you want comfort and style. This cost factor is the leading reason why the city has not had boarding schools until now (even though there are a number of leading “prep” day schools).
 
Leman is a relatively new school that was taken over two years ago by the Meritas international school chain. They (and a few other Manhattan schools with similar plans) clearly have ambitions to make a name for themselves on the global stage. Tapping into an equally ambitious and eager pool of well-heeled families from China may prove to be a winning formula to get noticed. That is, so long as the school is able to keep the students studying in classrooms longer than browsing the aisles of Bergdorf Goodman.

Friday, May 10, 2013

Blingapore!

Selling discretion and security, not gum.

The new Monaco! A tut-tutting Nanny State no more! Singapore has arrived. It is now considered the wealthiest city in the world. This in-depth Wall Street Journal article provides an eye-opening update on Singapore as the playground du jour of the world’s wealthy. Despite its persistent reputation for prudishness (laws still outlaw selling chewing gum and peeing in elevators, caning transgressors and putting drug traffickers to death), the city now prides itself on its combination of sparkling showiness and disciplined discretion. It boasts a rock solid government and first world infrastructure that instills a high degree of confidence for the wealthy based in shakier regimes such as China and Indonesia to park their money and indulge their passion for, well, indulgence. Taxes are low, bank secrecy is high, the paparazzi are kept to heel, and the weather is warm 24/7/365. No wonder the glitzy are finding themselves in larger numbers here.
 
Of course, this policy of having an open border to overseas money has deleterious impacts on wealth disparity and the cost of living. Singapore’s Gini coefficient is now one of the highest amongst developed economies. At street level and among the masses, there has been more frequent grumbling about the invasion of wealthy foreigners into this once-sleepy Chinese outpost in a sea of Malay. However, for those high up in the Pangaea bar sipping a $26,000 cocktail while keys to their Ferraris or private jets dangle out of Armani slacks, such social issues seem far from mind.

Wednesday, May 8, 2013

Down Time is Face Time

And next year, shall we do that bespoke South Pole thing?

This Jing Daily article attempts to summarize how luxury brand providers should try to cater to the high end Chinese tourist. Given that (a) there could be 1.7 million Chinese tourist arrivals in the US this year, and (b) up to 30% of Hermes’ global sales are to rich Chinese, bringing smiles to their faces is a serious business matter. The article suggests four key strategies:
  • Provide unique experiences. Don’t just go to a French chateaux, meet and chat up the owner. In Milan, avoid the shops and make a beeline for the fall fashion show.
  • Provide special treatment. Get a private tour of the luxury leather factories (provided this doesn’t involve a trip back to some place in China, e.g. Shenzhen). Have tea at the Prada family villa. Sing karaoke with Tory Burch.
  • Explore new destinations. Bored of Milan, New York and London? Exciting alternative possibilities include the South Pole or the US National Parks. Presumably, the tour leaders’ megaphones should be left on the bus. And the bears should be allowed to keep their pelts, paws and pancreases.
  • Ensure Trusted Information Sources. Forget those glossy mass mailing brochures. Have your local LV outlet provide you with a bespoke list of restaurants or hotspots.
If this seems suspiciously similar to the kind of treatment that any (not just Chinese) wealthy tourist might want, there’s probably a good reason for that. It is. So nothing too new here, folks. However, what is somewhat different for the Chinese is why they might demand such pampering. Face. It’s that uniquely Asian form of essential one-upsmanship vis-√†-vis one’s peers. And for the ultra-competitive elite class, nothing is more soothing and reinvigorating than knowing that you have been treated better than your rivals. No “I love NY” T-shirt can speak louder than that.

Sunday, May 5, 2013

Chinese Mums to Gold Short Sellers: ‘Make My Day’

A powerful defender in Mom.

We’ve all become well schooled in the power of market investors to bring governments to their knees. George Soros shorted the British pound in 1992 and forced the Bank of England to de-value. During the Asian financial crisis in 2007, hedge funds forced a succession of countries – e.g. Thailand, Korea, Indonesia – to abandon the defense of their artificially inflated currencies, and wreaked international economic turmoil.
But now, has the almighty short-selling financial investor met his match - a nemesis in the unlikely form of the Chinese "Tiger" mom - when it comes to the price of gold? According to this SCMP article, retail gold buyers, led by Chinese mothers looking to stock up on gold for their daughters’ weddings, have been taking advantage of the 26% plunge in gold prices since mid-April to buy the shiny metal. During the Golden Week just ended, mainland tourists in Hong Kong alone bought “60 tonnes of physical gold, 50 per cent more than last year”. Many gold merchants ran out of stock, a situation apparently not seen in decades. As a result of this demand rush, gold prices have rebounded to approximately US$1,450 per ounce, much higher than the $1,300 price targeted by short sellers. Given the resolve of some of these physical buyers – “if the banks keep short selling gold, we will keep buying more,” declared one individual – short sellers may need to call it a day and close out their positions to avoid further losses.
Okay, so it’s an exaggeration to attribute all the buying interest to Chinese mothers. Pensioners and jewelry makers have also been pouring into the market. Nevertheless, the current stand-off may be a cautionary message for financial investors out to make a quick buck -  sometimes, assets have value to certain buyers that numbers simply can’t properly measure.

Thursday, May 2, 2013

Of Wads Big and Small

It takes a lot of these...

to get one of these.


Odd and often amusing consequences result when a monetary system wherein the highest bill denomination is worth only US$16 is conflated with a citizenry that prefers cash payments above all others (e.g. credit cards, checks). That country of course is China. As discussed in this New York Times article, China has not put in circulation any bill denominated higher than RMB 100 in the past thirty years, even though the economy has grown fifty-fold during that period. The red note bearing Mao's Mona Lisa smile is the lowest top-value bill issued by any advanced country.

It seems the growth of China’s economy has not been mirrored by the trust by all of its citizens in the country’s banking system and government. Thus, cash still reigns king in many transactions. Jewelry, cars, yacht, and even houses are regularly paid for in duffel bags or even trunk loads of bright red notes. Monthly wages are still often paid with envelopes full of the stuff. Of course, a thick wad is also a efficient means of transacting that most useful of wink-wink dealings – bribes. Discouraging bribery is a motivation speculated on by the NYT article as to why a larger denomination bill has not been released. After all, a large bulge in an official’s pants may be more than simply embarrassing. It could be an indication of more nefarious goings on.
 
China’s situation is in sharp contrast to Singapore’s. The city state has the world’s highest-value note in active circulation – the S$10000, currently worth US$7,800. The bill is most often used for interbank transactions, but it is also occasionally spotted being passed around in Singapore's casinos and high-end luxury shops. The note is a symbol of a banking system that is modern, fluid and open. Perhaps too much so. It's not difficult to speculate how a note this valuable might facilitate cross-border money laundering and shadow banking flows. And do away with the need to lug around heavy suitcases or explain bulging pockets. 

Wednesday, May 1, 2013

Asia’s 0.000007% Most Powerful

Foreign Policy magazine (www.foreignpolicy.com) has just released a list of the world’s 500 most powerful people. Click here for a link to the article. Not surprisingly, the US leads in terms of numbers of individuals named. Non-Japan Asian countries contribute 79 names. The chart below breaks out the nationality of that elite group.



A few interesting notes:
  • Not surprisingly, China leads the region. The individuals named are a combination of Communist party officials and leaders of the largest state-owned enterprises. Of course, such a segregation is a virtual redundancy.
  • India’s entries are a very diverse lot, and includes politicians, industrialists, spiritual leaders and heads of international charities.
  • For South Korea, besides UN chief Ban Ki-moon and two top Samsung executives, the others are government officials.
  • Except for the head of the Hong Kong Monetary Authority, the SAR’s most powerful are business people. Duh.
  • The two Singapore individuals named are the heads of the city state’s government-related investment companies – GIC and Temasek. How these two people, and not Lee Kwan Yew and his son Prime Minister Lee Hsien Loong, were named by FP is somewhat bewildering.
  • Ditto for Thailand. The person named is the chairman of CP Group, not Thaksin Shinawatra – the country’s puppet master.
  • Any guesses as to who North Korea’s entry is? No peeking at the answer.

Let the debate rage.