Word: honge
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...since become the symbol in China of a naive bunch of foreigners getting hooped by Wall Street sharpies. It's been the subject of withering public scorn in China and has drawn pointed private criticism from the highest levels of the Communist Party, banking sources in Beijing and Hong Kong have said. The message: Never again. All of which makes CIC's critics in China wonder why Gao, a soft-spoken graduate of Duke University's law school (class of '86), bothered to get on the plane...
...clear, despite this week's carnage on Wall Street, that anything has changed significantly. To the extent that sovereign wealth funds are talking to desperate-for-capital bankers in the U.S. - and, as Gao's trip shows, they are talking - the terms of the discussions, one senior Hong Kong-based banker said today, are likely to be very harsh for any potential recipient of capital: "You're basically looking at structuring a deal at this point in which there is no downside - none. Even if a company goes under, like Lehman, you're first in line to get paid...
...China Construction Bank - that themselves are getting hurt by an economic slowdown and a real estate slump at home. "This is a significant policy initiative aimed at supporting China's leading financial institutions at a time of global turmoil," says Jing Ulrich, chairman of China securities at JPMorgan in Hong Kong. It's another way of saying to CIC's Gao Xiqing, If you come home from New York having increased our stake in Morgan Stanley, it had better be the sweetest deal anyone in Beijing has ever seen...
...Tainted Baby-Food Shock In a widening scandal, at least three babies have died and more than 6,200 have become sick after consuming milk contaminated with the nonfood substance melamine. Beijing is investigating at least 22 companies that packaged tainted milk and yogurt sold in mainland China and Hong Kong. Melamine, a plastic compound that shows up as protein in some food tests, has been used by certain manufacturers in China to make their products appear more nutritious. In 2007, thousands of pets in the U.S. died after eating pet food contaminated with Chinese melamine...
...Glenn Maguire, chief Asia-Pacific economist for Société Générale in Hong Kong, expects that Asia's central bankers will move towards looser policy to support their economies and head off any possible liquidity shock from the U.S. meltdown. "It's pretty clear that the tightening cycle in Asia is over," says Maguire. Tuesday's market tumble will likely convince policy makers "to be much more accommodating on policy immediately." That may be the only good news in a dark day for investors...