1997. It was the best of times, it was the worst of times; it was the age of wisdom, it was the age of foolishness, it was the spring of hope, it was the winter of despair. Well, at any rate it was a year of two halves.
It was the year of the handover, the return to the embrace of the Motherland. People who really understood how Hong Kong worked, i.e. lowly-paid journalists and highly-remunerated investment analysts were in agreement. Hong Kong's political and social future was highly uncertain, but the economy and the stock market would go from strength to strength. China would see to that.
The Hang Seng Index and the property market rose to new heights by 30th June, and smart money said they would keep rising. The year end would see Hongkongers even more wealthy. This after all was the natural order of things. Demand for red chip shares was not a "bubble": this time it was different.
By the end of the year, however, everything looked rather different. Only then could we distinguish between good loans, and bank loans; and between bad investment banks, and worse investment banks.
Such a year needs its chronicler.
The Rise and Fall of Merkin Brothers is an investment banking tale set in Hong Kong in 1997, and is quite possibly the finest work of fiction since Enron's last Annual report. Not least of the fiction is the opening disclaimer that "the characters, companies and investment banks in this novel are fictitious and any resemblance to real people or institutions is a coincidence." Examples of similarities in Irvine's peregrination through the banking world of the late 90s are legion, more than can be counted on your fingers or toes.
He writes of a world where money talks, but Armani talks louder. Perhaps he is unkind to heads of Hong Kong investment banks. Are they really so shallow, or motivated only by money and personal interest? Surely some of them, at least, are people of firm convictions (even if these convictions can be overturned by clever lawyers in the Court of Appeal some years later).
Who were the heroes amidst all the greed and fear of 1997? Journalists? Not according to Irvine, and he should know. The sub-plot in Merkin Brothers revolves around the FCC, and the author is even-handed in trashing his own kind. It's a dog eat dog world, so no change there.
Any banker who reads Merkin Brothers will see that Irvine has produced an insightful and keenly observed exposT of other investment banks - of course, not his own, which would never behave as disgracefully as the competition.
This is a wickedly amusing satire, and so for that reason I'm afraid I can't recommend it to the serious-minded readers of FinanceAsia, who, because of their high professional calling, want only the facts and incisive analysis.
Steve is very generously donating all profits from the book to Afghan charities building schools. He is, after all, a journalist and not therefore subject to the greed factor exhibited by (other) investment bankers. And so I strongly urge analysts, corporate financiers, DCM and ECM specialists, M&A experts and other "professionals" to acquire a copy and charge it to their open-ended corporate expense accounts, and to ask their tax advisors how to claim relief on it.
And as for Steve, I say publish and be damned.
Merkin Brothers is available to buy from today in Hong Kong book chain, Bookazine and will be in all Hong Kong bookshops from next week. It retails at HK$149 and profits will go towards building schools in Afghanistan. The author will receive no royalties from the book. For those outside Hong Kong, it can be bought on the internet at www.paddyfield.com.hk