THE GAMBLING CULTURE THAT IS FUELLING CHINA'S HOT MARKET

 
Hugh Young
Thursday, June 07, 2007
 
 
China is an emerging economy – and history tells us all emerging economies experience hot and speculative stock markets as they develop. Excitement and volatility are nothing new to an emerging market in the Far East.

Of course, China is bigger. But it is reminiscent of Taiwan's boom and bust stock market of the late 1980s. Both countries share a gambling culture – on sporting events, card games, dice or, as it now turns out, stocks.

Having taken 25 years to reach 1,000 in late 1986, the Taiwan Stock Exchange rocketed to 12,495 by February 1990. At the peak, some 10 per cent of its population were trading daily. People stayed away from work so they could spend time investing. On some days, market volume exceeded activity on the New York and Tokyo bourses combined.

Eventually, Taiwanese regulators took action and the market collapsed to 2,560 in September 1990. The fall was painful, but the economy emerged in better shape. Since relatively few companies were listed, the impact of the fall on overall investment and production was not great. The economy was also protected by large foreign currency reserves. Local investors were stoical, looking back at the good times and regarding the experience as a lost bet.

Beijing has so far not been as bold and successful as Taipei in cooling its stock market. Last week's increase in stamp duty from 0.1 per cent to 0.3 per cent seems merely tinkering at the margin, even if it has caused shares to fall.

In terms of economic controls, the obvious thing to do would be to raise the cost of borrowing, but this would have ramifications across the economy, attracting further speculative inflows and putting more upward pressure on the currency. The suspicion is that Beijing doesn't want to see its retail investors shouldering large losses if its actions caused the market to plunge.

Perhaps the Chinese government should look to increase supply by having more initial public offerings of state businesses. One option is to accelerate the listing of H shares (Hong Kong Stock Exchange) on the A share (Shanghai stock exchange) market, which would mop up some liquidity (and improve the standard of listed companies on the mainland). But right now the government is more interested in encouraging flows the other way. It has reduced barriers to domestic investors investing overseas, which is sensible, but investors are disinclined to diversify when they think returns will be better in their own market.

Whether the government takes radical action and succeeds in cooling the stock market, or whether it ends in tears for local investors, the impact on the wider economy, as with Taiwan, may be limited. There has been a flurry of IPOs but many businesses and industries are still state-owned, somewhat immune from fluctuations in bourses. Furthermore the government has the saving reserves to invest if capital from the stock market dries up. Depending on the degree of the fall, economic growth may slow – no bad thing, as it would ease the inflationary pressures in some parts of the economy.

We would welcome a slowdown in China's stock market and economic growth as we have been concerned for some time about the rate of its rapid expansion. However, it is unlikely to prompt us to change our strategy on capitalising on China's undoubted potential. As long-time (and long-term) investors in China, we've always been more comfortable investing via Hong Kong, including H shares. In general, companies there are of better quality and better regulated than on the mainland. (That said, at least we are now seeing profit margin improvement on the mainland and real earnings growth.) So they provide a more prudent way of gaining exposure to China's growth.

It's worth highlighting that the mainland exchanges are in effect off limits. (China is still largely a closed economy for investment purposes.) We are disinterested observers, because we do not have any holdings there. That will change in time as market access and company fundamentals improve. But there's no screaming urgency for us to plunge into the mainland while we see better quality at its edges

The writer is managing director of Aberdeen Asset Management Asia

中国股市大起大落源于赌博文化?

 
作者：安本资产管理亚洲公司董事总经理休•扬(Hugh Young)为英国《金融时报》撰稿
2007年6月7日 星期四
 
 
中国是一个新兴经济体，而历史告诉我们，所有新兴经济体在其发展阶段都经历过火爆和投机性的股市。对于远东地区的新兴市场来说，兴奋和波动都不算新鲜。

当然，中国是一个规模更大的新兴经济体。但它让人回想起上世纪80年代末兴衰更迭的台湾股市。两地都流行一种赌博文化——押注于体育赛事、扑克游戏、骰子，而现在则是股票。

台湾股市于1986年底才达到1000点，历时25年，而在1990年2月份飙升至12495点。在大盘处于顶部之际，台湾约10%的人口每天都在炒股。人们不去上班，这样他们可以有时间去投资。有的时候，台湾股市的成交量超过了纽约与东京证交所的总和。

最终，台湾监管机构采取了行动，1990年9月份市场狂泻至2560点。股市下跌是痛苦的，但经济结构得到了改善。由于上市公司数量相对较少，因此股市下跌对投资和生产活动的影响并不大。强大的外汇储备也为经济提供了保护。当地投资者宠辱不惊，回想着以往的好时光，将此次经历视为一次失败的赌注。

迄今为止，在为股市降温方面，中国政府并不像台湾那么大胆和成功。中国政府上周将股票交易印花税从0.1%上调至0.3%，似乎只是意在旁敲侧击，不过该举措仍导致股市大跌。

在经济管控方面，显然应该采取提高借贷成本的措施，但这可能在整个经济中造成复杂的影响，吸引投机性资金进一步流入，并加大人民币升值压力。人们猜测，如果其举措导致市场暴跌，北京不希望看到散户投资者蒙受重大损失。

或许中国政府应该考虑让更多国有企业上市，以提高股票的供应量。一项选择是加快H股（香港交易所(Hong Kong Stock Exchange)交易的内地股票）在A股（上海证交所）市场上市的步伐，此举可以吸收部分流动性（同时提高内地上市公司的标准）。但眼下中国政府对鼓励资金反方向流动更感兴趣。政府已降低了国内投资者投资海外的门槛，此举颇为明智，但在投资者认为本土市场的回报率会更高时，他们不愿意将其投资多样化。

无论政府采取激进措施并成功使股市降温，抑或最后是以国内投资者的泪水收场，对整个经济的影响可能非常有限，如同台湾的例子所表明的那样。近年来有很多公司上市，但许多企业仍为国有，在一定程度上并不受股市震荡的影响。此外，如果来自股市的资金干涸，政府还有存款储备可以投资。根据股市下跌的幅度，经济增长可能会有所放缓——这不是件坏事，因为它可以缓解部分经济领域的通胀压力。

我们会欢迎中国股市及其经济增长放缓，因为我们有时对中国经济迅速的扩张速度感到担忧。不过，这不太可能促使我们改变策略：即利用中国勿庸置疑的潜力。作为在中国的长时间（和长期）投资者，我们一直更乐于通过香港进行投资，包括投资H股。总体而言，香港公司的质量和监管都优于内地企业。（话虽如此，至少我们目前已看到内地企业利润率提高和实际收益增长。）因此，它们提供了一种更为谨慎的、分享中国经济增长的途径。

值得强调的是，内地证交所实际上是块禁地。（就投资目的而言，中国在很大程度上仍是一个封闭的经济体。）就此，我们的观察无涉利益，因为我们在内地没有任何投资。但随着市场准入和企业基本面情况的改善，情况也将发生变化。尽管我们看到内地企业的质量在提高，但我们不会急于进军内地市场。