Big jewelry chains are scrambling to cope with the rising price of bullion while striving to keep their baubles affordable for consumers still cautious in their spending.
Some are cutting back on the amount of gold in their products and turning to less expensive metals from silver to tungsten. Jewelers also are buying precious metals in bulk at fixed prices to hedge the risk of further spikes.
Even so, jewelry prices are likely to rise due to higher material costs. This year, gold prices have risen 22%, settling Wednesday at $1,336.80 a troy ounce, near a record high in nominal terms. Silver is up 52% and platinum is up 12%.
'If our costs go up, customers understand prices will go up as well,' said Mark Aaron, vice president of investor relations at Tiffany & Co.
The moves are aimed at helping the industry recover from anemic sales in the last few years. U.S. jewelry sales fell 2.7% in 2008 and another 1.6% in 2009, according to market-research firm Mintel International Group Ltd.
Gold's growing favor among investors worried about inflation and falling currencies has made the gold market far less reliant on jewelry demand. Jewelry accounted for 52% of gold demand through the first three quarters of this year, down from 73% in 2005, according to GFMS Ltd., which tracks the gold market.
In tonnage terms, the amount of gold used for jewelry plummeted by 35% between 2005 and 2009.
The fall-off has coincided with the decade-long gold rally, driven by investor interest. Since the end of 2000, when the gold price settled at $272 a troy ounce, it has nearly quintupled.
Jewelers have scrambled to adjust. Ben Bridge Jeweler Inc., a division of Warren Buffett's Berkshire Hathaway Corp., is selling more silver and platinum items, and has added wedding bands made of cobalt and tungsten at its 73 stores in 12 mostly Western states, according to Jon Bridge, a company executive.
'We've been looking at a lot of different alternatives,' said Mr. Bridge. 'Part of it is price driven, part of it is fashion driven.'
Thursday, November 25, 2010
Wednesday, November 24, 2010
Will Hong Kong's housing market finally cool?
The government's latest measure--which includes charging a stamp duty fee of 15% on properties sold within six months of purchase, 10% on those sold within six to 12 months, and 5% on those sold within one to two years--is meant to subdue the market by combating speculation.
But previous initiatives haven't done much to corral prices, rising at a 20% annual clip over the past two years. In the past year the government has tried increasing the land supply and temporarily suspending real estate from the Capital Investment Entrant Scheme, which offers visas to those making qualifying investments in Hong Kong, and still the market charges ahead.
Some say Hong Kong could be on the verge of a bubble burst that could sink housing prices as it did in the late 1990s and early 2000s.
Denise Yam, an analyst at Morgan Stanley Asia Limited, and Albert Wong, senior executive director of Midland Holdings, face off whether the latest effort will be effective.
Ms. Yam: Government Measures Will Curb Speculation
'We welcome the latest anti-speculation package, which will hopefully serve to curb destabilizing speculative activities amidst capital inflows and preempt painful adjustments when conditions reverse. We believe the latest measures could slow the surge in property prices, but should not bring about a sharp correction, as we see limited impact on the fundamental supply/demand conditions.'
Mr. Wong: New Fees Shatter Consumer Confidence, Prices
'Transactions dropped 80% this weekend compared with last weekend, and this is because of the government measure. The market has sent a very bad signal to tell the government this measure will hurt confidence in the property market.
But previous initiatives haven't done much to corral prices, rising at a 20% annual clip over the past two years. In the past year the government has tried increasing the land supply and temporarily suspending real estate from the Capital Investment Entrant Scheme, which offers visas to those making qualifying investments in Hong Kong, and still the market charges ahead.
Some say Hong Kong could be on the verge of a bubble burst that could sink housing prices as it did in the late 1990s and early 2000s.
Denise Yam, an analyst at Morgan Stanley Asia Limited, and Albert Wong, senior executive director of Midland Holdings, face off whether the latest effort will be effective.
Ms. Yam: Government Measures Will Curb Speculation
'We welcome the latest anti-speculation package, which will hopefully serve to curb destabilizing speculative activities amidst capital inflows and preempt painful adjustments when conditions reverse. We believe the latest measures could slow the surge in property prices, but should not bring about a sharp correction, as we see limited impact on the fundamental supply/demand conditions.'
Mr. Wong: New Fees Shatter Consumer Confidence, Prices
'Transactions dropped 80% this weekend compared with last weekend, and this is because of the government measure. The market has sent a very bad signal to tell the government this measure will hurt confidence in the property market.
Tuesday, November 23, 2010
Sonia Cheng is no Paris Hilton
The 29-year-old granddaughter of New World Hospitality founder Cheng Yu-tung is a tough-talking Harvard-grad.
Even so, she has her work cut out for her.
As the newly named executive vice chairman of New World Hotels, Ms. Cheng will manage a $1.1 billion expansion plan in greater China: 'We will do whatever it takes to be competitive within the markets we enter,' she says, noting that the company's goal is to develop 40 hotel properties in China over the next five years 20 are already in the pipeline. The unit of New World China Land Ltd., which was relaunched recently as New World Hospitality (from New World Hotel Management, Ltd.), currently owns eight properties in China.
Ms. Cheng is not one to forget about tradition, but there are old-school things about luxury hotels she won't miss, as well as some new-school trends she thinks won't last. Read about her pet peeves below and take the poll: Do you agree?
1. Too much service (in the wrong places): Bellboy service these days, says Ms. Cheng, is often more disruptive than it is helpful. 'When it comes to the business traveler with one carry-on suitcase, is it really necessary to make them wait in the room while a bell boy brings up the luggage separately?' she asks.
2. Too little service (when you want it): 'During check-out, why can't the reservationist get me a car to the airport? Why do I have to walk over to concierge to arrange this?' she asks. The traditional system of labor division in hotels translates to a less seamless experience for customers.
3. Over-the-top design: 'We're taught to not judge a book by its cover, but with hotels, why are people so easily sold by design?' she asks. In her opinion, design-centric hotels run the risk of becoming gimmicky, and cutting corners in service. Sooner or later, she hopes, guests will learn to look beneath the surface.
4. Bed covers: Whenever she checks into a hotel, Ms. Cheng says the first thing she does is pull off the bed cover. 'Who knows how often they wash it?' she says. 'What's wrong with a simple clean, white bed sheet? Do we need a heavy and useless bed cover to represent luxury?'
5. Too much technology: Ms. Cheng isn't happy about how the iPad has infiltrated its way into many services at other hotels, from checking in to ordering room service. 'Since when did a normal room-service menu become insufficient?' asks Ms. Cheng. She owns one at home, but she says that in hotels, the iPad and other gadgets ─ such as rooms with automated air conditioners and light switches ─ sometimes end up creating more problems than they solve.
Even so, she has her work cut out for her.
As the newly named executive vice chairman of New World Hotels, Ms. Cheng will manage a $1.1 billion expansion plan in greater China: 'We will do whatever it takes to be competitive within the markets we enter,' she says, noting that the company's goal is to develop 40 hotel properties in China over the next five years 20 are already in the pipeline. The unit of New World China Land Ltd., which was relaunched recently as New World Hospitality (from New World Hotel Management, Ltd.), currently owns eight properties in China.
Ms. Cheng is not one to forget about tradition, but there are old-school things about luxury hotels she won't miss, as well as some new-school trends she thinks won't last. Read about her pet peeves below and take the poll: Do you agree?
1. Too much service (in the wrong places): Bellboy service these days, says Ms. Cheng, is often more disruptive than it is helpful. 'When it comes to the business traveler with one carry-on suitcase, is it really necessary to make them wait in the room while a bell boy brings up the luggage separately?' she asks.
2. Too little service (when you want it): 'During check-out, why can't the reservationist get me a car to the airport? Why do I have to walk over to concierge to arrange this?' she asks. The traditional system of labor division in hotels translates to a less seamless experience for customers.
3. Over-the-top design: 'We're taught to not judge a book by its cover, but with hotels, why are people so easily sold by design?' she asks. In her opinion, design-centric hotels run the risk of becoming gimmicky, and cutting corners in service. Sooner or later, she hopes, guests will learn to look beneath the surface.
4. Bed covers: Whenever she checks into a hotel, Ms. Cheng says the first thing she does is pull off the bed cover. 'Who knows how often they wash it?' she says. 'What's wrong with a simple clean, white bed sheet? Do we need a heavy and useless bed cover to represent luxury?'
5. Too much technology: Ms. Cheng isn't happy about how the iPad has infiltrated its way into many services at other hotels, from checking in to ordering room service. 'Since when did a normal room-service menu become insufficient?' asks Ms. Cheng. She owns one at home, but she says that in hotels, the iPad and other gadgets ─ such as rooms with automated air conditioners and light switches ─ sometimes end up creating more problems than they solve.
Monday, November 22, 2010
Huawei Technologies must be wondering what it has to do to catch a break in the U.S. It's surely not alone
Flush with cash, Chinese companies have the potential to launch a wave of overseas acquisitions. Asian companies as a whole had cash balances of $228 billion by the end of June, up 60% from the end of 2008, Moody's says. Chinese and Hong Kong-based firms account for 45% of that total.
But Huawei's recent experiences in the U.S. point to how suspicions of Chinese companies' backgrounds and motives continue to stymie their overseas plans. The privately owned telecom equipment giant is in trouble with the Committee on Foreign Investment in the U.S., for not seeking approval for a $2 million acquisition of some staff and intellectual property from Californian startup 3Leaf Systems in May.
This is just the latest chapter in Huawei's difficult relationship with U.S. regulators. The company -- thought by some to have links to the Chinese military, something it denies -- saw its proposed acquisition of 3Com blocked in 2008 on national security grounds.
Other potential Chinese buyers are in a similar bind: State-owned giant China Mobile, holds the most cash of all, having grown its balance to $47 billion. Like Huawei, though, it faces some difficulties finding targets in countries that won't get the shivers about letting a Chinese company into their telecom sector.
Not all prominent Chinese firms encounter problems, it should be said. Alibaba.com has this year made two acquisitions in the U.S., for example. Others are changing their tactics. State-owned oil major Cnooc was famously blocked when it tried to buy Unocal in 2005: But it's back in the U.S., this time buying a non-controlling 33.3% stake in one of Chesapeake Energy's shale-oil and gas fields.
But Huawei's recent experiences in the U.S. point to how suspicions of Chinese companies' backgrounds and motives continue to stymie their overseas plans. The privately owned telecom equipment giant is in trouble with the Committee on Foreign Investment in the U.S., for not seeking approval for a $2 million acquisition of some staff and intellectual property from Californian startup 3Leaf Systems in May.
This is just the latest chapter in Huawei's difficult relationship with U.S. regulators. The company -- thought by some to have links to the Chinese military, something it denies -- saw its proposed acquisition of 3Com blocked in 2008 on national security grounds.
Other potential Chinese buyers are in a similar bind: State-owned giant China Mobile, holds the most cash of all, having grown its balance to $47 billion. Like Huawei, though, it faces some difficulties finding targets in countries that won't get the shivers about letting a Chinese company into their telecom sector.
Not all prominent Chinese firms encounter problems, it should be said. Alibaba.com has this year made two acquisitions in the U.S., for example. Others are changing their tactics. State-owned oil major Cnooc was famously blocked when it tried to buy Unocal in 2005: But it's back in the U.S., this time buying a non-controlling 33.3% stake in one of Chesapeake Energy's shale-oil and gas fields.
Saturday, November 20, 2010
The road to the mall may be paved with good intentions
'Buy me!' And this holiday season, they're rolling out more tricky marketing strategies to encourage recession-scarred shoppers to spend. 'Shoppers are dealing with a whole new arsenal of tricks,' says Kit Yarrow, a professor of psychology and marketing and Golden Gate University in San Francisco.
Merchants have always used marketing tricks and rotating sales to encourage consumers to open their wallets, but this year, they're pushing every psychological button they can, retail experts say. Competition for shoppers, plus a tepid holiday shopping outlook, means retailers are doing whatever they can to attract deal-hunting consumers' attention ─ all in an effort to entice them into spending more than they'd planned. That means adding worry-inducing purchase limits to indicate scarcity, promising free gifts to shoppers who spend just a little more, and offering rewards today to redeem later just so people will come back to the store.
These strategies work in part because they tap into hard-wired behaviors that go back to our days in caves. Long before we were confronted with half-off Merino turtlenecks or buy-one-get-one-free smartphones, we learned to stockpile in the event of shortage and to compete for scarce resources, psychologists and neuroscientists say. The stakes are considerably lower when you shop, but studies have shown our brains react similarly nonetheless. The effectiveness -- and proliferation -- of these mind games are a big part of the reason you're apt to look back and wonder why you thought that buying three itchy sweaters for $50 or a $200 no-name television was such a good idea.
Get to know these seven hidden triggers, and next time you go shopping you can look at retailers' pitches with a more critical eye -- and maybe avoid blowing your budget:
'Shop today and save 50% next week.'
Aimed at: Your best intentions.
Why you fall for it: The promise of bigger savings in the future appeals to people who think they can game the system, says Lars Perner, an assistant professor of clinical marketing at the University of Southern California's Marshall School of Business. You figure on buying just one or two things now, then returning to pick up a few more. But volume-driven retailers are using the now-and-later tactic this year to steer consumers back to stores when they know they'll have new stock or other promotions that help you buy more than you planned.
It's similar to the 'buy a little bit more and get a free gift' promotion, Perner says.
'Limit five per person.'
Aimed at: Your competitive spirit.
Why you fall for it: Limits trigger a feeling that the deal is so great that, if not for that limit-four-per-customer rule, shoppers would be filling their carts to the brim, leaving none for you, says L.J. Shrum, the president of the Society for Consumer Psychology and the marketing department chair at the University of Texas at San Antonio. Setting a limit increases the likelihood you'll buy at least one, and it's even more effective if you were already planning to buy one of the item.
Higher numbers in promotions have the same effect, according to a 2007 study in the Journal of Retailing. Changing the structure of a sale from 'Buy two' to 'Buy eight' resulted in a 55% increase in sales ─ regardless of the price of each option, says study co-author Kenneth C. Manning, chair of the marketing department Colorado State University. This year, limits are showing up on anything a store wants to get rid of. You'll even see limits on items that might seem absurd to purchase in multiples, Shrum says.
'Our Big Sale ends tomorrow/today/in a few hours.'
Aimed at: Your survival instincts.
Why you fall for it: Fear, pure and simple. This tactic appeals to a basic instinct to grab what's available or be left without, says Noah Goldstein, an assistant professor of human resources and organizational behavior at the Anderson School of Management at the University of California, Los Angeles. Think of the crowds stocking up on bottled water and canned goods before a major storm comes through. In those frenzied hours, it's a matter of survival.
Retailer e-newsletters have made it easy to extend that tactic online, and many retailers send multiple emails to shoppers as the end of a sale nears. And they often respond.
'Get 23% off.'
Aimed at: Your love of a bargain.
Why you fall for it: Real estate brokers have long known that uneven pricing (say, $524,755 versus $525,000) catches buyers' attention, because those odd numbers suggest a bargain that has already been marked down -- whether that's actually the case or not. This year, retailers have picked up on that tactic this year as a way to separate their sales from the sea of 20%-off offers, Yarrow says.
'We have a great deal on the accessories for that, too.'
Aimed at: Your long-term investor.
Why you fall for it: Once the consumer has already made a decision to buy and to pay, it's easier to convince them to add related ─ but maybe unecessary ─ items to their purchase, Shrum says. That's because in your mind, you already own the product, making you more vulnerable to pitches for things that promise to make the purchase more useful or less vulnerable. A 2009 Carnegie Mellon study found that consumers were more likely to buy warranties on purchases if they thought doing so would extend the life of their gadget or preserve its value. And shoppers who felt they were being offered an un-advertised deal were 42% more likely to buy. This is particularly common with products that would be expensive to replace, like smartphones or tablet computers.
'Save $250! (New price: $500.)'
Aimed at: Your price-sensitive side.
Why you fall for it: Touting big savings or using a gigantic font in an ad puts the deal at the center and makes the actual price an afterthought. What's more, your brain often perceives the actual price as more reasonable because of that big price drop, says Perner.
Stores have used this tactic more during the recession to sell higher-priced items, hoping that you'll take a closer look at the washer that has the splashy discount, even if it is more expensive than other models, he says. This trick works, experts say.
'Get a free gift with your $50 purchase.'
Aimed at: Your inner child (who wants a present, too).
Why you fall for it: You were already planning to buy one sweater, but you're one additional belt purchase away from getting to get a free scarf. At the store, you don't think about the $20 price tag or about how rarely you actually wear a scarf. Instead, your mind sees the free gift as an additional reason to buy the primary product in the first place.
Merchants have always used marketing tricks and rotating sales to encourage consumers to open their wallets, but this year, they're pushing every psychological button they can, retail experts say. Competition for shoppers, plus a tepid holiday shopping outlook, means retailers are doing whatever they can to attract deal-hunting consumers' attention ─ all in an effort to entice them into spending more than they'd planned. That means adding worry-inducing purchase limits to indicate scarcity, promising free gifts to shoppers who spend just a little more, and offering rewards today to redeem later just so people will come back to the store.
These strategies work in part because they tap into hard-wired behaviors that go back to our days in caves. Long before we were confronted with half-off Merino turtlenecks or buy-one-get-one-free smartphones, we learned to stockpile in the event of shortage and to compete for scarce resources, psychologists and neuroscientists say. The stakes are considerably lower when you shop, but studies have shown our brains react similarly nonetheless. The effectiveness -- and proliferation -- of these mind games are a big part of the reason you're apt to look back and wonder why you thought that buying three itchy sweaters for $50 or a $200 no-name television was such a good idea.
Get to know these seven hidden triggers, and next time you go shopping you can look at retailers' pitches with a more critical eye -- and maybe avoid blowing your budget:
'Shop today and save 50% next week.'
Aimed at: Your best intentions.
Why you fall for it: The promise of bigger savings in the future appeals to people who think they can game the system, says Lars Perner, an assistant professor of clinical marketing at the University of Southern California's Marshall School of Business. You figure on buying just one or two things now, then returning to pick up a few more. But volume-driven retailers are using the now-and-later tactic this year to steer consumers back to stores when they know they'll have new stock or other promotions that help you buy more than you planned.
It's similar to the 'buy a little bit more and get a free gift' promotion, Perner says.
'Limit five per person.'
Aimed at: Your competitive spirit.
Why you fall for it: Limits trigger a feeling that the deal is so great that, if not for that limit-four-per-customer rule, shoppers would be filling their carts to the brim, leaving none for you, says L.J. Shrum, the president of the Society for Consumer Psychology and the marketing department chair at the University of Texas at San Antonio. Setting a limit increases the likelihood you'll buy at least one, and it's even more effective if you were already planning to buy one of the item.
Higher numbers in promotions have the same effect, according to a 2007 study in the Journal of Retailing. Changing the structure of a sale from 'Buy two' to 'Buy eight' resulted in a 55% increase in sales ─ regardless of the price of each option, says study co-author Kenneth C. Manning, chair of the marketing department Colorado State University. This year, limits are showing up on anything a store wants to get rid of. You'll even see limits on items that might seem absurd to purchase in multiples, Shrum says.
'Our Big Sale ends tomorrow/today/in a few hours.'
Aimed at: Your survival instincts.
Why you fall for it: Fear, pure and simple. This tactic appeals to a basic instinct to grab what's available or be left without, says Noah Goldstein, an assistant professor of human resources and organizational behavior at the Anderson School of Management at the University of California, Los Angeles. Think of the crowds stocking up on bottled water and canned goods before a major storm comes through. In those frenzied hours, it's a matter of survival.
Retailer e-newsletters have made it easy to extend that tactic online, and many retailers send multiple emails to shoppers as the end of a sale nears. And they often respond.
'Get 23% off.'
Aimed at: Your love of a bargain.
Why you fall for it: Real estate brokers have long known that uneven pricing (say, $524,755 versus $525,000) catches buyers' attention, because those odd numbers suggest a bargain that has already been marked down -- whether that's actually the case or not. This year, retailers have picked up on that tactic this year as a way to separate their sales from the sea of 20%-off offers, Yarrow says.
'We have a great deal on the accessories for that, too.'
Aimed at: Your long-term investor.
Why you fall for it: Once the consumer has already made a decision to buy and to pay, it's easier to convince them to add related ─ but maybe unecessary ─ items to their purchase, Shrum says. That's because in your mind, you already own the product, making you more vulnerable to pitches for things that promise to make the purchase more useful or less vulnerable. A 2009 Carnegie Mellon study found that consumers were more likely to buy warranties on purchases if they thought doing so would extend the life of their gadget or preserve its value. And shoppers who felt they were being offered an un-advertised deal were 42% more likely to buy. This is particularly common with products that would be expensive to replace, like smartphones or tablet computers.
'Save $250! (New price: $500.)'
Aimed at: Your price-sensitive side.
Why you fall for it: Touting big savings or using a gigantic font in an ad puts the deal at the center and makes the actual price an afterthought. What's more, your brain often perceives the actual price as more reasonable because of that big price drop, says Perner.
Stores have used this tactic more during the recession to sell higher-priced items, hoping that you'll take a closer look at the washer that has the splashy discount, even if it is more expensive than other models, he says. This trick works, experts say.
'Get a free gift with your $50 purchase.'
Aimed at: Your inner child (who wants a present, too).
Why you fall for it: You were already planning to buy one sweater, but you're one additional belt purchase away from getting to get a free scarf. At the store, you don't think about the $20 price tag or about how rarely you actually wear a scarf. Instead, your mind sees the free gift as an additional reason to buy the primary product in the first place.
Friday, November 19, 2010
So what exactly is an Aquaminium?
According to Gulu Lalvani, the Royal Phuket Marina chief executive and developer who says he created the term, it's an apartment complex on the water with one added feature ─ an indoor parking garage for a boat.
At the Royal Phuket Marina, these garages are available in just two penthouse units; the other apartments have outdoor docking stations. But according to Mr. Lalvani, who founded with his brother the U.K. consumer-electronics company Binatone, the latest must-have in luxury living is a dock just steps from your front door.
The idea came from James Bond, says Mr. Lalvani. In the movies, the British secret agent often needs to make a quick getaway by boat, and of course, one was always close at hand. (The nearby island of Khoah Phing Kan is nicknamed 'James Bond Island' because it appeared in 'The Man with the Golden Gun' in 1974.)
Of the 15 apartments, two penthouses, and five villas in the Aquaminium complex, which was completed in 2009, 14 units are occupied. A second complex is in the works.
The marina won't reveal the list of residents, except to say that 10 are chief executives from Hong Kong and Singapore in various industries. And there are other clues. Among the well-to-do, according to the marina, are two Taiwanese tycoons ─ one in the semiconductor industry and the other in children's garments ─ and an Englishman who made his fortune replicating antique-furniture designs in Asia. Also joining the neighborhood is a long-term Phuket resident and famed restaurateur.
Hobnobbing with such power folk will no doubt be a bonus ─ according to the marina. One British businessman who now lives there said, the Aquaminium community will be a 'place where you can meet up with like-minded people.'
At the Royal Phuket Marina, these garages are available in just two penthouse units; the other apartments have outdoor docking stations. But according to Mr. Lalvani, who founded with his brother the U.K. consumer-electronics company Binatone, the latest must-have in luxury living is a dock just steps from your front door.
The idea came from James Bond, says Mr. Lalvani. In the movies, the British secret agent often needs to make a quick getaway by boat, and of course, one was always close at hand. (The nearby island of Khoah Phing Kan is nicknamed 'James Bond Island' because it appeared in 'The Man with the Golden Gun' in 1974.)
Of the 15 apartments, two penthouses, and five villas in the Aquaminium complex, which was completed in 2009, 14 units are occupied. A second complex is in the works.
The marina won't reveal the list of residents, except to say that 10 are chief executives from Hong Kong and Singapore in various industries. And there are other clues. Among the well-to-do, according to the marina, are two Taiwanese tycoons ─ one in the semiconductor industry and the other in children's garments ─ and an Englishman who made his fortune replicating antique-furniture designs in Asia. Also joining the neighborhood is a long-term Phuket resident and famed restaurateur.
Hobnobbing with such power folk will no doubt be a bonus ─ according to the marina. One British businessman who now lives there said, the Aquaminium community will be a 'place where you can meet up with like-minded people.'
Thursday, November 18, 2010
On Tuesday afternoon, a 28-year-old brunette stood before a wall of photographers here with her old college boyfriend and newly minted fiance
No pressure there.
As Britain's Prince William announced his engagement to longtime girlfriend Kate Middleton, the couple stepped into the spotlight with the ease of media-romance veterans. They have already spent an eight-year courtship under the harsh scrutiny that comes with the possibility of one day being the King and Queen consort of the United Kingdom of Great Britain and Northern Ireland -- not to mention fifteen other Commonwealth realms.
The couple have been photographed on ski slopes and coming and going from nightclubs in the wee hours. Ms. Middleton was branded 'Waity Katie' by British tabloids in honor of her long wait for the prince to pop the question. A brief breakup a few years ago has been combed over like a key episode in Churchill's war rooms.
'We were both very young,' Prince William, 28, explained calmly in a nationally televised interview on the British Broadcasting Corporation Tuesday night. 'We were growing up.' By agreeing to take each other in holy matrimony, the couple has volunteered to be the lead players in one of Britain's signature spectacles: a royal wedding with all the trimmings, chiming church bells and horse-drawn carriages.
The news launched what will certainly be the U.K.'s most closely watched soap opera between now and the wedding itself, to be held in the spring or summer. The drama is enhanced by the fact that Prince William is the first-born son of Prince Charles and the late Princess Diana, who shot to fame in the early 1980s when her own engagement was sprung on the world. She became one of the world's most familiar faces and then died in a 1997 car crash in Paris, with paparazzi giving chase.
If the couple's debut on Tuesday was any indication, they are accustomed to the spotlight; Prince William dropped the bombshell that he had been carrying his mother's engagement ring around 'in my rucksack for about three weeks' before proposing to Ms. Middleton on a trip to Kenya recently. He allowed that he held the pack tightly because losing it would mean he'd 'be in a lot of trouble.'
With Britain struggling to emerge from the global financial crisis, and facing steep deficit-reducing budget cuts that signal an age of austerity, Prime Minister David Cameron seized on the news to say that next year's wedding was 'a great moment for national celebration.' He said he had camped in the streets before Charles and Diana's marriage, an over-the-top contender for wedding of the last century.
But it didn't take long for sniping to start either, as newspaper columnists and Twitter wags quickly noted that such a wedding could divert attention from the brutal economic problems facing Britain.
'Blimey, it took Thatcher three years to need a royal wedding to distract the UK from its woes,' wrote one Twitterer, referring to the marriage of Charles and Diana during a tough recession in 1981, when Margaret Thatcher was prime minister.
Another quickly added: 'Call me a cynic, but does it seem to anyone else that they roll out a royal wedding every time there's a recession?帝'
Some said a colorful wedding could lift the nation's spirits. 'It's time for a change of mood. There's been a lot of shakiness and darkness. I think it's something everyone can look forward to,' said Elizabeth Emanuel, a fashion designer who made Princess Diana's iconic wedding dress. 'Everybody wants to see a fabulous wedding, and nobody can really do it like the British.'
'There is magic in our monarchy, and this is what William and Kate have today undertaken to protect,' Fraser Nelson, editor of the weekly British magazine the Spectator, said by email. 'It's great news for the Queen and the country. And God knows, we need some.'
The couple met as young students at University of St. Andrews, a picturesque institution on the eastern shore of Scotland. William is said to have first spotted Ms. Middleton on the runway at a charity fashion event, where she modeled a sheer black dress.
In their televised interview Tuesday, William said the pair were friends for over a year before things 'blossomed from there.' Kate said she was 'quite nervous' about meeting William's father, Prince Charles, for the first time, but that she found him 'very welcoming and very friendly.'
After graduating and moving to London, the pair initially became known for boisterous nights out, and they were often photographed stumbling out of nightclubs to a waiting driver. Those tabloid snapshots have stopped appearing as often as Kate and William have grown older, and perhaps more cautious about their image.
Unlike Diana, Ms. Middleton is not an aristocrat: Her mother used to be a flight attendant, and her family runs a small business called Party Pieces, which sells glitter, pinatas and other party paraphernalia.
The British media sometimes mock her lower social standing, although it's entirely relative. Her family lives in a large, comfortable home, and she and her siblings went to private schools.
In the televised interview, Ms. Middleton said she was sorry to have never met Princess Diana, calling her 'an inspirational woman to look up to.'
But despite wearing Diana's ring, Kate will be free to carve her own future, William said: 'No one's trying to fill my mother's shoes.'
Londoners were excited about the coming nuptials. 'People generally enjoy having a royal celebration of some sort,' said Tessa Shewan, a 27-year-old nursing student, who sat reading on the steps of London's St. Paul's Cathedral, where Princess Diana and Prince Charles were married.
Claire Alexander, an events coordinator from London, said Britain could benefit from the positive atmosphere a royal wedding would bring. 'Everyone loves a bit of pomp and circumstance,' Ms. Alexander said, as she stood on the street reading a copy of a London evening tabloid featuring the couple.
As Britain's Prince William announced his engagement to longtime girlfriend Kate Middleton, the couple stepped into the spotlight with the ease of media-romance veterans. They have already spent an eight-year courtship under the harsh scrutiny that comes with the possibility of one day being the King and Queen consort of the United Kingdom of Great Britain and Northern Ireland -- not to mention fifteen other Commonwealth realms.
The couple have been photographed on ski slopes and coming and going from nightclubs in the wee hours. Ms. Middleton was branded 'Waity Katie' by British tabloids in honor of her long wait for the prince to pop the question. A brief breakup a few years ago has been combed over like a key episode in Churchill's war rooms.
'We were both very young,' Prince William, 28, explained calmly in a nationally televised interview on the British Broadcasting Corporation Tuesday night. 'We were growing up.' By agreeing to take each other in holy matrimony, the couple has volunteered to be the lead players in one of Britain's signature spectacles: a royal wedding with all the trimmings, chiming church bells and horse-drawn carriages.
The news launched what will certainly be the U.K.'s most closely watched soap opera between now and the wedding itself, to be held in the spring or summer. The drama is enhanced by the fact that Prince William is the first-born son of Prince Charles and the late Princess Diana, who shot to fame in the early 1980s when her own engagement was sprung on the world. She became one of the world's most familiar faces and then died in a 1997 car crash in Paris, with paparazzi giving chase.
If the couple's debut on Tuesday was any indication, they are accustomed to the spotlight; Prince William dropped the bombshell that he had been carrying his mother's engagement ring around 'in my rucksack for about three weeks' before proposing to Ms. Middleton on a trip to Kenya recently. He allowed that he held the pack tightly because losing it would mean he'd 'be in a lot of trouble.'
With Britain struggling to emerge from the global financial crisis, and facing steep deficit-reducing budget cuts that signal an age of austerity, Prime Minister David Cameron seized on the news to say that next year's wedding was 'a great moment for national celebration.' He said he had camped in the streets before Charles and Diana's marriage, an over-the-top contender for wedding of the last century.
But it didn't take long for sniping to start either, as newspaper columnists and Twitter wags quickly noted that such a wedding could divert attention from the brutal economic problems facing Britain.
'Blimey, it took Thatcher three years to need a royal wedding to distract the UK from its woes,' wrote one Twitterer, referring to the marriage of Charles and Diana during a tough recession in 1981, when Margaret Thatcher was prime minister.
Another quickly added: 'Call me a cynic, but does it seem to anyone else that they roll out a royal wedding every time there's a recession?帝'
Some said a colorful wedding could lift the nation's spirits. 'It's time for a change of mood. There's been a lot of shakiness and darkness. I think it's something everyone can look forward to,' said Elizabeth Emanuel, a fashion designer who made Princess Diana's iconic wedding dress. 'Everybody wants to see a fabulous wedding, and nobody can really do it like the British.'
'There is magic in our monarchy, and this is what William and Kate have today undertaken to protect,' Fraser Nelson, editor of the weekly British magazine the Spectator, said by email. 'It's great news for the Queen and the country. And God knows, we need some.'
The couple met as young students at University of St. Andrews, a picturesque institution on the eastern shore of Scotland. William is said to have first spotted Ms. Middleton on the runway at a charity fashion event, where she modeled a sheer black dress.
In their televised interview Tuesday, William said the pair were friends for over a year before things 'blossomed from there.' Kate said she was 'quite nervous' about meeting William's father, Prince Charles, for the first time, but that she found him 'very welcoming and very friendly.'
After graduating and moving to London, the pair initially became known for boisterous nights out, and they were often photographed stumbling out of nightclubs to a waiting driver. Those tabloid snapshots have stopped appearing as often as Kate and William have grown older, and perhaps more cautious about their image.
Unlike Diana, Ms. Middleton is not an aristocrat: Her mother used to be a flight attendant, and her family runs a small business called Party Pieces, which sells glitter, pinatas and other party paraphernalia.
The British media sometimes mock her lower social standing, although it's entirely relative. Her family lives in a large, comfortable home, and she and her siblings went to private schools.
In the televised interview, Ms. Middleton said she was sorry to have never met Princess Diana, calling her 'an inspirational woman to look up to.'
But despite wearing Diana's ring, Kate will be free to carve her own future, William said: 'No one's trying to fill my mother's shoes.'
Londoners were excited about the coming nuptials. 'People generally enjoy having a royal celebration of some sort,' said Tessa Shewan, a 27-year-old nursing student, who sat reading on the steps of London's St. Paul's Cathedral, where Princess Diana and Prince Charles were married.
Claire Alexander, an events coordinator from London, said Britain could benefit from the positive atmosphere a royal wedding would bring. 'Everyone loves a bit of pomp and circumstance,' Ms. Alexander said, as she stood on the street reading a copy of a London evening tabloid featuring the couple.
Wednesday, November 17, 2010
Lone Star Funds has agreed to sell its 51% stake in Korea Exchange Bank to Hana Financial Group Inc
Lone Star's stake is worth about $3.8 billion based on KEB's latest share price. While the exact terms of the deal weren't yet known, Hana would likely pay a premium of 10% or more to the current market value, the person said. Lone Star and Hana have signed a memorandum of understanding, and a sales and purchase agreement is expected to follow within several weeks, the person added.
The deal will require regulatory approval.
ANZ has been conducting due diligence on KEB with the intent of purchasing Lone Star's stake, which would have vastly boosted the Melbourne-based lender's efforts to expand in East Asia.
A Hana-KEB tie-up could create a strong domestic Korean player that marries Hana's strength as a retail commercial bank with KEB's dominance in trade finance and foreign exchange. But it also means Hana will likely steer clear of the bidding for the South Korean's government's 57% stake in Woori Finance Holdings Co. when that process moves forward. Hana and KB Financial Group Inc. have been considered the most probable suitors for Woori.
Dallas-based Lone Star's long-running attempts to sell the stake in KEB it acquired for $1.3 billion in 2003 have been dogged by scandal and court cases as well as bad timing. After the 1997-98 Asian financial crisis, Lone Star and other foreign investors bought assets cheaply and sold some of them profitably as the country's economy recovered. But the size of those profits, and the fact that foreign private-equity funds weren't subject to South Korean taxes, later stoked local resentment.
In 2006, Lone Star reached a deal to sell its KEB stake to South Korea's Kookmin Bank for more than $7 billion, but a probe into the circumstances under which Lone Star bought KEB ended up derailing the transaction. A person involved in the sale process said the acquisition had become too politically sensitive for Kookmin to consider.
Lone Star's standing was also hurt when regulators discovered that its country head during the KEB purchase, Steven Lee, embezzled millions of dollars from his firm, causing Lone Star to file inaccurate tax returns. Upon looking into the matter, Lone Star discovered that Mr. Lee had submitted dozens of phony invoices during his seven years in Korea, diverting about $12 million to pay for property, works of art and cash gifts to family members. The firm has said it resolved tax discrepancies associated with Mr. Lee's actions.
In September 2007, Lone Star reached a deal to sell the stake to HSBC Holdings PLC for $6.3 billion, but regulatory approval was held up by ongoing court cases. After the collapse of Lehman Brothers in September 2008, HSBC dropped its offer, citing the turmoil in global financial markets.
The deal will require regulatory approval.
ANZ has been conducting due diligence on KEB with the intent of purchasing Lone Star's stake, which would have vastly boosted the Melbourne-based lender's efforts to expand in East Asia.
A Hana-KEB tie-up could create a strong domestic Korean player that marries Hana's strength as a retail commercial bank with KEB's dominance in trade finance and foreign exchange. But it also means Hana will likely steer clear of the bidding for the South Korean's government's 57% stake in Woori Finance Holdings Co. when that process moves forward. Hana and KB Financial Group Inc. have been considered the most probable suitors for Woori.
Dallas-based Lone Star's long-running attempts to sell the stake in KEB it acquired for $1.3 billion in 2003 have been dogged by scandal and court cases as well as bad timing. After the 1997-98 Asian financial crisis, Lone Star and other foreign investors bought assets cheaply and sold some of them profitably as the country's economy recovered. But the size of those profits, and the fact that foreign private-equity funds weren't subject to South Korean taxes, later stoked local resentment.
In 2006, Lone Star reached a deal to sell its KEB stake to South Korea's Kookmin Bank for more than $7 billion, but a probe into the circumstances under which Lone Star bought KEB ended up derailing the transaction. A person involved in the sale process said the acquisition had become too politically sensitive for Kookmin to consider.
Lone Star's standing was also hurt when regulators discovered that its country head during the KEB purchase, Steven Lee, embezzled millions of dollars from his firm, causing Lone Star to file inaccurate tax returns. Upon looking into the matter, Lone Star discovered that Mr. Lee had submitted dozens of phony invoices during his seven years in Korea, diverting about $12 million to pay for property, works of art and cash gifts to family members. The firm has said it resolved tax discrepancies associated with Mr. Lee's actions.
In September 2007, Lone Star reached a deal to sell the stake to HSBC Holdings PLC for $6.3 billion, but regulatory approval was held up by ongoing court cases. After the collapse of Lehman Brothers in September 2008, HSBC dropped its offer, citing the turmoil in global financial markets.
Monday, November 15, 2010
Zebras crossing: painted horses for Russian road safety
Traffic police in Moscow offered rides on horses and ponies painted as zebras Friday in an attempt to improve road safety and raise awareness among Russia's notoriously careless drivers.
The police dispatched the fake zebras to several different locations in the Russian capital, where officials in orange vests walked them over zebra crossings and handed out flyers to passing drivers.
Some held up rainbow-coloured umbrellas over the painted animals to protect them from the rain, footage aired on television showed.
Russian roads are notoriously dangerous and drivers still rarely give way to pedestrians.
More than 9,500 people were killed and more than 100,000 injured in road accidents in the first six months of 2010, according to official statistics.
Nearly half of all traffic accidents in the country's big cities are caused by cars hitting pedestrians, and a third of those occur on crossings, according to traffic police figures published last month.
Though police officials said that only safe paint would be used on the animals, animal rights activists still fumed over the idea, accusing the police of "treating animals like garbage."
"Children understand that paints are toxic for animals: they can cause internal swelling," the Interfax news agency quoted president of Vita animal rights group Irina Novozhilova as saying.
The police dispatched the fake zebras to several different locations in the Russian capital, where officials in orange vests walked them over zebra crossings and handed out flyers to passing drivers.
Some held up rainbow-coloured umbrellas over the painted animals to protect them from the rain, footage aired on television showed.
Russian roads are notoriously dangerous and drivers still rarely give way to pedestrians.
More than 9,500 people were killed and more than 100,000 injured in road accidents in the first six months of 2010, according to official statistics.
Nearly half of all traffic accidents in the country's big cities are caused by cars hitting pedestrians, and a third of those occur on crossings, according to traffic police figures published last month.
Though police officials said that only safe paint would be used on the animals, animal rights activists still fumed over the idea, accusing the police of "treating animals like garbage."
"Children understand that paints are toxic for animals: they can cause internal swelling," the Interfax news agency quoted president of Vita animal rights group Irina Novozhilova as saying.
Sunday, November 14, 2010
Cigarette boxes will have new warning signs
Corpses, cancer patients and diseased lungs are among the images the federal government plans for larger, graphic warning labels that would take up half of each pack of cigarettes sold in the United States.
Whether smokers addicted to nicotine will see them as a reason to quit remains a question.
The images are part of a new campaign announced by the Food and Drug Administration and the Department of Health and Human Services on Wednesday to reduce tobacco use, which is responsible for about 443,000 deaths per year.
"Some very explicit, almost gruesome pictures may be necessary," FDA Commissioner Margaret Hamburg said. "This is a very, very serious public health issue, with very, very serious medical consequences," such as cancer, heart disease, strokes and lung diseases.
The share of Americans who smoke has fallen dramatically since 1970, from nearly 40 percent to about 20 percent, but the rate has stalled since about 2004. About 46 million adults in the US smoke cigarettes.
In the same period, the average cost per pack has gone from 38 cents to $5.33. Much of those increases are from state and federal taxes.
It's unclear why declines in smoking have stalled. Some experts have cited tobacco company discounts or lack of funding for programs to discourage smoking or to help smokers quit.
The new prevention plan is part of a law passed in June 2009 that gave the FDA authority to regulate tobacco, including setting guidelines for marketing and labeling, banning certain products and limiting nicotine. The law doesn't let the FDA ban nicotine or tobacco.
The FDA is proposing 36 labels for public comment. They include phrases like "Smoking can kill you" and "Cigarettes cause cancer" and feature graphic images to convey the dangers of tobacco.
Some of the labels include a man with a tracheotomy smoking a cigarette, a cartoon of a mother blowing smoke in her baby's face, rotting and diseased teeth and gums, as well as cigarettes being flushed down the toilet to signify quitting.
The new warning labels are to take up the top half of a pack - both front and back - of cigarettes and contain "color graphics depicting the negative health consequences". Warning labels also must constitute 20 percent of advertisements.
Whether smokers addicted to nicotine will see them as a reason to quit remains a question.
The images are part of a new campaign announced by the Food and Drug Administration and the Department of Health and Human Services on Wednesday to reduce tobacco use, which is responsible for about 443,000 deaths per year.
"Some very explicit, almost gruesome pictures may be necessary," FDA Commissioner Margaret Hamburg said. "This is a very, very serious public health issue, with very, very serious medical consequences," such as cancer, heart disease, strokes and lung diseases.
The share of Americans who smoke has fallen dramatically since 1970, from nearly 40 percent to about 20 percent, but the rate has stalled since about 2004. About 46 million adults in the US smoke cigarettes.
In the same period, the average cost per pack has gone from 38 cents to $5.33. Much of those increases are from state and federal taxes.
It's unclear why declines in smoking have stalled. Some experts have cited tobacco company discounts or lack of funding for programs to discourage smoking or to help smokers quit.
The new prevention plan is part of a law passed in June 2009 that gave the FDA authority to regulate tobacco, including setting guidelines for marketing and labeling, banning certain products and limiting nicotine. The law doesn't let the FDA ban nicotine or tobacco.
The FDA is proposing 36 labels for public comment. They include phrases like "Smoking can kill you" and "Cigarettes cause cancer" and feature graphic images to convey the dangers of tobacco.
Some of the labels include a man with a tracheotomy smoking a cigarette, a cartoon of a mother blowing smoke in her baby's face, rotting and diseased teeth and gums, as well as cigarettes being flushed down the toilet to signify quitting.
The new warning labels are to take up the top half of a pack - both front and back - of cigarettes and contain "color graphics depicting the negative health consequences". Warning labels also must constitute 20 percent of advertisements.
Wednesday, November 10, 2010
Rising demand for the Chinese yuan and yuan-based products
Now, all that yuan buzz has spurred debate as to whether Hong Kong might abandon its 27-year peg to the U.S. dollar.
Barclays Capital recently suggested in a report that the Hong Kong dollar could drop its dollar link in a year or two as yuan deposits drive out holdings of Hong Kong dollars pegged to the falling greenback. Nomura issued a report saying it didn't expect the peg to go within one to two years, but it warned, 'we expect pressure for a regime change to increase through this period.' Deutsche Bank, too, warned that market speculation about a Hong Kong dollar revaluation will intensify.
Under Hong Kong's currency-board policy, Hong Kong dollars trade in a narrow band around the rate of 7.8 to one U.S. dollar, and all currency in circulation is fully backed by U.S. dollar reserves. The peg dates to 1983, when it was adopted to stem capital flight stemming from uncertainty over the former British colony's future.
Two factors are driving the speculation that the system could be approaching its expiration date. One is the rising pile of yuan in Hong Kong bank accounts, which drives some people to suggest that all this currency will somehow displace the Hong Kong dollar in daily use.
Yuan deposits are indeed on the rise in Hong Kong, thanks to a policy that allows citizens to transfer up to 20,000 yuan (about US$3,000) a day into their Hong Kong bank accounts and a new program allowing businesses to settle trade deals with mainland China in yuan. The amount of yuan on deposit jumped two-thirds in the third quarter. It is still a small percentage of total foreign deposits in Hong Kong, at 5.6% as of September, and only about 2.7% of all deposits. But this percentage will increase as long as expectations that the yuan will appreciate against the dollar remain widespread.
The second factor is a disparity between the bustling Hong Kong and limping U.S. economies, creating distortions as easy monetary policy in America allows for too-cheap credit in a territory riding high on China's growth. Neither issue, however, is a game-changer.
The rising piles of yuan in Hong Kong banks aren't a sign of fading confidence in the Hong Kong dollar. They are the latest manifestation of Hong Kong's penchant for holding foreign currencies to maximize returns. Foreign-currency deposits, especially U.S. dollars, but also Australian dollars, euros and British pounds, make up almost half of all savings in the banking system. By investing in yuan, Hong Kong denizens are putting their savings where the risk-adjusted returns look most attractive. But they continue to use the Hong Kong dollar for their daily affairs because it, unlike the yuan, is freely convertible.
Hong Kong's economy is indeed out of whack with the U.S., but that has been true in the past, too. And more important, the alternatives to a dollar peg either aren't technically viable or won't offer any relief.
The yuan can't substitute for the dollar because the yuan remains subject to capital controls. Local authorities would have to be able to freely sell yuan for Hong Kong dollars should the local currency come under attack. And China isn't likely to lift those controls for some time.
John Greenwood, an adviser to the colonial government in 1983 who advocated the U.S. dollar peg and today is chief economist at Invesco Asset Management, believes that day could be decades off. And even once the controls are lifted, the yuan will need to prove its stability in global foreign-exchange markets before a change makes sense, he told an audience at Hong Kong University recently.
Some suggest Hong Kong could manage its exchange rate using a trade-weighted basket of currencies, much like Singapore does.
But because China accounts for about 50% of its trade, the Hong Kong dollar effectively would track the yuan's rise. That would turn it into a proxy for yuan appreciation, attracting a speculative inflow of capital, notes Goldman Sachs in a report issued Friday, pushing asset prices higher.
Already, rising property prices in a city with some of the world's most expensive real estate are a major political challenge. The Hong Kong government will be in no hurry to pour fuel on the fire.
If Hong Kong were to abandon the peg and let its currency float, things could get uglier, Norman Chan, chief executive of the Hong Kong Monetary Authority, said in a recent note. The exchange rate would shoot up, and capital again would flood in, creating an asset bubble. 'When the bubble finally burst, capital outflows would set in, causing the exchange rate to plummet,' he said.
Barclays Capital recently suggested in a report that the Hong Kong dollar could drop its dollar link in a year or two as yuan deposits drive out holdings of Hong Kong dollars pegged to the falling greenback. Nomura issued a report saying it didn't expect the peg to go within one to two years, but it warned, 'we expect pressure for a regime change to increase through this period.' Deutsche Bank, too, warned that market speculation about a Hong Kong dollar revaluation will intensify.
Under Hong Kong's currency-board policy, Hong Kong dollars trade in a narrow band around the rate of 7.8 to one U.S. dollar, and all currency in circulation is fully backed by U.S. dollar reserves. The peg dates to 1983, when it was adopted to stem capital flight stemming from uncertainty over the former British colony's future.
Two factors are driving the speculation that the system could be approaching its expiration date. One is the rising pile of yuan in Hong Kong bank accounts, which drives some people to suggest that all this currency will somehow displace the Hong Kong dollar in daily use.
Yuan deposits are indeed on the rise in Hong Kong, thanks to a policy that allows citizens to transfer up to 20,000 yuan (about US$3,000) a day into their Hong Kong bank accounts and a new program allowing businesses to settle trade deals with mainland China in yuan. The amount of yuan on deposit jumped two-thirds in the third quarter. It is still a small percentage of total foreign deposits in Hong Kong, at 5.6% as of September, and only about 2.7% of all deposits. But this percentage will increase as long as expectations that the yuan will appreciate against the dollar remain widespread.
The second factor is a disparity between the bustling Hong Kong and limping U.S. economies, creating distortions as easy monetary policy in America allows for too-cheap credit in a territory riding high on China's growth. Neither issue, however, is a game-changer.
The rising piles of yuan in Hong Kong banks aren't a sign of fading confidence in the Hong Kong dollar. They are the latest manifestation of Hong Kong's penchant for holding foreign currencies to maximize returns. Foreign-currency deposits, especially U.S. dollars, but also Australian dollars, euros and British pounds, make up almost half of all savings in the banking system. By investing in yuan, Hong Kong denizens are putting their savings where the risk-adjusted returns look most attractive. But they continue to use the Hong Kong dollar for their daily affairs because it, unlike the yuan, is freely convertible.
Hong Kong's economy is indeed out of whack with the U.S., but that has been true in the past, too. And more important, the alternatives to a dollar peg either aren't technically viable or won't offer any relief.
The yuan can't substitute for the dollar because the yuan remains subject to capital controls. Local authorities would have to be able to freely sell yuan for Hong Kong dollars should the local currency come under attack. And China isn't likely to lift those controls for some time.
John Greenwood, an adviser to the colonial government in 1983 who advocated the U.S. dollar peg and today is chief economist at Invesco Asset Management, believes that day could be decades off. And even once the controls are lifted, the yuan will need to prove its stability in global foreign-exchange markets before a change makes sense, he told an audience at Hong Kong University recently.
Some suggest Hong Kong could manage its exchange rate using a trade-weighted basket of currencies, much like Singapore does.
But because China accounts for about 50% of its trade, the Hong Kong dollar effectively would track the yuan's rise. That would turn it into a proxy for yuan appreciation, attracting a speculative inflow of capital, notes Goldman Sachs in a report issued Friday, pushing asset prices higher.
Already, rising property prices in a city with some of the world's most expensive real estate are a major political challenge. The Hong Kong government will be in no hurry to pour fuel on the fire.
If Hong Kong were to abandon the peg and let its currency float, things could get uglier, Norman Chan, chief executive of the Hong Kong Monetary Authority, said in a recent note. The exchange rate would shoot up, and capital again would flood in, creating an asset bubble. 'When the bubble finally burst, capital outflows would set in, causing the exchange rate to plummet,' he said.
Russia Warns Ukraine, Georgia Over Seeking NATO Membership
Russia is warning of negative consequences if Ukraine and Georgia join the NATO defense alliance. The prediction comes on a day of one-on-one meetings between Russian President Dmitri Medvedev and most leaders of countries that were once part of the Soviet Union. The meetings came on the sidelines of a yearly economic forum in Saint Petersburg.
Before heading behind closed doors for meetings with Kremlin leader Dmitri Medvedev, the presidents of Ukraine and Georgia hinted publicly at Moscow's strained relations with Kyiv and Tbilisi. Ukrainian President Viktor Yushchenko said many issues have accumulated and need to be discussed between the two countries. Georgia leader Mikhail Saakashvili also spoke of numerous problems, noting optimistically, however, that none of them are insoluble given the presence of good will.
Lavrov says Dmitri Medvedev warned President Yushchenko that Ukraine's NATO membership would violate a friendship treaty between the two countries. He linked the treaty to another agreement governing the presence of Russia's Black Sea Fleet in Sevastopol on Ukraine's Crimean Peninsula.
Lavrov says unresolved issues concerning the fleet cannot be substituted by unilateral moves. The agreement, he says, provides for possible extension of the fleet's presence, and that preparing for a withdrawal nine years before its lease expires is not the approach Russia would like to see in its partners.
Russia is required to vacate the base in Sevastopol in 2017 and considers Ukrainian preparations for the Russian departure to be premature. The Interfax News Agency says President Yushchenko told journalists in Saint Petersburg that Ukraine will fulfill its side of the fleet agreement to the last letter.
The Russian Foreign Ministry has not rejected a recent statement by Moscow Mayor Yuri Luzhkov, that Sevastopol and Crimea should belong to Russia, more than 50 years after the Kremlin transferred the area to Ukraine.
Russian-Ukrainian tensions over NATO and the fleet were accompanied by news announced by Sergei Lavrov that Ukraine will be hit with a nearly 100 percent hike in the price of gas on January first. Lavrov said President Yushchenko was told the reason is that Central Asian countries, which supply gas to Ukraine via Russia, will begin charging European prices.
The Russian diplomat says the Ukrainian leader responded by saying the sooner his country switches to market prices, the better its economy will be. Lavrov agrees. So does Vasyl Yablonsky, an analyst at the National Institute of Strategic Studies in Kyiv, who told there is logic to higher energy prices for Ukraine.
Yablonsky says the longer Ukraine gets subsidized gas, the longer it will be obligated to return the favor to Russia either politically or economically. He says market prices will also encourage more efficiency and use of energy saving technologies.
Mr. Medvedev's other presidential meetings, held in the ornate Konstantin Palace near Saint Petersburg, seemed less tense. He spoke of Russia's key strategic partnership with Uzbekistan with that country's president, Islam Karimov. The leader of Turkmenistan touted his country's reliable energy partnership with Moscow. And Moldova's President Vladimir Voronin announced that two paintings stolen from the Hermitage Museum in Saint Petersburg have been found and will be returned.
Before heading behind closed doors for meetings with Kremlin leader Dmitri Medvedev, the presidents of Ukraine and Georgia hinted publicly at Moscow's strained relations with Kyiv and Tbilisi. Ukrainian President Viktor Yushchenko said many issues have accumulated and need to be discussed between the two countries. Georgia leader Mikhail Saakashvili also spoke of numerous problems, noting optimistically, however, that none of them are insoluble given the presence of good will.
Moscow is particularly concerned about Georgian and Ukrainian moves to join NATO. Russian Foreign Minister Sergei Lavrov told reporters that Georgian membership in the alliance would create a spiral of confrontation in Abkhazia, a separatist region of Georgia that is supported by Russia.
Lavrov says Dmitri Medvedev warned President Yushchenko that Ukraine's NATO membership would violate a friendship treaty between the two countries. He linked the treaty to another agreement governing the presence of Russia's Black Sea Fleet in Sevastopol on Ukraine's Crimean Peninsula.
Lavrov says unresolved issues concerning the fleet cannot be substituted by unilateral moves. The agreement, he says, provides for possible extension of the fleet's presence, and that preparing for a withdrawal nine years before its lease expires is not the approach Russia would like to see in its partners.
Russia is required to vacate the base in Sevastopol in 2017 and considers Ukrainian preparations for the Russian departure to be premature. The Interfax News Agency says President Yushchenko told journalists in Saint Petersburg that Ukraine will fulfill its side of the fleet agreement to the last letter.
The Russian Foreign Ministry has not rejected a recent statement by Moscow Mayor Yuri Luzhkov, that Sevastopol and Crimea should belong to Russia, more than 50 years after the Kremlin transferred the area to Ukraine.
Russian-Ukrainian tensions over NATO and the fleet were accompanied by news announced by Sergei Lavrov that Ukraine will be hit with a nearly 100 percent hike in the price of gas on January first. Lavrov said President Yushchenko was told the reason is that Central Asian countries, which supply gas to Ukraine via Russia, will begin charging European prices.
The Russian diplomat says the Ukrainian leader responded by saying the sooner his country switches to market prices, the better its economy will be. Lavrov agrees. So does Vasyl Yablonsky, an analyst at the National Institute of Strategic Studies in Kyiv, who told there is logic to higher energy prices for Ukraine.
Yablonsky says the longer Ukraine gets subsidized gas, the longer it will be obligated to return the favor to Russia either politically or economically. He says market prices will also encourage more efficiency and use of energy saving technologies.
Mr. Medvedev's other presidential meetings, held in the ornate Konstantin Palace near Saint Petersburg, seemed less tense. He spoke of Russia's key strategic partnership with Uzbekistan with that country's president, Islam Karimov. The leader of Turkmenistan touted his country's reliable energy partnership with Moscow. And Moldova's President Vladimir Voronin announced that two paintings stolen from the Hermitage Museum in Saint Petersburg have been found and will be returned.
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