Power And Dollar

From Zimbabwe, Kenya, To Madagascar Oil, China and India

Zimbabwe got a new twist.  CNN reports Mugabe decides not to atten the submit to be held in Zambia, its neighbour.  However, the opposition (Tsvangirai) is attending.  This will give the Tsvangiraia great opportunity to sell his plan of stabilization and strengthens Tsvangirai’s edge both internationally as well as domestically. 

The instability in Zimbabwe affects copper’s prices.  However, the copper price has been receding from its historical high.  This Zimbabwe episode will provide a support price level to copper.  So, this price will probably slow down.

Further down, Sino Union Petro & Chemical secured an oil field with Madagascar, expected to be worth 2B barrels.  China will own 50% of the venture. 

Chinese oil exploration firms have been trying to secure sites overseas with little success.  This is a firt major break not only for them, but also to Madagascar as well.  Madagascar has not produced oil for 60 years, reports Reuters! 

This company is not traded in LSE nor NY.  It is traded in HK only. 

This will also strench India’s resources as well.  Although India is not in as an urgent need as China in terms of resources.  Over the years, China is slowly moving in East Africa (more so than Africa in general), the traditinoally perceived sphere of influence by India.  Not that India has navy bases all over the place, but it has a lot of migrants and control a big portion of trade in East Africa.  It will only be a matter of time for India to express its security concern not only about the Himalaya border and Parkistan, but also about pan India Ocean security issues with China.  These oil exploration companies will have to learn that getting listed in London and NY helps them mitigate political risks.

For India, issues such as Kenya and Zimbabwe will have to become the leverage points for it to enter the stage.  It is probably too late for this episode.  But next time.

April 11, 2008 Posted by | business, China, chinese, Current Events, economics, finance, market, Money, opinion, politics, stock, Thoughts, trading, wordpress-political-blogs | 5 Comments

Meeting Dalai Lama = Rooting Out Violence

Many compare the Tibetan riot to the protests in 1989.  The protest back then did not involve riot.  This riot involved organization: targeted location, date; weapons were transported and were unavailable in the city.  Violence has also spurred to the Hui people, in addition to Han.  This is also a new turn of history.  Clean up is finally there for the Hui quarter.  When will Mainland China start to clean up this Tibet question?

http://edition.cnn.com/2008/WORLD/asiapcf/04/01/china.tibet/index.html

Dalai Lama is over 70 years old.  His influence is determined to wear out.  New generation of Tibetans demand more power from the Tibetan elites in exiles.  What is to gain for Mainland China from meeting Dalai Lama? 

Dalai Lama continues to be the spiritual leader of all Tibetan causes, be it independence, cultural preservation, environmentalism, human rights, etc.  Meeting with him will turn Mainland China from being defensive to a proactive stand.  

The younger generation of Tibetans is getting frustrated with Dalai Lama’s approach to their goal.  The riot is a good example.  This generation of activists does not have the baggage of Tibetan Bhuddism, they are willing and able to carry out indigenously organized violence.  It will only be a matter of time for these activists to be funded by other state institutions.  When that occurs, Tibet will be the Palestine in the East.  

Tibetan cause may still not succeed.  However, how much resources will be drained out to restrain Tibet?  The goal of Mainland is to keep Tibet.  Why wouldn’t Mainland China want to keep Tibet in the most cost effective manner?  At least a more cost effective manner than fighting out an endless battle in the future Palestine in the East?  That more cost effective manner is to prevent a peaceful Tibet to become a costly Palestine in the East.  

Meet Dalai since he does not seek independence anyway.  Take the Tibetan anti-government violence off the television not for a day, but for years to come.  Turn it into screens of hand shakes.  Dalai is old and wants to return home.  Remove the unifying figure of all Tibetan causes.  That will make these different organizations lose their focus.  Out of sight, out of mind.  

They different organizations will become a lot more manageable, be it the battle for TV coverage or outside of TV coverage.  It is always difficult for organizations to win against state institutions.  

Mainland China may think time is on their side in the international political arena.  And time is not in favour of Dalai Lama.  Every one and everything has its time.  Time will run out on Dalai Lama.  And when that happens, that option will forever be shut, for there probably be two Dalai Lama next time around and Mainland China cannot control them all.  

March 28, 2008 Posted by | China, china politics, chinese, Current Affairs, Current Events, 西藏, opinion, politics, Thoughts, Tibet, wordpress-political-blogs, 中國 | | Leave a comment

Some Progress on Taiwan Strait

It seems like a match can finally begin.  Hu may not be able concentrate on too many items.  He is more inclined to deal with a positive opening (Taiwan) than a hot spot for now (Tibet).Important press releases by both US and China, below.  Read the question started by the keyword “Olympics”.  And follow all the subsequent questions by the keyword “China”.  http://www.businesswire.com/portal/site/google/?ndmViewId=news_view&newsId=20080327005800&newsLang=en

http://news.xinhuanet.com/english/2008-03/27/content_7865209.htm

March 27, 2008 Posted by | america politics, China, china politics, chinese, Current Affairs, Current Events, opinion, politics, Taiwan, Thoughts, US politics, wordpress-political-blogs, 台灣, 中國 | Leave a comment

What is the next Taiwan surprise?

Taiwan is in the news lately.  First off the election, then a great win and now a missile parts mis-shipment by Defense Department:

http://edition.cnn.com/2008/WORLD/asiapcf/03/26/china.taiwan.missiles/index.html?iref=mpstoryview

http://edition.cnn.com/2008/US/03/25/taiwan.missiles/index.html

(And the recipient had to call back “what is this?”)

(Pay helicopter batteries and get nose-cone fuses for nuclear warheads. Not a bad deal!)

 

What is next?  Taiwan’s president faces the reality and finds out he cannot deliver?  Taiwan’s president Ma has nicknamed “Mr. Clean” and “Mr. Teflon” since he has no scandal attached him and no accusation against him ever sticks.  He was a well liked mayor of Taipei. 

How will he fail?  He got close to 60% of the votes!

Well, that is the start: He now has to face high expectation.  And high expectation is not easy to match with high results.  

It is said Taiwan, the island of 23 million, has 7,000 political appointments made by the president.  Now, no wonder it was so easy for president Chen to get into financial scandals.  Gasoline is sold by government owned monopoly.  So is cigarette, alcohol, lottery ticket and even sugar.  Boards of the banks got a seat for the president’s appointee since the government has a substantial portion of the stocks.  Now how tempting is it for any president? Or his appointee?  Will this newest president be able to stand against the temptations of his own but also his appointees?  How will anyone manage the ethical conducts of his own 7,000 appointees?

Remember this following line from Bush after 2004 presidential election?

“I earned capital in the campaign, political capital, and now I intend to spend it. It is my style.” 

It means the politician is able to accomplish objectives without fear of losing votes.  If the initiative means well, then it is to offer something to the opposite.  Of course, it could also mean initiatives that would be unpopular (say increasing taxes for Social Security or Medicare).  This is the situation Taiwan now has.  President Ma has a lot of capital.  He may be mean well, but would it be unpopular?

President Ma got 60% of the votes and he advocates a closer tie with Mainland China and his party is the pro-unification party.  Great.  His every move in relations to Mainland can be viewed as a betrayal by the pro-independence voters and possibly by the voters who want to keep the status quo.  There will be no easy way out of this corner.  The best person to calm the separatist sentiment is a president of the DPP affiliation.  In order to pacify the completely opposite side, he needs a name to join his camp.  President Ma promises to invite talents of all affiliation to join his camp.  But who from DPP has the talent in this Mainland-Taiwan relationship management?  Tsai is unlikely to join since she still wants to pursue further in her political career.  If Ma cannot find a respectable name to stand with him for Mainland relationship management, he can forever be haunted for this traitor status.  

Taiwan has to deal with another Mainland China dilemma.  If a closer tie with Mainland translates to more manufacturing migrating to Mainland, what will Taiwan be able to offer?  What is the plan for industrial upgrade?  If Taiwan is to become the bridge to China, similar to UK for the continental Europe when marketing itself to US, then Taiwan is to compete against Hong Kong, Singapore and Shanghai.  What advantage does Taiwan have?  Easy access to capital? HK got it.  IPO centre?  HK got it.  Shipping? All these 3 cities are great shipping centres.  Language advantage?  HK and Singapore both speak English better than Taiwan.  Judicial independence?  HK and Singapore are better.  Political stability? 

Taiwan has a lot of work to do.  Where is Taiwan going?  President Ma has a very strong sense of historical responsibility.  Is he accomplishing his ideals or delivering his voters wishes?  Or his voters simply wanted to get rid of DPP without a clear goal in mind?

March 26, 2008 Posted by | China, chinese, Current Affairs, Current Events, election, opinion, politics, Taiwan, Thoughts, wordpress-political-blogs, 台灣, 中國 | 3 Comments

Market Reacts to Taiwan’s Election

The general sentiment of the economic outlook written on 03.21 is reflected today in markets.  The article on 03.21 is here: 

https://royho.wordpress.com/2008/03/21/taiwan-count-down-1/

This is from Reuters:

http://edition.cnn.com/2008/WORLD/asiapcf/03/21/taiwan.elections/index.html#cnnSTCText

CNN:

http://money.cnn.com/2008/03/24/news/international/taiwan_markets.ap/index.htm

CNN has a summary of the post election here:

http://edition.cnn.com/2008/WORLD/asiapcf/03/23/taiwan.ma.ap/index.html#cnnSTCText

http://edition.cnn.com/2008/BUSINESS/03/24/taiwan.markets.ap/index.html

Some stocks are going up in Hong Kong and Shanghai as well.  Stocks in Shanghai will have a much shorter ride.  Since you probably cannot trade in Shanghai’s market, you cannot be exposed to it.  Your mutual fund may.  If your mutual fund does not have a local office, it may not actually understand political dymanics and the reasons for its short ride.  This is a good opportunity to watch your fund manager. 

You may happen to have some stocks in Hong Kong since HK is a lot more accessible to foreign capital and quite a good amount of their listed companies are also listed elsewhere (London, NY’s 2 markets).  This ride could be slightly longer.  New president does not come until much later.  So, all these trades are also emotional. 

Some Taiwan companies are traded overseas.  These rides are longer.  Again, new president does not come until May 2008.  So, these are sentiment trades.  One may want to wait untill some announcements come.  But it is the time to study the annual reports. 

Is the Taiwan the safest bet while the USD continues to fall?  It is not as easy to hold foreign currency in US as in some other countries.  So, holding a foriegn currency at the retail level is not easy.  The second best is to find a foreign currency/foreign money market fund.  The third is to find conservative funds with foreign positions, foreign as in outside of North America (Canada is not safe enough).  If you are a hands-on kind of guy, and you are interested in this region, then Taiwan banks are okay (among the public tradable in NY).  Avoid banks in Mainland China (for a different reason).  Some other FIs are okay, but not banks.

March 24, 2008 Posted by | business, canada economics, China, china politics, chinese, Current Affairs, Current Events, economics, election, 馬英九, finance, market, Money, opinion, politics, stock, Taiwan, Thoughts, trading, 中國 | 2 Comments

CNN provides clues to Tibetan White Scarves Organization

CNN interviewed James Miles from “The Economist”.  Miles was in Beijing in 1989.  He knows what an organized activity with Chinese style is like.  However, James Miles says he does not “see any organized activity.”  However, James Miles also provided some clue to the kind of organization (or the lack of) in this incident: 

“They marked those businesses that they knew to be Tibetan owned with white traditional scarves” 

The transcript of the interview is here:

http://www.cnn.com/2008/WORLD/asiapcf/03/20/tibet.miles.interview/ 

It is unlikely Dalai Lama is behind it.  However, white scarves had been organized.  Since no one has given these organizers a name, I get the naming right: White Scarves Organization.   

A better transportation and communication network for Tibet also means more difficult for government to control everything.  This organization may not have reached the sophistication it needs, but it certainly has put itself on the radar of everyone in this trade.   

India increasingly considers the Tibetan issue a baggage to its Chinese relationship.  However, India cannot just drop it, just like Israel cannot just drop Gaza.  If White Scarves Organization increases its sophistication, scale and damage, then it will push Mainland China to find a solution, be it a negotiation or harder crack down.   

Mainland China started to learn how to play the soft power of influence maybe about 10 years ago or so.  It is getting better.  However, it has not learnt how to play this game domestically.  Very often, it is still seeing domestic power as Us vs Them.  Therefore, the path to this lesson is uncharted.  A better way to achieve this wisdom is to learn it through the governance of Hong Kong since there is a lower level of mistrust against a former British colony inhibited by Hans.   

The sad news is, everyone is running against time, not the count down on Olympics, but the count down on Dalai Lama.  Dalai Lama was born in 1935.  He is 73 years old.  He remains healthy.  But everything has its time.   

When Dalai Lama passes away, then there will be no spiritual leader among the exile Tibetans.  A new Dalai Lama will take another 2 decades to become effective, if at all he will be a political figure in addition to his religious duties.  The movement will turn violent or die down among the Tibetans.   

Mainland China will take the opportunity to find a Dalai reincarnation domestically.  If this domestic Dalai Lama is any good, an end for these 2 Dalai Lama will be difficult.  The status of them will obviously be part of the negotiation and political solutions were provided at times during Qing dynasty.  Again, the mandate of heaven was delivered through draws.  A negotiation will then be decades away, if any.  No end will be in sight any of our life times.  This will last just as long as Palestinian cause is going to be.   

Who will get the most out of it?  India already dreads this outcome.  Tom Clancy and the like will have more material to write about.

March 21, 2008 Posted by | China, china politics, chinese, Current Affairs, Current Events, election, 西藏, opinion, politics, Taiwan, Tibet, 中國 | , , , | Leave a comment

How is Taiwan’s Election Affecting Your Portfolio?

Taiwan’s presidential election is to be held on 2008.03.22.A.  Since Taiwan is half a day ahead of US, the stations will open starting tonight.  What is at stake (of your wallet)?  CNN gives a decent last day summary: 

http://www.cnn.com/2008/WORLD/asiapcf/03/21/taiwan.elections.ap/index.html 

The first industry is computer component manufacturing.  Taiwan’s computer component manufacturing has the greatest market share in the world.  It will directly affect the manufacturing costs of everyone from Dell and HP to IBM.  Taiwan’s computer component manufacturers can produce any kind of PCs without outside vendors.  The only thing they lack is brand name.  If Ma Ying-jeouwins this election, the costs from these manufacturers will come down because Ma Ying-jeou’s policy will favour stronger commercial ties between Mainland China and Taiwan.   

Financial services industry will get a real boost.  If Ma Ying-jeouwins, that will create foreseeable stability required for Taiwan.  FDI will increase as a result.  Taiwan FIs will be able operate in Mainland, not only a greater amount of them, but also in a greater geographic span.  Currently, only 1 bank is allowed to operate in only 1 city in China.  Capital of Taiwan residents and companies held in overseas will also flow back to domestic market.   

Shipping and hospitality industries will get receive more customers from Mainland China.  Taiwan airlines will get a better coverage in the future.  Their air fleets will finally get the cash flow to finance needed replacements.   

However, this is not a sure win for Ma Ying-jeou.  DPP is within a striking distance.  The poll may suggest a comfortable lead for Ma Ying-jeouover DPP by US standard.  These polls are known to be unreliable not by the bias of the pollsters but by voters.  DPP voters traditionally lie to the pollsters or remain silent.  Conventional wisdom gives an additional 20% point to DPP. 

In the case of a DPP victory, it will not be the end of the world.  CPP may have learnt something no one is privy of in this election and thus gave sweet announcement to DPP’s outgoing president Chen Shui-bian in the past days to prepare for DPP’s victory.  If DPP indeed wins, computer component manufacturing will not get anything as a result.  FIs will not get the benefit above.  Shipping and hospitality will get some reward due to DPP’s convergence of its Mainland policy to Ma Ying-jeou.  However, the benefit will not be as great.  Agriculture has been rumored to be negatively affected by this election in the case of Ma Ying-jeou.  However, Taiwan does not have big publicly traded agriculture companies.   

The advantage of Taiwan’s agriculture over Mainland is the R&D side of agriculture.  The most potential of Taiwan’s agriculture is how to turn their R&D into more productive scale: for a bigger market and/or for more capital intensive firms. 

All Japanese firms with heavy investments in Taiwan will get affected.  One particular industry people may oversee is content distribution industry.  If KMT wins, these firms may get crowded by a Mainland fever.  So, these contents range from comic books to cables to films.

Since the results will only be known on Sat US time, the first trading day to react is Monday.  There is no need to rush for anything.  Do not place bets in haste.

March 21, 2008 Posted by | business, China, china politics, chinese, Current Affairs, Current Events, economics, election, 馬英九, finance, opinion, politics, stock, Taiwan, Thoughts, trading, 台灣, 中國 | 3 Comments

Should Mainland China meet with Dalai Lama?

Mainland China is having problems with Tibet.  It probably needs help to manage this problem.  After all, it has been close to 60 years now since 1949, when CCP removed KMT from China, and the problem persists for these 60 years.  And there was not a problem before 1949.  Who will Mainland China go to for help?  Dalai Lama?

If Dalai Lama cannot stop the protest, then what incentives are there for Mainland China to negotiate with him?  Mainland China may as well ask Dalai Lama: Can you forward me to someone who is actually in charge?

CNN’s story regarding Dalai Lama’s “powerless to stop the protest”.

http://www.cnn.com/2008/WORLD/asiapcf/03/20/tibet.unrest/index.html

Dalai Lama has backed off from the independence demand.  Mainland China’s Premier Wen claims to have interests meeting Dalai Lama anytime (above CNN story).  Yet Mainland China has not managed to meet Dalai Lama for decades.  If one were to check on the conditions placed by Mainland China, Dalai Lama has satisfied them public for years.  This is a poor decision on the part of Beijing.  

Why isn’t Beijing doing anything with Dalai Lama?  

Partly because Beijing thinks Dalai Lama is fading away and an agreement with him will not bring much fruit anyway.  Some Tibetans started a returning trip to Tibet from India:

http://www.dnaindia.com/report.asp?newsid=1156901

Even though Dalai Lama public appealed to the opposite, with hints from India, this movement is not going away.  This is the first public ineffectiveness of Dalai Lama to control the Tibetan cause.  After all, time goes by.  A new generation of Tibetans are born and raised in India.  A new generation of politicians will come and demand power from Dalai Lama too.  

Who will be the next negotiator against Beijing if Beijing continues to practice this disengagement from Dalai Lama, and when Dalai passes away?  A Hindi speaking Tibetan political leader will definitely not be friendlier than a Dalai Lama who was born in Tibet and has mingled with Hans during his younger years.  What if the exile political elite controls the reincarnation process and have a blond Dalai Lama who speaks every language from English, French to Arabic but not Chinese?  How much friendlier will this negotiator be? 

The miscalculation from Beijing’s part is they never understood the influence of religion, although communism was not far off from a religion.  Materialistic improvement cannot overcome all the political difficulties CCP faces in Tibet.  They still have to overcome the lack of inclusiveness in the political process, a respect of religious practice, in addition to typical political problems of wealth distribution, etc.  Beijing continues to consider the problem will go away by 1) the passing of Dalai Lama 2) improvement in material life over the years in Tibet and 3) Beijing will find the next Dalai Lama in Chinese soil.  

Beijing continues to forget to put themselves into others’ shoes.  Beijing should be mindful that other peoples (like Tibetans) may have the kind of persistence and endurance that Chinese had during the Japanese invasion.

March 20, 2008 Posted by | China, china politics, chinese, Current Affairs, Current Events, 西藏, opinion, politics, Thoughts, Tibet, 中國 | , , | 3 Comments

Radio Appearnace: Taiwan Presidential Election

Time:

03.22.F.1730 – 1830  EST
03.23.A.1200 – 1330  EST

http://www.ccue.com/toronto/radio/

March 19, 2008 Posted by | China, china politics, chinese, Current Affairs, Current Events, election, opinion, politics, Taiwan | Leave a comment

Mainland drops another sweet before Taiwan Presidential Election

Mainland China authorized sand and gravel export to arrive Taiwan via Okinawa, Japan.  This is the second reconciliatory action offered by Mainland China to Taiwan.  The last one is about 1 week ago, letting Taiwan banks to operate in China.  Why is Mainland China offering so many goodies at this time?

Is Mainland trying to nullify all the negative rhetorics against Mainland (and thus unification) several days before the election?  Mainland could also be thinking DPP may be able to produce anther dramatic episode to win.  Mainland may want to set the stage for the next President, whoever maybe.  One would also be tempted to correlate to Mainland’s on-going People’s Congress as well.  Or, is this an act to balance to negative press in Taiwan regarding Tibet?  

This is a planned announcement.  So, any current event on the Mainland side is unrelated.  The first scenario is quite likely.  For it to be an effective tool to set a stage for the next president, this announcement needs to be made after president election, or even after inauguration.  If the first scenario is correct, there maybe more announcement in the future few days, although there is too little time between now and president election (this Saturday).  

These specific announcements must have been studied to minimize the possible distortion by DPP supporters against KMT candidate.  So, they were not meant to have a great general appeal, but targeted industries.  However, this announcement is being over crowded by news related to Tibet.  Unfortunately, this announcement’s effectiveness is drowned out. 

Again, it takes two to tango.  President Chen also took the bait.  So, at least DPP took it as a positive for their candidate.  So, these moves are very intriguing moves by Mainland.  Time will tell the true intent.

March 17, 2008 Posted by | China, china politics, chinese, Current Affairs, economics, election, opinion, politics, Taiwan | 2 Comments