Hong Kong song
As a Hong Kong resident, Chatroom becomes ever more concerned about our chosen domicile. The pollution seems to gets worse by the hour. We heard over lunch recently that the regional head of one major investment bank had decided to relocate himself to Singapore. The reason? His child has asthma and was suffering too much by living in Hong Kong.
I hear at another lunch that a major US investment bank was unable to bring a star executive over to Asia because he refused to live in Hong Kong. My own experience of regularly walking down Wyndham Street – in the slipstream of buses and minibuses – hardly adds anything positive to the portrait. It is a filthy, lung-choking experience.
Unfortunately, the government is about as dynamic in its fight to clean up the environment as the actors in the French avant garde movie, India Song, a movie Chatroom was subjected to a few weekends ago. At one point in this 1970s movie a man stands by a woman and neither person moves for the full duration of his cigarette burning down to its butt. I feel this is a very apt metaphor for the stance taken by the Hong Kong administration on the present environmental disaster.
Hit predictions
It has been an active month for hires. First off, our friend Richard Tsiang has joined Yahoo!Asia as the internet giant’s CFO and head of strategy. It’s an inspired choice for the portal search engine. Tsiang is well known around town as ‘the Abacus’ for his skill with numbers. As a former fund manager he knows what investors want from a company – and as a former corporate financier, he knows how to value and buy companies. Given the current potential for internet M&A in Asia, it may be this second quality which comes to the fore first.
Bad news for ING Barings, which has lost its head of Hong Kong research, the well regarded Jolyon Petch. This news was broke first on FinanceAsia.com, which was tipped off that the talented Petch was rejoining his old chum from Peregrine, Paul Pheby. He and Pheby had worked together in Korea, where Pheby ran the operation and Petch the research. Pheby left Peregrine to set up Lotus Asset Management shortly before the high-flying Peregrine went bankrupt thanks to some loans in Indonesia.
Petch is a very talented and clear-thinking analyst. His was one of the key interviews in the forthcoming book, The Super Analysts, and in the section where he is interviewed provided a groundswell of common sense on issues such as EVA. Interviewed in the book by his then ING
Barings colleague, Andrew Leeming, he is asked at one point whether the increase in their corporate finance work is a threat to the brokerage analyst’s objectivity? To this he replies: “We may see a rise in boutique research houses as a result of this trend, but I think we will also see that the better and more objective analysts will go over to the buyside.” In Petch’s case, that’s a prediction that came true remarkably quickly.
Another big career move was also first revealed on FinanceAsia.com. That was the decision by Simon Maughan – one of Asia’s most talented bank analysts – to move to Goldman Sachs. Maughan, who is also known as ‘the bank analyst from Parnassus’, had only just joined Lehman Brothers in March (mentioned in this column ‘Maughan’s a gone’). He had joined Lehman from Indosuez WI Carr where he was head of Hong Kong research, and had worked for the firm for a lengthy period. There was no repeat of this ‘lengthy-ness’ at Lehman, with Maughan barely doing a Jockey Wilson in terms of days served. His move to Goldman – for whom he will relocate to London – is a blow to Lehman’s regional strategy. Maughan was at the centre of a niche plan to win bank-related investment banking mandates. Not anymore.
But wait, there's more...
Probably the biggest hire of the summer was by Morgan Stanley, which has a new taipan for the Asia region in the form of Alasdair Morrison. Outgoing boss Jack ‘the Wad’ Wadsworth has left a tremendous legacy, with Morgan Stanley having established itself as one of Asia’s major investment banking forces during his tenure. Chatroom suggests that the Wad uses his considerable wealth to enter the US Congress and thus break the unspoken taboo where no US congressman has a clue about China.
But back to Morrison, who clearly knows a thing or two about China given that his former company, Jardine Matheson, was once labelled as “craving nothing but chaos” – by China. At Jardines, Morrison reached one of the pinnacles of Asian corporate power, but the company he inherited has been losing ground to rivals for years, largely thanks to poor management and poor decisions by the controlling shareholders. How he will fare in the go-getter atmosphere of a highly successful US investment bank remains to be seen. Unlike Jardines, Morgan Stanley is a Stilton-free zone. In a thoroughly un-Stilton act he did manage to take some time out of the Princely Hong to study at Harvard Business School, an unusual act for a Jardine Johnny. This out-of-the-box thinking may stand him in good stead at MSDW.
Morgan Stanley is in hiring mode obviously and a great coup for its M&A team is James Pearson who joins with a senior role. Not only is Pearson the former head of ABN Amro’s M&A team, he is also a man who has run the Maclehose trail quicker than a gurkha – an achievement not easily equalled. Can Morgan Stanley’s M&A team become any more formidable?
Calculated risk
After the recent near miss between China Southern and Dragonair at Chep Lap Kok, Chatroom was delighted to hear from a banker friend about an interesting website called amigoingdown.com. This site allows you to work out the probability of dying on a flight. You can choose the embarkation point, the destination, the airline and the aircraft as well as the month of the year. After several hours of research, we concluded that Seoul to Nepal on Korea’s favourite airline was a route we would not advise flying.
Super/bad
Our favourite website of the month is tres bizarre. It’s called superbad.com and is a post-modern website if ever we’ve seen one. It contains lots of images that have to be clicked through, and produce totally meaningless, unconnected results. There’s a lot of work in this website and you wonder who was crazy enough to go to all the trouble. We can only assume it was financed by a Nasdaq IPO in the fall of 1999.
Nothing better to do
Over the holidays, Chatroom was busy reading and came up with a few interesting titbits. Did you know the origin of the dollar sign? It derives from an old Spanish coin that featured a garland twined around the Pillars of Hercules. Or that 40% of Koreans have the surname Kim and 18% Park. Thus if you walk into a room you have a better than 50/50 chance of being right if you ask “Are you Mr Kim or Mr Park?”
Cows and democracy
The following was emailed to our office. It revolves around cows, democracy and definitions.
NIGERIAN DEMOCRACY: you have two cows. The government takes both, shoots you and sends the cows to Zurich.
SINGAPOREAN DEMOCRACY: you have two cows. The government fines you for keeping two unlicensed farm animals in your apartment.
BRITISH DEMOCRACY: you have two cows. You feed them sheep’s brains and they go mad. The government doesn’t do anything.
EUROPEAN DEMOCRACY: you have two cows. At first the government regulates what you can feed them and when you can milk them. Then it pays you not to milk them. After that it takes both, shoots one, milks the other and pours the milk down the drain. Then it requires you to fill out forms accounting for the missing milk.
HONG KONG CAPITALISM: you have two cows. You sell three of them to your publicly-listed company, using letters of credit opened by your brother in law at the bank, then execute a debt equity swap with an associated general offer so that you can get all four cows back, with a tax deduction for keeping five cows. The milk rights of six cows are transferred via a Panamanian intermediary to a Cayman Islands company secretly owned by the majority shareholder, who sells the rights to all seven cows milk back to the listed company. The annual report says that the company owns eight cows, with an option on one more. Meanwhile, you kill the two cows because of bad feng shui.
Two cows
We note with interest Merrill Lynch’s new compensation scheme. The new scheme says that if your years of service and age exceed 45 then you can leave and the options will still vest. Merrill reckons this is one of the most far-sighted approaches to share options in the industry. But what happens if
you have two cows? Chatroom will anonymously print any witty responses from readers who email us on [email protected].
CLSA's new place
We see that CLSA has finally moved out of its offices in the Lippo building to Pacific Place. For anyone who has been to their old offices, the only conclusion one can come to is that something must be going right with the Asian markets. CLSA will have two floors in Pacific Place, which also houses Lehman Brothers. We understand that a new cafeteria area has got the staff very excited. However, we also hear it has been strategically located next to the head of Asian broking’s glass-panelled office to stop any malingering.
The "current situation"
Chatroom has just returned from a trip to Manila. We haven’t been there since March and so were amazed to find that most hotels and buildings now have a sign outside pointing out that “in view
of the current situation” all bags must be checked for bombs. Not exactly comforting.
