Keith wrote: We live in interesting times! Don't we though? So what do you guys think will happen in the Japanese and Chinese markets/economy when the US attacks Iraq? What about Wall Street? Will a New Year's timing make any difference?
I found it unusual that the NYT had three separate articles about Japan's banking problems yesterday. One an OpEd piece and the other two under International. The OpEd piece largely asked the question if the Bush administration knew what is was doing pushing Japan to reform, as in, be careful what you wish for, and the other two explained and complained about the situation from different angles. Would Reform Ruin Japan? @ http://www.nytimes.com/2002/10/29/opinion/29MURP.html Japan's Sick Banking System Resists Therapy @ http://www.nytimes.com/2002/10/29/business/worldbusiness/29BANK.html Japan's Zombie Businesses Live On @ http://www.nytimes.com/2002/10/29/business/worldbusiness/29ZOMB.html Here in the States we like to think that we remade Japan after defeating her 50 years ago, but we didn't really change the native bureaucracy that much. McArthur made significant changes, but the reforms were superficial at the middle management on down level. After we turned the country back over to them, the native bureaucrats reestablished their hold on getting things done at the local level. Patrick Smith made this point repeatedly in his Japan: A Reinterpretation, essentially debunking the Reischauer 'Chrysanthemum Club's' presentation of Japan to the post-war Allies. The more I restudy Japan as an adult 30+ years away from living there as a teenager, the more I agree. The Japanese adopted our institutional ideas but adapted it to their peculiar native practices, just as SE Asian Muslims practice a different version of Islam than do Arab Muslims. Yet today too many seem confused that they aren't exactly like us in their application of an imported idea. You'd think that we'd have learned the lesson by now that not everything we do is golden, and not everyone will use democracy and 'free market capitalism' the same way. All of this should be foremost on our minds as people are making plans to refashion the Middle East after initiating a war for liberation and ignoring what is happening in the Far East. I don't know how else to enlighten so many people who have not traveled or lived elsewhere so that they have the eyes, ears and head to see the world from other's perspectives. It's not just a matter of not speaking other languages, or learning more world history, or reading more international news. There is still a pervasive provincialism that we must constantly fight to minimize. Otherwise, we will not be prepared for the consequences. Karen Keith wrote: Re your posting below, the FT today confirms (in its own more restrained way) the language that Howson uses to describe the possibility of buying Chinese "A shares" (". . . very, very hot ideologically . . . very, very hot commercially . . . and it's going to potentially have a very, very big impact on the capital markets.") Apparently China's head Securities Regulator, a Mr Zhou, outlined the plan to fund managers in Singapore last week, and this makes the prospect almost certain as soon as the five-yearly Communist Party Congress in Shanghai is out of the way. Even apart from the possibility of portfolio investment in China, I seem to remember reading somewhere recently that foreign direct investment (FDI) in Chinese firms is now poised to overtake FDI in America. We live in interesting times! From PBS Nightly Business Report. Comment? Speculation? Bets? - KWC 10/28/02: Stock Trading Has A Sinister Side In China @ http://www.nightlybusiness.org/trnscrpt.htm#STORY3 SUSIE GHARIB: Buying stock in companies is a pretty easy process in the United States, but that's not true elsewhere in the world. Take China, for example. Noah Smith reports. NOAH SMITH, NIGHTLY BUSINESS REPORT CORRESPONDENT: Twelve hundred of China's best companies are listed on its domestic stock markets. But, sorry, they're off limits to foreign investors. Shares in China's listed companies are divided into three main types. So-called A shares are traded on the open market but constitute less than a third of the total. Almost all the rest are held by the government in the form of state shares and legal person shares. The state shares cannot be sold even to private Chinese investors and none of them can be bought by foreigners. FRASER HOWIE, CHINA SECURITIES SPECIALIST: That has created a very warped marketplace and limits the effectiveness of the stock market, the effectiveness in terms of allocating capital, of bringing market discipline to the listed companies themselves. And, also, it's now put the government in a very difficult position in that it's unable to raise more funds off its existing share holdings. SMITH: Beijing needs to raise money, in part to support billions of dollars in pension liabilities. And since China's entry last year in the World Trade Organization, pressure has been building to ease restrictions on foreign investment. In the past few months, several government departments have issued statements that show support for foreign investment in listed companies, but there hasn't been any official policy change. Meanwhile, reports in China's state press say that pilot deals are in the works. NICHOLAS HOWSON, PAUL, WEISS, RIFKIND, WHARTON & GARRISON: Something is up. No one is sure exactly what is up, but my bet would be that within the next six months you will start to see experimental or ad hoc or specific approvals of disposals of state owned shares, legal person shares to foreign investors. SMITH: Such talk has China's more aggressive listed companies looking for ways to tap overseas money. We're talking with some foreign investors, he says, but right now we're limited to cooperating with foreign companies on product development. Foreign investment in listed Chinese companies could have a strong positive impact on issues like transparency and corporate governance. Currently, even poor performers are supported by their state owners and are shielded from shareholders concerns. HOWSON: It's very, very hot ideologically. It's very, very hot commercially because it's going to dilute the state's interest and it's going to potentially have a very, very big impact on the capital markets. SMITH: That's one reason test cases are expected before current regulations are changed. In the meantime, eager foreign investors and Chinese listed companies can only hope that Beijing sees the benefits of opening its markets to the world. Noah Smith, NIGHTLY BUSINESS REPORT, Beijing. Outgoing Mail Scanned by NAV 2002
