Thursday, July 31, 2008

Book Review: Superclass

When I picked up a copy of David Rothkopf's book on "the global power elite and the world they are making", I was assuming from the cover image of a world under the thumb of a pin stripe wearing man that this would be another diatribe bashing the rich and powerful.

Fortunately, it was a well balanced study that provides an overview of what it takes to be one of the estimated six thousand strong "superclass", how the superclass network and carry on their "business". The later is an interesting point as the superclass covers people from a wide variety of backgrounds, including the obvious candidates from the world of wealthy business types, CEO's from some of the world's largest companies and political leaders. Also included were religious leaders, pop stars, athletes and scientists. In one sense, the superclass is representative in that it draws people from a variety of backgrounds. (For other purposes the group is weighted towards male business and political leaders from the world's wealthy economies.)

While the absence of any conspiracy theories and a corresponding degree of objectivity was welcome, by the time I reached the end of the book, I was left feeling that I had not learned anything new and could just as easily have been reading a series of newspaper or magazine articles as much as a book. Put differently, while the book represented a useful summary of the world's elite and how they operate, it was ultimately a rather bland read that offered little in the way of insight.

Wednesday, July 16, 2008

"Professionals" still bullish on Hong Kong property

The weekly Property Post supplement to the South China Morning Post carried a front page article on how professionals are still bullish on the Hong Kong property market.

Refreshingly, the professionals being quoted were actually investors as opposed to permabull real estate agents. These are investors who put their own money into the market. The expectation was for a small drop in prices (5-7%) due to a combination of factors (declining share indices, small rises in interest rates and general economic uncertainty) before the fundamentals reassert themselves and the uptrend continues. All of the investors quoted were intending to hold their positions and, in most cases, look for opportunities to add to them.

Among the fundamentals cited were:

1. limited supply of new units

2. rising rental incomes (up 19% year on year)

3. cheap debt finance (still below 3% for new loans)

4. readily available debt finance (banks are still keen to lend and have excess deposit build up)

5. lack of alternative places to invest (close to zero percent interest on short term bank deposits and inflation rates above 5%)

The longer term case for property investment in Hong Kong remains solid.