Category Archives: Covid-19

China Sets ‘Highly Challenging Target’ for Economy

March 7, 2022 By in China, Communist Party, Coronavirus, Covid-19, Investment, Politics, Real Estate, Stock market Tags: , , , , , , , , , , , , Leave a comment

Premier Li Keqiang stresses stability and the importance of 100 million ‘market entities,’ even as Beijing keeps up its regulatory assault on the private sector.

China will target growth of 5.5% in 2022, at the high end of expectations but still far off the double-digit pace we’d grown used to, as the Middle Kingdom grew to become the world’s second-largest economy.

Premier Li Keqiang delivered a forecast of GDP growth of “around 5.5%” while giving his annual work report to the National People’s Congress, the Chinese Communist Party’s yearly agenda-setting meeting for the country’s economy.

“This is a highly challenging target,” Société Générale economists Wei Yao and Michelle Lam say in a research note. It is an acceleration from the two-year compound growth 5.1% rate established in 2021, and there are plenty of headwinds blowing against the Chinese economy.

This story first appeared on Real Money, the premium site of TheStreet.com. Click here to visit the original story.

Top of the list: China still has a “zero-Covid” policy that requires a disruptive snap local lockdown wherever cases break out. It’s hardly a realistic approach in the face of the hyperinfectious Omicron variant. A leading Chinese virus expert has hinted at a change in approach, as I mentioned on Friday, with the potential for China to move toward “Chinese-style coexistence with the virus,” whatever that means.

It’s vague language that allows the Chinese Communist Party to carve out any old “live with Covid” strategy that it likes, explaining away any aberrations by saying they’re necessary in China. It would be a face-saving step designed to discourage too many people from asking why such harsh lockdowns were ever necessary.

But the CCP has so far struck a fine balance by avoiding an overload of the Chinese healthcare system, which is not strong outside the major cities, while permitting much of daily life to return to normal. This has been achieved by barring nearly all overseas travel. The number of Chinese passports issued in the first half of last year was just 2% of the number issued in the first half of 2019.

China set a growth target of “over 6%” for 2021, and official growth came in at 8.1%. Given the wild swings in the economy produced by the pandemic, China also cites the 5.1% average compound annual growth rate over 2020 and 2021, combined.

Li, speaking to around 3,000 delegates in the Great Hall of the People on Saturday, laid out the lowest growth target since 1991. He acknowledges that China “could face more difficulties and challenges this year,” and pledges that China will issue C¥2.5 trillion (US$396 billion) in tax refunds in 2022, in support of the private sector.

President Xi Jinping directed a series of regulatory crackdowns over the course of the last 18 months, in particular targeting Big Tech but also highlighting the “disorderly expansion of capital.” Quite what the “orderly expansion of capital” looks like is unclear; the criticism, part of the overarching “Xi Jinping Thought” that’s now codified in the Chinese Communist Party charter, gives license for the party to curb the power of the private sector, and take down a notch both Chinese “unicorn” companies and its billionaire entrepreneurs.

Meetings like the NPC owe a lot to the Marxist-Leninist roots of the Chinese Communist Party, and the “five-year plan” style of a command economy. Li praised the work of “market entities, over 100 million in number,” for having responded “with fortitude and resilience” to the shocks of the last year. “Employment is pivotal to people’s well-being,” he continued, suggesting the party is not at this time in a position to push its difficult overhaul of its inefficient, bloated state-owned enterprises. “Our efforts to keep market entities afloat are aimed at maintaining stable employment and meeting basic living needs.”

China is resisting direct stimulus from the government to support the economy as it slows, and Li said the government will target a fiscal deficit of 2.8% of GDP this year, down from 3.2% in 2021. But economists believe Beijing will continue to roll out dovish policies this year, and is even warming to the property sector, where prices have gone into reverse. It kept its inflation target at “around 3%,” and the forecast for land sales stays flat, an optimistic call given that many parcels of land are going unbought due to the financial deleveraging forced on developers.

The SocGen team calculate that the measures announced at this meeting equate to fiscal stimulus of around 3% of GDP. That’s one percentage point larger than the economists expected. Li frequently stressed “stability,” and he repeated the Communist Party’s clarion call that “housing is for living, not for speculation,” suggesting it will pull support once again if home prices start to rise.

It is not yet therefore time to consider buying the beaten-down shares of Chinese developers. Li warned that “land prices, home prices and general housing market’s expectations should be stabilized,” with affordable housing and an expansion of the rental-housing stock high on his list of priorities. Nomura says the overall impression, coupled with no mention of imposing a property tax, is that policy has turned “slightly friendly” toward the beleaguered property sector.

The NPC, coming on the heels of the closing ceremony for the Beijing Winter Olympics on February 24, marks the second major marker for the Chinese government this year. It is building toward the 20th Party Congress, likely in November, the latest installment of a key leadership overhaul that’s held once every five years. At this Party Congress, Xi will be seeking an unprecedented third term as president, having pushed through a change in the constitution that will allow him to run again. He will surely be unopposed but must still muster the support of the party. Xi wants to be able to declare victory over the coronavirus and point to solid steering of the economy.

Li did not mention the Russian invasion of Ukraine, but the geopolitical distress haunts this year’s proceedings. China is staying largely silent, not wishing to criticize its ally, Russia, but is therefore giving tacit support of the war. It is attempting to cast itself in the role of peacemaker, but it may find it hard to push Russian President Vladimir Putin to the negotiating table at a time he appears recalcitrant. Putin is insisting on the “demilitarization” of Ukraine, but China – whose officials stress over and over again the importance of national boundaries and “sovereignty” – has done nothing to criticize the clear violation of Ukraine’s borders.

Chinese shares are dropping today in synch with other Asian markets. The CSI 300 of the largest companies in Shanghai and Shenzhen ended down 3.2%. As is usual when there’s selling in this downturn, Hong Kong has fared worse than most, with the Hang Seng lurching 3.7% lower.

It’s another heavy day of selling on Asian markets on Monday, with the Topix in Japan closing down 2.8%, and all major indexes lower. The day began badly after oil shot up, with Brent crude up 8.9% at the time of writing, having risen briefly above US$130 per barrel. That hurts most Asian nations, which bar Malaysia all import large amounts of oil. The United States is leading the charge in figuring out how to restrict and sanction oil shipments out of Russia, the world’s third-largest oil exporter.

The Sensex in India is also down 2.7% at the time of writing. China and India bookend the United States as the three largest importers of oil in the world.

Indonesia is also a major oil extractor, although the former OPEC member is now a net importer of oil. Still, the production levels out of Southeast Asia are insulating those markets slightly on Monday. The Jakarta Composite Index were down 0.8%, Singapore stocks were 1.0% lower an hour before the close, and Malaysian equities were off 2.3%.

Will Asia Catch Back Up in 2022?

January 4, 2022 By in Asia, Australia, China, Communist Party, Coronavirus, Covid-19, Geopolitics, Hong Kong, Investment, Politics, Real Estate, Stock market Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , Leave a comment

For Asia, 2021 was tease. It was a year that often promised something better, only to deliver everything worse. It’s hard to escape the feeling at the end of the year that we are back in much the same position as when it began.

This story originally appeared on Jan. 3, 2021 on TheStreet.com and its subscription service Real Money. Click here for the original story.

Will 2022 see the Asia Pacific region finally escape its cycle of opening up, then locking down again? There were tentative attempts to welcome foreign visitors once again in countries like Thailand, Vietnam and Indonesia. That gave way to a hellish pattern of waves of virus washing over the region, with all the travel bans, curfews and stay-at-home orders that unfold in response. Asia’s production schedules and shipments have been heavily disrupted as a result.

China persists in its zero-Covid strategy, an ultimately impractical approach that is exported to Hong Kong as East Asia’s financial hub attempts to open the mainland borders. Anyone returning from overseas must spend three weeks in an expensive hotel. China will likely maintain its position at least until the “coronation” of President Xi Jinping for a third term. That will come in the power reshuffling confirmed during the weeklong 20th National Congress, the latest in a series of once-every-five-years major meetings that is due to happen in October or November. March will see the growth target set at the annual National People’s Congress.

Before that, the Beijing winter Olympics will go ahead from February 4-20 in front of Chinese spectators, if all goes to plan. The winter events will make Beijing the first city to host both summer and winter games. But the political undercurrents are strong. The Olympics will go ahead minus diplomatic delegations from the United States, United Kingdom, Canada and Australia, in protest of the human-rights violations in China’s westernmost Xinjiang province, and the death of civic society here in Hong Kong. China says those politicians weren’t invited in the first place…

Other governments in the Asia Pacific region, led in this regard by Singapore, Australia and New Zealand, appear willing to try something other than “zero Covid.” Ratchet up the vaccine rate, do your best to protect and triple-jab the vulnerable, and learn to “live with Covid.” This seems the sensible approach.

When you look at the 26.9% gain for the S&P 500 in 2021, the 21.0% gains for the Eurozone stocks in the Euro Stoxx 50 index, and the 14.3% advance in London’s FTSE 100 index, it has been a disappointing year for Asian equities. There’s scope for them to gain ground in relative terms.

The S&P Asia Pacific Broad Market Index, which tracks developed markets in Asia, posted a loss for 2021, down 0.6%. But that was a better showing than the S&P Asia Pacific Emerging BMI, which netted a 2.3% decline for the year. China-linked plays had a torrid time.

There were solid gains for the Tokyo market, with the broad Topix index up 10.4% for the year. But it was a tougher time for export-oriented companies, as reflected in the poorer 4.9% showing for the Nikkei 225, which tracks big-caps and multinationals. Those kinds of companies should benefit in the year ahead from a weaker yen, as the Fed boosts the dollar by raising rates.

I’ve indicated before that the Japan market will be a safe haven in 2022. We can be certain that the central Bank of Japan will maintain its exceedingly easy monetary policy, with Japanese interest rates still negative at -0.10%. Inflation is not a concern, as yet, in Japan – in fact, it is desirable. The central bank and the government have struggled to achieve a 2% inflation target since setting that as a goal way back in 2013.

The Japanese economy should post strong (for it) growth of 3.2% in 2022, according to IMF estimates, up from 2.4% last year. It’s a similar pace of growth as you’d find in South Korea, Taiwan and Singapore, all typically more dynamic in recovery mode. Underpinning it all, the Japanese government under new Prime Minister Fumio Kishida passed a record US$490 billion stimulus spending package in November, bucking the trend toward tapering in other developed markets.

Value Partners, the Hong Kong-based asset manager, indicates that “investor sentiment towards Japan remains weak, and needs time to pick up,” it states in its 2022 market outlook. “Corporate earnings will likely continue to recover and we view that Japan will be one of the very few countries that will continue to have earnings upgrades.”

Australian stocks also delivered steady if not stellar performance, with the S&P/ASX 200 index up 13.0%. “With pent-up demand following Q3 lockdowns, a high vaccination rate, elevated confidence and rebounding mobility, the stage is set for a strong six months” in Australia, Nomura predicts in its global economic outlook for 2022.

Singapore’s Straits Times index didn’t quite post double-digit gains, up 9.8% in 2021. Like Australia, Singapore is now exceptionally poised having vaccinated the vast majority of its populace. The jobs market is improving, while the strength of high-end manufacturing and pharmaceuticals should stand the city-state in good stead for the year ahead. It’s a likely outperformer.

The problems with supply chains globally hurt South Korea, where the Kospi advanced only 3.6% all year. Despite the heavy influence of semiconductor producers on the Seoul market, electronics- and tech-related exporters did not experience the stellar kind of year they had in 2020, when the world couldn’t get enough gadgets to keep people company in lockdown.

Korea will have presidential elections in March, which add an element of uncertainty to the market. The central Bank of Korea also became the first in Asia to raise rates back in August, did so again in November, and will likely continue to tighten throughout 2022 to combat rising prices and home-price inflation. Rates may rise to 1.5% by the end of the year. That makes it a hard market to like for now, with South Korea’s highly indebted population sure to struggle under straightened circumstances. There’s pressure on the Seoul home market, where prices have doubled in the last five years.

The strongest showing in Asia came in India, where the Sensex posted a 21.7% gain for 2021, with the Nifty 50 up 23.8%. In fact, it’s been a very strong showing by the Mumbai market since the original depths of the first wave of Covid back in March 2020. The Indian market has more than doubled since then, with the Sensex up 111.1%.

That’s come on the back of breakneck growth, the world’s strongest major economy with a pace of 9.5% in 2021, likely to moderate to 8.5% in 2022. Reflecting that slowdown, Indian equities have flagged since mid-October, down 5.7% in the last 10 weeks of the year, so there’s no surging strength to carry them into the new year.

“While India enjoys a long-term secular bull market with expanding new-economy sectors, and is still in the upward profit cycle, we are cautious as valuations are at extreme levels versus the rest of Asia,” Value Partners notes.

Taiwan also outperformed as a market, a rare year when it did not move in lockstep with South Korea. The Taiex index added 23.7%, with electronics makers booking strong orders. Taiwanese companies also benefitted from sanctions and restrictions on some mainland Chinese manufacturers. In Taipei, retail traders became very active in the market, and have not been hampered by the higher rates seen in Korea. The Taiwanese central bank may start to raise rates next year, which could stem the tide of retail flows.

There was a narrow 0.2% loss in the Philippines, where the process of vaccinating 110 million people across 7,000 islands proving exceptionally difficult. The task is even more trying in the world’s largest archipelago, Indonesia, with the world’s fourth-largest population of 274 million people spread across 17,000 islands.

The commodities boom and increased digitalization of the Indonesian economy drove the Jakarta market up 10.1% in 2021. Vaccination rates and the success of “back to normal” business will dictate the future direction of equities in both island nations this year.

More than anything, 2021 became the year that the full vulnerability of investors in China was exposed. A series of sudden, overnight regulatory actions made it eminently clear that the Chinese Communist Party puts its own interests and its diktats over the Chinese people far above any common capitalist concerns about investor protection.

First, the for-profit tutoring industry was essentially banned. Then young people were restricted to at most three hours of videogame playing over the weekend. Next came an assault on Big Tech, with all China’s largest tech companies called in for a dressing down, and ordered to change their ways. Most recently, the country has started revising its securities laws to restrict how and where Chinese companies can go public.

Caught in the crossfire were the poor investors who bought into the “China story,” such as those who subscribed to the international offering of DiDi Global, the Chinese ride-haling market leader. Its business should be a huge growth market – scratch that, it is a huge growth market. But DiDi ran afoul of rules that didn’t exist, fulfilling the requirements of securities regulators for a foreign listing but failing to appease the newly-powerful, previously obscure cyberspace-security review office.

DiDi saw its apps stripped from Chinese app stores, and was barred from signing up new customers. That tanked its business, with the company last week posting a US$6.3 billion loss for the first nine months of the year. And it tanked its stock, an immediate descent days after its June 30 listing that leaves it down 64.8% as of the end of the year.

So it was Chinese and Hong Kong stocks that saw the most-pessimistic mood all year. The CSI 300 index of the largest stocks in Shanghai and Shenzhen fell 5.2% over the course of 2021.

Life was even worse here in Hong Kong, where the much-hated National Security Law continues to be used to pound pro-democracy activity, and anyone deemed “anti-patriotic.” The benchmark, the Hang Seng index, plunged 14.1% over the last 12 months.

Hong Kong’s mix of overseas-inclined Chinese companies, in particular those that also have U.S. listings, drew it down. The city also has a hefty influence from Chinese property developers. Many of those are in or on the brink of default, led by China Evergrande Group, which lost virtually all its value, down 88.8% over the last 12 months.

Hong Kong has been my home for the last 20 years, but it’s terrible to see it suffer so. We are walled in by excessive quarantine, treated to an East Germany-style police state, and are losing the international attractiveness that a once-free city has surrendered.

In Beijing, there is no sign that Chinese regulators will ease up their pressure on overleveraged developers. President Xi has cast scorn on investor-owners, repeating his insistence that “Houses are for living in, not for speculation.” This flies in the face of conventional wisdom, where the incredible unpredictability of the stock market leads anyone with any money to look to invest it in property, first and foremost.

Not that consolidation will be a bad thing in the long run in the property industry. There are too many Chinese developers, 103,262 of them as of 2020, the last count by Statista, a number that grew 21.1% in a decade. Fly-by-night behavior and overborrowing to fund rapid development drove land prices sky high, and homes in the biggest cities are the domain only of the wealthy.

But it is a painful correction as the model is disrupted of pre-selling flats off plan, then racing through development to the next project. Local and provincial governments have based their budgets on aggressive land sales projections, too, so there’s desperation at that level and reports of deep wage cuts among local Communist Party officials.

I don’t see any way to recommend Chinese stocks in 2022, except as a completely contrarian or bottom-feeding play. They are too unpredictable at this stage. Someone is going to make a lot of money when Alibaba Group Holding rebounds. It’s an extremely profitable company that saw its share price fall 47.8% in 2021 in a move that had nothing to do with its fundamentals. But a bet on the company is essentially a bet on what kinds of regulations the Chinese government will implement, without warning. It is not your conventional rebound story.

If you know what social changes Beijing is going to push next, and which companies it will target, perhaps you can make that kind of call. If not, there are better places to invest your money where you can be sure your ownership is valued, protected, and means something.

Have I Been Given a Dodgy Pfizer Shot in Hong Kong?

March 24, 2021 By in Asia, Business, China, Coronavirus, Covid-19, Hong Kong, Investment, Stock market, Vaccine Tags: , , , , , , , , , , , , , , , Leave a comment

Lies, damn lies, and statistics in the vaccine age, as Hong Kong and Macau stop administering the Pfizer/BioNTech drug.

This story first appeared on TheStreet.com on Wednesday, March 24, 2021.

I’ve been given a dodgy vaccine dose.

Hong Kong and Macau have today suspended delivery of the Pfizer/BioNTech/Fosun shots. The Chinese local distributor, Fosun, requested the halt of the first batch of the vaccine to reach these shores. Batch 210102 consists of 585,000 doses. Eight days ago, I got one.

The markets moved on the suspension. The Hang Seng Index opened slightly lower after yesterday’s 0.8% drop in the S&P 500. But as morning word broke of the vaccine halt, the Hang Seng faltered, ending Wednesday down 2.0% at its lowest level in more than 10 weeks. The Hong Kong benchmark is now in a technical correction. It has fallen 10% since a February 17 peak.

Now, I’m not too worried. About the vaccine, at least. I’m worried the negative news will delay shots getting into arms, and ultimately the economic opening up of Hong Kong and Asia in general.

There have been reports of “more than 50” instances of defective packaging for the Pfizer drug made by front-line nursing staff. Those reported defects include cracks in the tops of the glass vials, leaks, or stains on the outside. There’s no apparent safety threat.

The defective doses have been thrown out. Fosun, which received the packaging complaints, wrote to the governments in Hong Kong and Macau, telling them to suspend use of the drug as a precaution. It’s undecided how long the suspension will last. Fosun distributes the drug in China, while Pfizer sends it around the rest of the world.

The sudden halting of the BioNTech vaccine will raise further doubts in the minds of a Hong Kong public that is already highly skeptical about getting inoculated, as I explained before I got my shot. The Pfizer/BioNTech drug is one of only two available so far in Hong Kong. The administration of the Chinese-made Sinovac vaccine can continue.

We need to be very careful about how we respond to such reports. The tendency, as I exaggerated at the start of this article, is to think “Oooh, vaccine, dodgy.” AstraZeneca (AZN) is contending with far worse such misperceptions. The authorities should investigate if the Pfizer doses already administered have had the right strength.

I was, by chance, asked to provide some media training today for a major fund manager. The media coaching is something that I do very occasionally, when my corporate news sources request it. Here I was, giving the reporter’s eye view to companies administering their PR.

My early comments focused on three biases that are prevalent in today’s media: negative news bias (we remember bad news better), availability bias (we ascribe greater importance to news we’ve recently read) and confirmation bias (we seek out, by choice of news source or through algorithmic suggestions, news stories and data that support what we already believe).

The halting of the vaccines has Availability Bias written all over it. So, too, do the issues over the AstraZeneca jab concerning both blood clots in Europe and the veracity of its 79% efficacy rate.

An easy way of thinking about the combination of these biases: You never read about a plane that doesn’t crash.

It’s an exaggeration, we have all probably read a story about a pimped-out Gulfstream or a stealth bomber or two. We just remember the plane crashes.

Nevertheless, there have been an average of 14 fatal accidents for commercial and cargo planes globally per year over the last five years, according to the Aviation Safety Network, resulting in 345 deaths per year. In 2020, there were five commercial passenger-plane accidents, killing 299 people.

There were 42,060 people who died in vehicle crashes in the United States alone in 2020. The pandemic and empty roads seem to have encouraged reckless driving: the figure was up 8% over 2019, and the highest since 2007, even though people drove 13% less. What’s more, the fatality rate per 100 million miles driven spiked 24%, the largest annual jump ever, since the National Safety Council started collecting data in 1923. Speed, drugs and perhaps empty roads coupled with a deadly pandemic that encourage reckless behavior are factors.

Hardly anyone is afraid of hopping in a car. Plenty of people are terrified to fly. Yet even when you break it down into accidents per mile travelled, driving is far more dangerous.

It is far more dangerous to get Covid than to get a Covid vaccine. Covid is killing more than 20,000 people per week in Europe. Controversially, it might have been advisable for Europe to continue to give people the AstraZeneca vaccine even if they knew it was causing dangerous blood clots… but on further investigation, and to the best of our knowledge, it is not, anyway.

I need to write “to the best of our knowledge,” because we’re handling a health emergency in real time. The newly developed drugs involve vaccines developed in a year, when the process normally takes a decade. We have learnt a lot about Covid over the course of the pandemic, and will continue to learn about both it and the drugs designed to contain it.

Many European nations screeched to a halt with their AstraZeneca programs when the red flag was raised over concerns about suspiciously timed blood clots. At that time, there were 18 cases of cerebral sinus vein thrombosis, of which one was fatal, out of 20 million people vaccinated in Europe. That’s 0.00009% blood clots, and 0.000005% that were fatal.

Random chance determines that some people are going to get blood clots, and that seems to be what has been going on, although the clotting issue is still being investigated. In fact, the number of blood clots was lower than average in the general population, AstraZeneca says. But blood clots have become the plane crashes of the vaccine age.

Here in Hong Kong, I can tell you every single case of hospitalization after someone got a vaccine. On Monday, the latest info available, there were 20 people taken to hospital after receiving a dose, as this daily report outlines. “A female aged 58 suffered from dizziness,” one report starts. “A male aged 46 suffered from palpitation and increase in blood pressure,” another begins. “A female aged 20 suffered from loss of consciousness and abdominal pain,” and so on.

While this public record may be necessary, it also isn’t all that useful. What we want to know is, did the vaccine cause those effects? Did the person faint or get high blood pressure because they were stressed out? As a direct result of the drug? Because they don’t like needles? Or because they watched a scary movie on their phone while they waited?

Our Negative News Bias tells us it’s directly because of the vaccine drug. Our Availability Bias tells us everyone feels faint, when in fact 20 Hong Kongers had typically very minor reactions out of 23,400 people who got a dose that day: 0.085%. And we don’t even know why those 0.085% of people had that response. Confirmation bias tells anti-vaccers they were right all along.

The Hong Kong government reports that around 403,000 people have so far been vaccinated against Covid-19. Of those, 150,200 received the BioNTech vaccine, and 252,800 got the Sinovac jab. So about one-quarter of the original BioNTech Batch 210102 has been administered. The second Batch 210104 of 758,000 doses is all in storage.

The Sinovac numbers are higher because it was available first, and was for a while the only anti-Covid dose you could get. Mainland China is encouraging people to get a Chinese-made vaccine if they want streamlined entry to China, even though a Chinese vaccine is not available in many places, including the United States.

The BioNTech vaccine has been proving far more popular with the folks I know. Yesterday, about twice as many people signed up for the BioNTech/Pfizer shot as the Sinovac option. Its 95% efficacy figures are far higher than for Sinovac, which has variously been cited as 50.4% effective in Brazil, 65.3% in Indonesia and 91.3% in Turkey. The World Health Organization suggests a minimum efficacy of 50% – meaning 50 out of 100 people have total immunity – for a vaccine to be approved.

I’ve already indicated that I do not think the Sinovac drug should have been cleared in Hong Kong. The company has not released its clinical trials data to the public. It has not been properly peer reviewed. Hong Kong has broken its own public health rules to approve the drug, desperate to get a Chinese alternative into arms first before any “foreign” drug.

The 95% efficacy rate of the Pfizer/BioNTech drug has yet to be challenged. Should these defect reports dent its reputation in the public eye? According to the Hong Kong director of health, there have been eight incidents of cracked BioNTech vials, 22 air-pressure issues leading to leaks, 16 reports of vial seals being loose, and 11 cases of stains or marks on the outside.

That’s 57 incidents out of a batch of 585,500 doses. That’s a rate of 0.0097%. I like those odds. I’ve got an appointment to get my second dose three weeks after the first – assuming that this temporary halt in the vaccine program lifts.

It’s an appointment I intend to keep.

Vaccine Skepticism May Hold Back Asian Recovery

March 24, 2021 By in China, Communist Party, Coronavirus, Covid-19, Geopolitics, Hong Kong, Stock market, Vaccine Tags: , , , , , , , , , , Leave a comment

Getting international travel and commerce back on track may hinge on vaccine acceptance.

This story first appeared on TheStreet.com on Monday, March 15, 2021

I’m due to go get my COVID-19 vaccination, the first jab, Tuesday. But I’m one of the few and the brave in Hong Kong.

There has been apathy, antipathy and resistance to vaccinations in Hong Kong, resulting in a very slow take-up. Only around 5% of the eligible population of Hong Kongers has taken advantage of the free program. According to one doctor, 40% of the people who have actually reserved their injection do not show up.

It’s understandable that there’s skepticism about a new vaccine, developed at record pace. I get it. A process that normally takes a decade took a year. It took me a day to make up my mind.

But the main detriment to the initiative in Hong Kong has been coverage of six deaths in the city of people who have taken the Chinese vaccine, Sinovac. That has dampened any enthusiasm that may have existed — and that was in shorter supply than doses anyway.

Oh, and the Sinovac vaccine should not be approved in Hong Kong, in my view. The health authorities here are not following their own rules, and have passed a special exemption to get the drug cleared for use, against protocol. Ordinarily, any drug would have to have its clinical-trial results published, and peer reviewed in medical journals. But that has not occurred.

The maker of the drug, Sinovac Biotech, has not released the data. Quite why, I don’t know, but we can all have our suspicions. The most innocent explanation is that there are no longer enough COVID-19 cases within China to make a large enough sample of patients. The Beijing-based company has struggled to conduct its own research in its home market.

But Sinovac is being used and tested in Brazil. Researchers there said in mid-January that the Sinovac vaccine was only 50.4% effective, when you include mild infections. They initially gave a 78% efficacy rate, but then admitted it does not include patients who still caught the virus but had “very mild infections.”

The World Health Organization sets a minimum standard that a vaccine must have an efficacy of at least 50% for it to qualify. The figure means that of 100 people given the vaccine, 50 are guaranteed not to get it at all, while the other 50 may or may not, and may have a milder version of the disease if they do.

Indonesia also ran trials on Sinovac, and found it to be 65.3% effective. The highest efficacy came from tests in Turkey, where researchers said it proved 91.3% effective, both nations reporting interim results from late-stage trials.

If you’re being charitable, you’ll chalk up Sinovac Biotech’s inability to publish its results to the difficulties of squaring away research from all over the world. If you’re being suspicious, you may wonder what kind of side effects and hospitalizations are contained in the figures they undoubtedly have.

One Hong Kong doctor here joked that the Hong Kong population is taking part in another phase of Sinovac’s late-stage trials, without knowing it. We chuckle, knowing there’s a grain of truth.

Hong Kongers, for a population that thrives on a famously entrepreneurial and risk-taking economy, are surprisingly risk-averse in their daily life. Widespread, mild hypochondria has stood them in good stead in the face of an unknown disease. Mask wearing and social distancing took off right away, even before “social distancing” became a thing.

It is not going to help the vaccine program. On top of that, every death or hospitalization of someone who has taken a COVID-19 jab gets blown up in the city’s tabloids. The first two deaths, the authorities said on investigation, were coincidence. “Natural” heart attacks are gonna happen if you inject a lot of people, just like some will die in car crashes. Now we have six coincidences …

There’s a political angle to the vaccines, undoubtedly. We have two vaccines available, the Chinese one with insufficient data and a Western one with data supplied.

Hong Kong did not start administering any vaccines until it was able to give out a Chinese-made one, rushing through Sinovac with incomplete and non-public testing data. Only then could the Pfizer-BioNTech vaccine that the city had reserved be flown in. Another standard for the Hong Kong drug authorities is that the drug be approved elsewhere in reputable markets, and the Pfizer drug had been given the seal of approval in Britain and the United States.

Here in Hong Kong it is not the “Pfizer drug.” The name Pfizer (PFE) is nowhere to be found. This is the BioNTech/Fosun drug, which has the made-up drug name of Comirnaty, as you can see from the Hong Kong booking form. A subsidiary of the conglomerate Fosun International (FOSUF) gets involved. And yes, Comirnaty is the exact same one that Pfizer makes.

BioNTech is the brains behind Comirnaty, the first mRNA vaccine ever to get approved anywhere in the world, when Britain gave it the all-clear. Pfizer was pulled in to help commercialize and mass produce the drug. It contains a molecule of a type called messenger RNA that carries instructions to make a protein that can bind with SARS-CoV-2, the virus that causes COVID-19. Unlike a conventional vaccine, the kind we have all taken for polio or smallpox, it does not contain any of the virus itself, which is present in “old-fashioned vaccines,” in a weakened or denatured state.

Pretty smart, huh? I think of it like a Trojan Horse of a drug. That’s not quite right, it’s sending your body a message to generate body doubles so that when the virus arrives, it gets confused, and attacks the dummy instead.

Why has Pfizer been erased? All pharmaceuticals companies have to have a Chinese joint venture to sell drugs in China. That’s where Fosun Pharma, the largest drugmaker in China, comes in.

I was worried this partnership would mean the drug will be made in China. But BioNTech will be making the drug in Europe, at production bases in Germany and Belgium, with Fosun acting as distributor as well as conducting the regulatory applications and marketing in China.

Pfizer is BioNTech’s global partner — except in China. Hong Kong Chief Executive Carrie Lam, whose every uttering seems politically calibrated to please Beijing, says Pfizer is a “co-supplier” alongside Fosun Pharma.

Fortunately, it’s the same drug, and that’s the one I’ll be getting. I would in no circumstances whatsoever get the Sinovac drug that has been approved when it shouldn’t have been approved, in my view. The Pfizer drug has peer-reviewed data showing it’s 95% effective, as per the E.U. product factsheet.

For Sinovac, Hong Kong health authorities say they’ve seen some but not all of the numbers. Yet again, they have also not released them to the public, or said which numbers they’ve seen. On top of that, Hong Kong health authorities are giving the Sinovac drug to all ages, from 18 and up. Even in mainland China, it is not given to people over 60.

Numbers out of China are often, well, just numbers. One friend of mine who runs a business says most Chinese companies have two sets of books, one with financials they show to the public or partners, and another that give the real picture. He insists his company does not!

We have an added layer of politics involved. China is keen to build a medical database and has used a “voluntary” program to collect biometrics including DNA and facial-recognition scans from the Uighur population in Xinjiang. This “health check” info can and will be used by the Communist authorities. Folks mistrust the Hong Kong government badly enough to expect them to do the same.

Then of course the entire world has to contend with anti-vaccer misinformation. Much of that stems from a completely discredited piece of research indicating that there’s a link between the measles/mumps/rubella shot and autism.

THIS IS NOT TRUE, people! The concept was based on a discredited piece of research unfortunately published in the esteemed medical journal The Lancet, in 1998. The journal retracted it partially in 2004 and completely in 2010.

The damage, however, was done, or at least the info was out there on the Internet. An article in the Annals of Pharmacotherapy, another peer-reviewed journal, calls the alleged autism-vaccine connection “perhaps, the most damaging medical hoax of the last 100 years.”

I’m no scientist, but I trust that the medical establishment has been working double and triple time on COVID-19. A 95% efficacy on the Pfizer/BioNTech shot hasn’t been shot down. And with just about all the vaccines, “efficacy” in medical terms of granting complete immunity is different from “efficacy” in real-life terms. It is rare for people given any COVID-19 vaccine to get hospitalized.

I’ve noticed that expatriates in Hong Kong appear more willing to get vaccinated. This may be because they’re keen to travel. China’s very slow take-up on vaccinations is likely to hamper efforts to deploy its newly introduced “vaccine passport,” which also raises a lot of concerns over health-record privacy and sharing that information between governments.

In the United States, a commendable 32 doses per 100 people has been administered (not quite 32% vaccination because some people might have had a second shot). In China, the figure is 3.8 doses per 100 people.

It’s a very personal decision whether to get the shot or not. I understand, I’ll reiterate, if people hesitate about adopting this new technology. I don’t buy the first generation of a new phone or computer, and when I once did, it broke quicker than I expected.

Tuesday, I’ll try the new technology. I put my faith that the medical community has been working double, triple, quadruple time to get this right. Any company that produces a faulty vaccine would be destined for the scrapheap.

The medical community has been fooled before, yes. See MMR-autism, above. I’ll set this skepticism aside. I have kids, I meet a lot of people that I don’t want to infect. It’s the right thing, I feel, to do. One small shot for my arm, a giant leap of faith for mankind.

Australia Reportedly Faces Secret Trade Ban by China

November 10, 2020 By in Asia, Australia, Business, China, Communist Party, Coronavirus, Covid-19, Politics, Stock market Tags: , , , , , , , , , , , Leave a comment

This story first appeared on TheStreet.com.

https://realmoney.thestreet.com/politics/australia-reportedly-faces-secret-trade-ban-by-china-15481731

Is China punishing Australia by imposing a secret ban on a series of Aussie imports? That appears to be the case, with November 6 reportedly set as the day for the ban to begin.

Beijing has ordered a halt to the import of a wide range of Australia products, with at least seven product categories temporarily banned, according to a Bloomberg report citing “people familiar with the situation.”

The hit list would stop inbound shipments into China of coal, barley, copper ore and copper concentrate, sugar, timber, wine and lobster, the report states. The sources asked to remain anonymous because the information is sensitive.

Any temporary ban on commodities such as coal and copper would go much further than previous one-product restrictions, normally on high-profile consumer goods. China is Australia’s top trading partner, accounting for A$136 billion in imports into China in 2018, according to figures from the Australian government, with A$78 billion in Chinese goods heading the other way. That total two-way volume is up 35.8% since 2016.

Ore shipments explain why Australia punches above its weight as China’s sixth-largest source of imports, on par with Germany. Australia’s total trade ranks it as China’s 14th largest partner, matching the size of the Aussie economy.

China often changes visa restrictions for its citizens without any public notice. It often tries out policy changes in the securities industry by letting industry insiders experiment without any official announcement of a change in the rules to see how things go. And it occasionally restricts permissions for the import of certain specific goods in retaliation of perceived slights.

But China normally publicizes its punishments on trade. So it is unusual that Aussie exporters are in the dark on any trade ban about to come down.

The effects are already being felt.

Lobsters languish

Tons of live Australian lobsters have been left stranded on the tarmac of a Chinese airport, The Sydney Morning Herald reports, with customs clearance taking too long for the shellfish to reach restaurants before they are spoiled.

Australian Trade Minister Simon Birmingham says he knows about the reports of “customs clearance issues” on premium shellfish shipments into China. Paperwork suddenly becomes hard to come by if China wants to punish companies from a particular nation or multinational. So-called “health and reliance checks” have been holding up shipments into Shanghai, with China the destination for 94% of Australian rock lobster exports.

The trade minister said “discriminatory screening practices” imply a breach of World Trade Organization rules and a breach of the China-Australia Free Trade Agreement.

I doubt Beijing’s bigwigs are going to let that bother them. World Trade Organization (WTO) and United Nations rules and protocols are very useful when China wants something, less so when they don’t suit Beijing.

Virus vitriol

China and Australia are at odds diplomatically after Australia requested an independent investigation into the origins of the coronavirus. Australia has also sent its warships to participate in “freedom of navigation” trips through waters that China claims in the South China Sea.

China pushes dodgy evidence of centuries-old fishing trips by Chinese vessels as justification for a land grab over the oil-and-gas-rich waters right up to the shores of the Philippines, Brunei, Malaysia and Vietnam. All those nations are fighting China with legal challenges over their territorial rights.

The trade restrictions began in May, when China introduced heavy tariffs on Australian barley and suspended imports of beef from some Australian slaughterhouses.

China has since launched an investigation into whether Australia’s wine producers are dumping bottles at cut-rate prices on the Chinese market. The Australian cotton industry says Chinese spinning mills have been told to stop buying Australian cotton.

Pressure tactic

The China International Import Expo is taking place this week in Shanghai, at which President Xi Jinping sung the praises of international trade. Officially, China’s commerce ministry has denied that Australian goods are under a ban.

Trade analyst Jeffrey Wilson told The Guardian this is a classic example of “gray zone” diplomacy, where China is attempting to scare Australian companies over access to a key market, using trade to exert political pressure.

“The ambiguity is by design,” he says. “It’s not a trade war, it’s psychological war.”

Shares in Treasury Wines Estates fell 8% in Thursday trading in Sydney after the maker of Penfolds wines said China’s drinks industry is requesting Beijing to impose unprecedented retrospective tariffs on Australian wine already sold in China. That’s part of an anti-dumping investigation launched in August by China’s commerce ministry.

Spying spat, too

Besides their public diplomatic spats, China and Australia are also engaged in a clandestine fight over spying and undue political influence over Aussie politics.

Sunny Duong, a Chinese-Australian community organizer, on Thursday became the first person charged over foreign interference in Australian politics under new Australian national security laws. Duong, who heads the Oceania Federation of Chinese Organisations from Vietnam, Cambodia and Laos, has been a prominent donor to the pet projects of various Australian politicians.

There are no details as yet as to what Duong, who has been very public with his appearances alongside Australian politicians, is supposed to have done wrong. But the Australian Federal Police raided several properties in Melbourne on Oct. 16 in relation to the investigation.

Australia’s spy agency, the Australian Security Intelligence Organisation (ASIO), has worked with the FBI-equivalent federal police on a counter foreign interference (CFI) taskforce in a year-long investigation.

“The CFI taskforce has taken preventative action to disrupt this individual at an early stage,” Australian Federal Police deputy commissioner Ian McCartney said, according to The Guardian. “Foreign interference is contrary to Australia’s national interest, it goes to the heart of our democracy. It is corrupting and deceptive, and goes beyond routine diplomatic influence practiced by governments.”

ASIO began warning in 2017 of Chinese influence attempts to control Australian politics through donations and sympathetic politicians.

In a blockbuster 2019 allegation, ASIO said it was investigating evidence that Beijing attempted to plant its operative as an elected official into the national Australian government. ASIO went public after news media broke the story. A Melbourne luxury car dealer, Bo “Nick” Zhao, reportedly told ASIO he was offered a “seven-figure sum” to run for government by a Chinese spy ring. Zhao was found dead in March 2019 from unexplained causes in a Melbourne hotel room.

As is typical, China has countered that Australia has been spying on China on a mass scale, instigating defections, spying on students and feeding false stories to the news media. A foreign ministry spokesman, Zhao Lijian, said in response to a report that Australia has tried to bug the Chinese embassy in Canberra that Australia is playing the “part of the victim, peddling rumors and stoking confrontation by staging a farce of the thief crying ‘stop thief.'”

Chinese exiles say they have faced intimidation from pro-Beijing squads while sheltering in Australia. It is a similar situation to what other Chinese exiles say has been happening in the United States. It appears these shadowy squads are sent to silence Beijing’s critics or force them to return to face Chinese courts through threats against their families in China or abroad.

Australia was the first country to ban the Chinese tech giant Huawei Technologies from involvement in the country’s 5G mobile phone network. It cited national security concerns.

However, China is particularly angry over Australia’s demand for an investigation into the roots of Covid-19. It has worked very hard behind the scenes to force concessions from the World Health Organization as to how it will investigate the virus, with the WHO leaving many key decisions to China, and hobbled in its attempts to send its own scientists to the virus epicenter in Wuhan.

Chinese Investors Doubt Trump’s Talk Over Virus ‘Proof’

May 7, 2020 By in Asia, China, Communist Party, Coronavirus, Covid-19, Geopolitics, Investment, Politics, Science, Stock market Tags: , , , , , , , , , , , , , Leave a comment

It seems Chinese investors have called President Trump’s bluff.

Markets in Shanghai and Shenzhen resumed trade on Wednesday with early losses, after a five-day long weekend. That was the first time for investors to respond to renewed hostilities that again threaten China-U.S. trade.

But Chinese shares ended the day with modest gains. The CSI 300 blue-chip index rose 0.6%. Chinese punters are paying more attention to the likelihood of Chinese stimulus. The Communist Party is keen to keep its citizens happy ahead of its major political meeting now due to start on May 22. The central People’s Bank of China also appeased U.S. hawks by setting the Chinese yuan at a neutral rate, at 7.07 to the U.S. dollar.

At this stage, Trump’s attacks amount to hot air. In Chinese, we call it “blowing water,” or chit chat, idle talk.

Trump last Thursday threatened China with new tariffs. This week, U.S. Treasury Secretary Steve Mnuchin warned of “very significant consequences” if China doesn’t follow through on commitments to buy U.S. goods made in its “Phase 1” trade deal with the U.S. Those are worrying sounds here in Hong Kong, bashed last year by trade war winds.

On Tuesday, Trump said the U.S. is ready to dish the dirt about how a Chinese lab mishap led to Covid-19 cursing the world. He earlier told a reporter he has seen evidence that gives him a high degree of confidence that the virus originated from a Wuhan lab. But when asked what the evidence is, he said “I can’t tell you that. I’m not allowed to tell you that.”

Trump now says the U.S. will issue a full report on the origins of the virus. “We will be reporting very definitively over a period of time,” Trump said on Tuesday.

Trump has yet to prove that he is not propagating yet another conspiracy theory when he claims that the SARS-CoV-2 coronavirus leaked from the Wuhan Institute of Virology, China’s first biosafety level 4 lab. Numerous scientists have stepped forward to say the DNA indicates the virus is of natural origin, not man-made.

There are plenty of people here in Hong Kong who believe the lab theory too, without a shred of evidence. I’m sorry, but when U.S. Secretary of State Mike Pompeo says he has “enormous evidence” that Chinese lab technicians messed up, show us the proof. Otherwise keep quiet until you are ready to do so. It’s not just hot water, it’s irresponsibly vague.

For the rest of this story, check out Real Money on TheStreet.com.