Overcoming the challenges of Brexit

Not content with sending the UK and Europe into psychological and economic death spirals, Brexit is apparently wreaking havoc in China and Hong Kong.

It means an end to the touching ‘bromance’ between Britain’s David Cameron and China’s Xi Jinping. (People thought at the time that the Conservative government’s bid to be Beijing’s best buddy was a surprisingly cynical and inept political miscalculation. Those were the days…) Plunging UK/European currencies could derail China’s export-based Bl-Brexit-Bromeconomy for good, or disintegration of the Western world will enable the Middle Kingdom to divide and rule the whole planet – we’re not sure which.

Hong Kong-focused companies that nostalgically cling to the former colonial motherland’s apron strings are being hit hard. Prime victims are HSBC, Standard Chartered and our number-one tycoon Li Ka-shing, whose UK interests include retail, phone, gas, electricity, ports and other highly original sectors.

Vultures see opportunities. Hong Kong’s Chief Executive CY Leung mentions cheap real estate in London, while a top guy at Bank of China HK tempts the city with the exciting prospect of gaining at the UK’s expense as an offshore Yuan trading centre. Financial Secretary John Tsang and Monetary Authority chief Norman Chan talk of caution, prudence and monitoring the situation – honest admissions of cluelessness for which they deserve our respect.

What, we all wonder, about Hong Kong’s retail/landlord sector? Could Brexit by any chance cause it to suffer horrible pain as sales, turnover and profits shrivel up into nothing? It is a mouth-watering prospect.

An expert tries to put a brave face on the ‘crisis’ the sector is already facing. The executive summary…

Top brands need to go back to their original positioning, offering customers a premium experience with high-quality service and exclusive offerings.

This suggests that ‘top brands’ at some point started to provide sub-standard ‘experience’ and low-quality service (which is apparently different from ‘experience’) and – as the observant among us may have noticed – were all selling the same tedious crap. Disappointingly, it also suggests that the ‘top brands’ sector can reform and survive, when all right-thinking people would rather it just died, and the dust blown away with the wind.

The expert says:

It is certainly the most challenging I’ve seen since SARS. But the rents in shopping malls are not decreasing. However, nobody dares to close shops in the luxury space, but it will happen; it must happen.

The cartoon character has run off the cliff and is standing there and hasn’t looked down. Yet.

…many of the big brands set out to impress the mainland Chinese, and they rented bigger stores to show they are big brands … this killed the malls and the interest in those places … I would say reduce store sizes and bring more diversity to malls.

Could he mean ‘sell stuff people want’? This is dangerous and subversive talk.

A big part of the results [presumably ‘profits’] in Asia was gifting … generating more exclusive and over-priced products. But this is no longer the case.

Gifting! By which of course we mean ‘Mainlanders bribing each other’, as discouraged by Xi Jinping. So instead…

You need to go to local consumers and target them directly

Or, indeed, indirectly – just stop targeting people who Thank God/hopefully aren’t coming to Hong Kong any more.

However, we are still not quite getting to the radical and revolutionary stage of ‘selling people stuff they want’. The talk here is all about ‘brands’, which tends to mean overpriced junk. The expert recalls the time 60 years ago when luxury goods were authentic: family-made, high-quality and very limited in supply. Those companies (like LV) – or their names  and logos – were bought by conglomerates, who mass-produced the stuff, eventually in China, and relied on marketing to con new-rich Asian suckers into believing the items were desirable and valuable. Now the market is saturated, and even Mainlanders are getting tired of the avalanche of tawdry, phony heritage/lifestyle BS. So what’s the way forward?

There needs to be an upgrade in the quality of the service … I once purchased a beautiful jacket from a luxury brand, and the salesperson asked me if I wanted to pay an extra 50 cents for a bag. I thought, “It’s raining outside, of course I want a bag. Charge me HK$500 more, I don’t care! If you go into a luxury shop, you should be treated as a luxury client. This is important.”

How to overcome Brexit: charge people HK$500 for a bag.


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Suffering Twitter overload…


The weekend was an outpouring of mawkishness and mindless memes. The most shocking thing about the UK’s Brexit vote is the shock and horror subsequently displayed by many of the country’s own people. While the referendum result was unexpected, it seems parts of the British population are in complete disbelief, seeing it as against nature and world-ending. The impression is of pro-‘Remain’ electorates/sub-cultures that had been cocooned from realities of life and the opinions of many of their own countrymen (presumably, this is not peculiar to the UK – the ‘echo chamber’ effect must play a role).

The mawkishness and emotion suggest a lack of worldly experience, which heartless grumpy and impatient types might attribute to helicopter parenting, lack of ‘trigger warnings’ and similar modern ills. Even the most easy-going of us can only take so much whining about ‘having our future destroyed’ and demands for a second referendum. There is also a simplistic, naïve self-identity/tribalism at work in the assumption that being pro-EU and being against racism and other illiberalism are the same thing.

As for the memes… Scotland will become independent; violence will break out in Northern Ireland; there will be years/decades of uncertainty; banks will disappear from London; FT-PoliticalEnglish counties that received EU handouts will perish; the Labour Party leadership issue is of gripping importance. (We’ll skip the rush for Irish passports or the outbreak of anti-Polish pogroms.) No-one knows why these things can or should happen – it’s just that everyone is going round telling everyone else they will. If you like this sort unquestioning panic, try the Financial Times, the paper that once predicted cataclysm if the UK did not scrap its own monetary policy and adopt the Euro.

The emotion and memes culminate in the EU power structure itself, where grandees demand that the UK suffer maximum economic pain, partly out of vindictiveness for its impertinence, and partly to deter other countries from leaving. Incredibly, some are instinctively demanding greater federalization among remaining member countries.

Serious questions. Why do they so badly want to deter other countries from leaving? Why should other countries want to leave?

The Eurocrats detest arrangements (‘cherry-picking’, concessions, opt-outs, other flexibility) that might appease public opinion in individual member countries. Yet they have no convincing reasons why uniformity and submission to unpopular measures are vital. The only conclusion is that, rather than being about the needs and wishes of people, the purpose of the EU today is the continuation and strengthening of the EU itself. So much idealism and vision and work have gone into building the institutions and structures and processes and accumulation of power, they cannot allow the ‘project’ – as they call it – to end, change, adapt, listen, calm down or otherwise get real. Sounds as if it is the EU that really has the ‘existential’ problem.


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UK most important country in world, apparently


Hong Kong’s Chief Executive and Monetary Authority boss are hedging when they express their deep concern over the UK’s referendum on Europe. After all, the forex market is already freaking out. But looking at the big picture: why, exactly, should an East Asian city-state economy panic about one country in Europe leaving a regional bloc? There are fairly strong economic ties between Hong Kong and the UK (notably investment), but it’s not that big a deal. Life will go on, either way.

But apparently, it won’t. I can’t remember when so many usually-sensible people (George Magnus, say) were getting so worked up. It seems people are confusing leaving the EU with leaving Planet Earth. There’s an important difference: if you leave Planet Earth, trade, investment, immigration, regulations, taxes and death will come to an end; if you leave the EU – whether you love these things or hate them – they will all carry on, maybe with slightly different paperwork.

Commerce will continue because everyone benefits from it (it doesn’t happen otherwise). Migration will continue partly because at least a lot of people benefit, and partly because it’s a force of nature. Regulations/taxes/death go without saying. No-one gets ‘isolated’ or ‘liberated’ if Brexit happens. Brits in Spain will not be expelled. The UK’s Poles, Bangladeshis, Somalis won’t disappear. Everyone needs to get a grip. (The political fallout in Westminster is another thing.)

This is even more the case with the UK than other EU countries, because of something few people acknowledge: the UK is only half in the EU in the first place. It has nothing to do with the catastrophic Euro single-currency. It has a separate visa system and passport controls. From Euro-visionaries’ point of view, the Brits have already wrecked the EU. It was supposed to be a tight-knit, protectionist-leaning group destined to flower as a federal nation-state. The UK joined, put its weight behind free-market principles and insisted on letting a dozen or more backward and/or ex-Communist countries into the organization, rendering it unmanageable. Thanks to the Brits, the original dream is in shatters anyway, with only a flag, ‘parliament’ and pretentiously titled ‘president’ as reminders of what should have been.

Bottom line in the UK: Brexit would give emotional satisfaction to a certain segment (older, uncouth, supposedly dim, supposedly racist, probably angry), while Remain means another segment (young, sophisticated, ‘international’, probably doing quite well) feel righteous and victorious. Remain also spares officials some bureaucratic and administrative headaches – which tips the balance for the rational among us. If Brexit does win, the elites and bores and smug trendies have only themselves to blame for indulging in such a ridiculous scaremongering campaign.

Bottom line for everyone else: keep calm and carry on. It’s just the UK and the EU.


I declare the weekend open with the thought that, either way, we can get back to real life soon. (Unless the global elites’ worst fears are right, and this is the start of the under/middle classes’ revolt. Hmmm.)

The Who



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Update from Escalator-Land

We keep hearing about a collapse in tourist numbers, an economic slowdown and falling rents. But no-one seems to have told the commercial landlords in my neighbourhood, where the closure of tacky bars and restaurants – and the opening of even nastier ones – continues.

YorksPudThe latest outlet to go is a place called Yorkshire Pudding. It offered British food and televised sports, a combination that sounds like an especially loathsome circle of Hell, but the overweight-white-males-with-shaved-heads demographic seemed to like it. To give an idea of what worse could take its place: just a couple of streets away, a Hooters is going to open.

Although the Soho restaurant investors go to cynical/desperate lengths in devising new themes and concepts with a chance of surviving in this ultra-high-rent environment, you can at least laugh. The Thai tapas with a Scandinavian twist, artisanal hamburgers and Peruvian-ceviche-with-kimchi ideas border on self-parody. Hooters, however, is simply not funny, just gross.

The South China Morning Post goes into almost-investigative and crusading mode in its nicely unsympathetic story on this newest and, surely, ultimate excrescence on Central’s dining scene. Even in 1980s US, the waitresses-with-big-boobs thing was infantile. Now, well into the 21st Century, it turns up in the trashy Lan Kwai Fong extension that is upper Wyndham Street – with a 10-year-lease, somehow.

The SCMP reports that a headhunting company with a female client base is fleeing the premises upstairs because, understandably, it can’t bear to have ‘above Hooters’ as its location. And we learn that these low-lifes are even planning to blight poor old Phnom Penh with a branch. To emphasize the sordid/sleaze/icky angle, the paper also extracts a quote from the investor behind Hooters denying that his Thai branch employs ladyboys.

Some demented malevolence opened a Krispy Kreme up the hill a few years ago. When it started offering free samples of the vile donuts to schoolkids, some angry vigilante feng-shui experts went round and put a spell on it. It closed soon after. Rare but glorious proof that HL Mencken was wrong when he said that no-one ever lost money by underestimating the public’s taste. I foresee Hooters cursed and collapsing in a similar fashion.

Meanwhile, at the other end of the wholesomeness scale, there’s a place called Nood, on Peel Street…


Don’t worry – you’re not supposed to drink it. This is their special extra-strength colonic-irrigation solvent. But why is only the cucumber ‘organic’? And why Pink H. Salt, rather than the regular white no-middle-initial stuff? (Actually, if you dropped the spinach/broccoli and added onion and tomato, you’ve got a great tabbouleh recipe.)

And on the Escalator that caused all this horrifying gentrification, a man wearing those foot-less tights beneath shorts, like women do…


Not being judgmental – just bemused at the sartorial symbolism or functionality, if any. (I’m guessing horrible scars on legs.)

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Trying to be popular, old man talks drivel

Doing his bit to ensure the world continues to get weirder by the day, uber-tycoon Li Ka-shing suggests higher taxes on business to address the wealth gap and, particularly, Hong Kong’s growing Stroppy Young People Problem. He even pulls a number out of the air: an extra one or two per cent.

It’s a silly idea. In the 2016-17 budget, profits tax accounts for HK$138bn, which is a bit over a quarter of government revenue. Pushing the 16.5% rate up a couple of notches would yield a bit more, but why bother when the government accumulates massive surpluses year after year (around HK$80bn last time)? The government doesn’t need more money.

The Bloomsburg report notes that, unlike Warren Buffett and Bill Gates, Li opposes higher taxes on wealthy individuals. His reasoning – “You mustn’t tax some people more and Bloom-LiKSsome people less or else it’s chaos” – is amusingly nonsensical. As a non-salaried chairman raking in billions in untaxed dividends, Li is in the fortunate position of not paying personal taxes. Hong Kong tycoons also differ from Buffett and Gates in that they see their wealth as a means to immortality, to be preserved and passed down through the generations of genius offspring.

We can forgive Li and his fellow plutocrats for drooling over their loot and refusing to share it with anyone else. They are only human, and probably perceive their American counterparts’ plans to give everything away as grotesque pretentiousness and vanity. What is harder to ignore is how they accumulated such vast riches in the first place, essentially by helping to create the wealth gap and social discord they now claim to worry about. One in seven Hongkongers live in poverty and young people lack opportunities because the city’s family-run cartels are allowed to suppress competition and overcharge the population for necessities. (I love the bit where the Bloomberg interviewer says: “but Mr Li – you’re the one who built 200 sq ft apartments and charged HK$4 million for them.”)*

Property moguls have done this unconvincing hand-wringing-and-weeping routine before when they sense that the mood is turning against them. Lee Shau-kee offered to donate land for cheap homes a while ago, and a few years earlier tycoons’ kids felt a need to launch contrived charitable foundations. Li’s comments look like a feeble attempt to appear to be a part of the solution.

After being co-opted by Beijing in the 80s as a loyal Hong Kong support base, our short-sighted local tycoons couldn’t resist gorging themselves. It is telling that the leadership that has finally noticed that these family conglomerates are parasites undermining Beijing’s grip on Hong Kong is the most vicious and insecure regime for decades. As with mass-murderer Mussolini and his trains running on time, Hong Kong people will look back at the despotic and tyrannical Xi Jinping and say, “but at least he shafted the tycoons.”

Meanwhile, the property barons and the Chinese government having both left it rather late to start caring deeply for the downtrodden dispossessed kids, our latest flamboyant, fantasizing, fun-loving freaks and fiends step forward and take a bow – the Alliance to Resume British Sovereignty Over Hong Kong and Independence (in that order, these guys being pragmatists about things like that).


*Oh, she didn’t.

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Beijing’s friends in a flap

As the Kidnapped Bookseller Saga continues, Hong Kong’s government demonstrates its resolve by announcing a no-nonsense pro-active decision to write a letter to the big boss in Beijing. Chief Executive CY Leung also wonders whether Mr Xi’s officials could or should do more to notify Hong Kong upon the abduction, blindfolding and confession-forcing of city residents. And he might send delegations up there. If necessary. By being open and honest about his administration’s powerlessness, CY actually retains a shred of credibility.


The government’s supporters and pro-Beijing forces are more exposed. Legislative Council president Tsang Yok-sing says we need to ‘find out what actually happened’. The South China Morning Post editorial agrees, citing uncertainty arising from the conflicting accounts of events. (This is how religious-nut creationists argue against teaching only science in science classes – demand that schools cover ‘both sides’ of the ‘controversy’.) The SCMP considerately reports more doubts in the form of returned bookseller Lam Wing-kee’s Giant Enormous Contradiction Inconsistencies Discrepancy (about whether colleague Lee Po said or intimated that he was abducted from Hong Kong). New People’s Party lawmaker Michael Tien says this discredits Lam.

Another approach is to split hairs. One government supporter has been heard complaining that CNN star newscaster Kristie Lu Stout made a slip-up during a broadcast yesterday, saying Lam had been ‘kidnapped’ when, being over the border, he was ‘arrested’. SCMP columnist Alex Lo ruminates on this important distinction.


This leads to a resigned/cynical/cretinous ‘what did the rape victim expect, dressed like that?’ reaction to and explanation for all the fuss. If the regime in Beijing believes it has feudal-style ownership of Chinese people throughout the world, then you have only yourself to blame if you get dragged off for producing a gossipy book about the emperor.

As a last resort, you can always point at the evil hypocritical USA, which is Just As Bad, because it used abduction and extrajudicial transfer of people it thought were plotting terror attacks, which are the same as gossipy books if you think about it.

Oddly, a voice of sanity squeaks above the desperate pro-establishment attempts to excuse, downplay or muddy Beijing’s embarrassing attack on Hong Kong people’s freedom. The Standard (stablemate of Sing Tao, spreader of anti-Lam exclusives) wonders whether the smears won’t end up being counter-productive and boosting the opposition vote in the September Legislative Council elections. Well, precisely.


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HK government in trap

After all the false confessions, does anyone out there believe the ‘forced disagreements’? SCMP-BooksellerFends

The Abducted Hong Kong Booksellers Saga continues with Beijing insisting ever more strenuously that its lies are the truth, using Lee Po, Lam Wing-kee’s girlfriend and the others as helpless co-erced puppets. Presumably no-one is going to swallow such obviously contrived BS. But it serves a purpose: it drops a lifeline to Beijing’s apologists, who can at least point to ‘two-sides’ of the story.

The Chinese regime is in a privileged position. It can state blatant falsehoods and still be surrounded by media, advisors, bureaucrats and others who assure it that it is correct, while having the luxury of disregarding anyone who differs (not that it works). The Hong Kong government, on the other hand, has to worm and wriggle its way through a morass of propaganda and illogicality and still try to make sense to a hostile and skeptical world.

Hong Kong’s government concedes that the mechanism whereby Mainland authorities notify the city when they arrest its residents apparently failed in Lam Wing-kee’s case. The city’s administration cannot admit that the Chinese security services have made a mockery of Beijing’s own claims that it always detains and treats suspects ‘in accordance with the SCMP-CYSpeakslaw’. It cannot admit that, on the other side of the border, there is no law. It certainly can’t bring itself to openly face the fact that, when the Communist Party decrees it, there is no law on this side of the border either.

The Hong Kong government would like to say that everything is fine, boys and girls – just provided you don’t sell subversive books on the Mainland. That would put everything in perspective. Despite this little bookseller unpleasantness, those of us who do not push seditious literature over the border can still rest assured that the Communist Party won’t break the rules in the case of, say, a legal dispute with a well-connected Mainland company.

Unfortunately, such a clarification would undermine the official fantasy – maintained even by top Communist Party Officials – that ‘One Country, Two Systems’ is totally inviolable. Even when Beijing publicly smashes Hong Kong’s autonomy into pieces, the city’s own hapless leaders have to stand there and assert that it’s still intact.

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HK learns more about China


And the great soft-power triumphs keep coming. Unable to find any cute puppy dogs to kick in the teeth, Chinese officials ban an adorable and innocent Taiwanese aboriginal children’s choir from appearing on the Mainland. The kids had (obviously) hoped to raise funds from the performance to sing in Europe. In Taipei, democratically elected President Tsai Ing-wen steps in with some cash. Communist Party United Front strategists are shocked and mystified that, yet again, a no-nonsense display of who’s boss still fails to convince the Taiwanese public that submission to and subjugation by the one-party state in Beijing is a compelling and alluring proposition.

The glorious-reunion-with-the-motherland thing isn’t going any better in Hong Kong, where one of the five abducted booksellers returns after eight months in captivity, and speaks out. When Lam Wing-kee reappeared in Hong Kong three days ago, it seemed he would behave as three other returnees have done – look traumatized, ask the police to shut the case, and drop out of public view. Most people could guess what had happened: they had been abducted, held in a secret Mainland location, interrogated, forced to make false confessions, subjected to blackmail or threats against family, and eventually, stressed and terrified, dropped off in Hong Kong.

Unlike the others, Lam has gone public. (The story is everywhere, but the SCMP do a pretty good job here, here and here. The daughter of the fifth hostage – Gui Minhai, abducted from Thailand – is also speaking out.)


Lam confirms the widespread suspicions. In doing so, he forces us to face some stark facts.

China’s top leaders see the locally produced scurrilous/gossipy books about them as a serious threat – perhaps emanating from anti-Xi factions in Beijing – and thus a ‘national-CNN-LamWKsecurity’ issue. The abductions are clear violations of the Basic Law’s guarantees of Hong Kong’s free press and separate legal/law enforcement jurisdiction. We should not be surprised: the Chinese Communist Party is not subject to the law.

The Hong Kong government is reduced to the role of helpless and impotent bystander with no clue about what is happening, issuing a lame press release as a silent plea for understanding. As an international business and financial hub, we must have rule of law, but as part of the People’s Republic of China, rule of law can be suspended at the pleasure of the Communist Party. They can snatch you off the street, televise a show trial, threaten your family – nothing we can do about it. But low taxes!

The rest of the world, including Taiwan, will draw their own conclusions.

Do the people of Hong Kong do the pragmatic thing and accept this as inevitable and not likely to happen often, or to anyone we know? Or do they become even more wary of, and hostile to, anything from Beijing and the Mainland? Former Chief Executive Tung Chee-hwa said a while ago that people in Hong Kong should learn more about China. Consider it done. Many will take Lam Wing-kee’s warnings to heart, and perhaps be inspired by his example. This guy has guts. The top-level Mainland security forces that abducted him are expecting him back with a hard drive full of names. Instead, he has turned the tables and exposed beyond any doubts or uncertainty the thuggishness and lawlessness of the CCP. I declare the weekend open by nominating him for one of these.


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Developer in fit of total honesty


Not content with unleashing packs of rabid, half-starved real-estate agents onto Hong Kong, Sun Hung Kai Properties is now trying to stuff cash into people’s pockets in an attempt to sell its grossly overpriced, horrid little apartments. The developer is offering 120% mortgages to enable existing home owners to pay off their current loans and ‘upgrade’ (I dread to think from what) to the company’s Park Yoho Venezia project in drab, distant and dismal Yuen Long.


Even a property agency boss expresses surprise at the ‘gamble’ suckers accepting the offer would be taking at a time when prices are set to continue falling.

Some onlookers question how a developer can get away with this when the HK Monetary SCMP-SHK-LouisAuthority forbids banks to lend buyers more than 60% of a property’s value. The answer is that the HKMA doesn’t care about the folks who buy homes; if they bite off more than they can chew and end up in negative equity, that’s their tough luck. The HKMA’s only concern is the well-being of the institutions that make the loans. If banks lend 90% or 100% mortgages during a housing bubble, and then prices collapse, the financial system will be threatened.

The cool bit is that if the banks lend money to developers, who then lend it to over-extended buyers, there’s nothing to worry about because – serendipitously – the HKMA doesn’t classify that as mortgages. At the time the banks lend that money, it gets called something else, so everything’s fine. The people at the HKMA are incredibly highly paid because, unlike the rest of us mere mortal dimwits, they can comprehend such mysteries. (Basically, it’s about risk: provided the banks and our developer friends have unloaded it onto some poor schmuck trying to house and feed his family, everything is perfect.)

The 120% mortgage offer in itself serves as proof that the market is heading down, and should therefore, in a rational world, be self-defeating. People think of property tycoons as shifty, duplicitous types, but right now, Sun Hung Kai would not be making a more transparent and honest statement if it tattooed ‘Desperate!!! Gimme Gimme Now!!!’ on Raymond Kwok’s forehead.

And still… There will be takers.


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Shock as company tells China truth

Whether it’s for reasons of realpolitik, greed, gullibility, herd mentality or fear, the world continues its compulsive panda-sycophancy. ASEAN nations rewrite statements on regional security to avoid offending Beijing. Leaders of proud, prosperous and nuclear-armed democracies cravenly cancel meetings with the Dalai Lama out of deference to the Chinese regime. Hollywood amends scripts to appease Chinese nationalism. Consumer goods companies break sponsorship deals with celebrities who commit anti-Communist thought crimes. The UK and Sweden hesitate even to comment when Chinese agents kidnap and extract false confessions from their citizens.

It seems the whole planet is obsessed with pre-emptive shoe-shining of the Middle Kingdom. A few rare exceptions stand out. The New York Times remains largely defiant in the face of Beijing’s wrath over revelations of senior leaders’ family wealth. The Queen damns Chinese officials as ‘very rude’. (Just in: Obama.) Taiwan’s voters and new cat-loving spinster splittist President seem determined to stand their ground. God, despite some recent wavering by His representative on Earth, still boldly refuses to join in the kowtowing.

And to this noble list we can now add MSCI. The company is in the slightly arcane business of compiling stock and other market indexes. Investors use these lists and sub-MSCI-logolists of equities and equity classes (company size, industry, country, etc) as benchmarks. If MSCI adds or increases the weighting of a particular component in an index, investors will buy more of it – to track the index. Inclusion of a company or wider market in an index also bestows status and face. (Hong Kong’s own Hang Seng Index has increased the number of constituent stocks over the years partly because certain older, withering, local family-run MSCI-Ch-announcecompanies – who shall remain nameless – kicked up a big fuss when the compilers considered dropping them in favour of newer, bigger listings on the stock market. It was partly because the move would reduce demand for their shares, but also because of the humiliation.)

China’s leaders want MSCI to include the mainland stock markets in the company’s emerging market index – essentially because they think it’s a matter of prestige and one of those overdue status symbols that China has ‘earned’, like having an aircraft carrier or a science Nobel. We are getting close to the national pride/arrogance/victimhood/self-pity complex here.

While Chinese officials crave inclusion of their sizable stock market, MSCI has been brutally honest and said ‘no’. For the third time. The reasoning is inescapable. Real, Bloom-MSCIgrown-up stock markets allow international investors to put funds in and take them out as and when they please; China, with its capital controls, does not. Proper stock markets are not subject (mostly) to weird, unpredictable government interventions, arrests of short-sellers, etc; Communist rule-of-man China’s is. Also, Chinese companies are allowed to suspend trading whenever they feel like it and obscure information (and, although MSCI are too polite to say so, many are run by corrupt scumbags who might disappear or be disappeared any time). Peru, on the other hand, passes muster.

So MSCI joins the small elite group of people who dare to treat China as a normal place, nothing special, not an object of automatic toadying. Presumably, the company – unlike Lancome and 99% of the world – sees little to gain from wanton groveling to the panda, and more to lose by tarnishing its international integrity. It has also mentioned the possibility of re-re-reviewing the subject before too long, which should mollify any ‘hurt feelings of the Chinese people’. Aficionados of major Beijing bed-wetting temper-tantrum meltdown freak-outs will probably have to wait for the Court of Arbitration’s ruling on the South China Sea.



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