Category Archives: Hong Kong

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.

Hong Kong Stocks Stagger Into 2022 as World’s Worst Performer

January 4, 2022 By in Asia, China, Communist Party, Hong Kong, Investment, Stock market Tags: , , , , , , , Leave a comment

Hong Kong was the worst performing major stock market not only in Asia but the entire world in 2021. The hamstrung Hang Seng index hobbled into year end. It’s astonishing to see a major financial hub’s market down almost 15% in what was supposed to be a year of recovery, when U.S. markets and others have been touching record highs.

This story first appeared on TheStreet.com and its subscription service, Real Money. Click here for the original story.

The Hong Kong stock market’s increasing influence from Chinese tech explains part of the underperformance. Then there’s real estate, a mainstay of the local market but beaten down by the sharp falls in mainland Chinese developers. And equally, the depressing disappearance of the city’s civic freedoms are to blame.

The Hang Seng index plunged 14.1% last year. It is far out of step with the double-digit gains in Australia (up 13.0%), Japan’s Topix index (up 10.4%), Indonesia (up 10.1%), and the majorly outperforming markets in Taiwan (up 23.7%) and India (up 21.7%).

There are smaller gains, true, in Singapore (up 9.8%), South Korea (up 3.6%), with the Philippines essentially flat (0.2% lower for 2021), and losses in New Zealand (down 0.4%) and Malaysia (down 3.7%).

Chinese markets also ended in the red. It is internationally focused Chinese companies that are experiencing the rot. The Hang Seng China Enterprises Index is made up exclusively of Chinese companies that are listed in Hong Kong but that do not trade inside mainland China. It was down a startling 23.8% in 2021, a sharp contrast with home-listed Chinese companies.

It’s a reflection of the rising pressure from Beijing for Chinese companies to “return back home” in terms of their listing. Didi Global (DIDI) is the unwitting poster child for that category of company. The ride-hailing market leader in China was pressured into delisting from the New York Stock Exchange under duress from Beijing. It was barred from signing new customers after its June 30 IPO, leaving its shares now 66.2% below the listing price. It said at the start of this month that it will abandon the NYSE and attempt to list in Hong Kong, as I explained at the time.

Most of the tech companies listed in Hong Kong have U.S. listings that are sure to be equally unpopular with the Chinese Communist Party. Until they abandon them, there’s the suspicion their shares can be hurt by drastic action. U.S. authorities are also acting to bar foreign companies if they don’t file accounts that can be inspected by U.S. regulators – a move that Chinese law suggests would be illegal. It’ll take a regulatory huddle across the Pacific to sort that one out.

Meanwhile, Hong Kong’s market remains in limbo. It should rebound once any penalties that Beijing is levying on Big Tech are laid down, and if the U.S. listing issue can be resolved. If and when that happens, there could be a swing in the order of 20% to 30% – the Hong Kong market’s underperformance this year – but this is a regulatory issue, not one driven by fundamentals. A policy change could be announced overnight in Beijing, or Washington. Or not.

Then there are the ongoing social problems in Hong Kong. Britain says 88,000 Hong Kongers have taken up its offer of a residence visa through September, after the program began in January. A record number of Hong Kongers have emigrated, to the United States, Australia, Canada, Singapore and New Zealand and other popular destinations.

British Foreign Secretary Liz Truss just delivered the six-month report that Britain compiles twice a year to cover the state of play in Hong Kong. It is damning in its condemnation of the oppression of citizens by the Hong Kong puppet government and the Chinese Communist Party above it.

In particular, a much-hated National Security Law went into effect on June 30, 2020, imposed directly from Beijing rather than having any input from Hong Kong’s people or their representatives. But the local authorities – the police, the courts, the administration of Chief Executive Carrie Lam, and the shadowy National Security Office – have abused it to persecute any and all of Beijing’s perceived enemies.

The media is under attack, sometimes literally. Unions, civic groups and student unions have been forced to disband. There’s an informant’s hotline, East Germany-style, for you to rat on your neighbors if you think they’re not patriotic enough. You can feed through information, photos, audio clips and video files if you want to report a violation of the National Security Law, which is so vague that popular protest slogans can land you in jail.

Britain notes that any contact by its politicians with anyone in Hong Kong is often construed by Beijing and the Hong Kong government as “foreign collusion.” This can involve the simplest diplomatic contact, and in fact Beijing’s critics are dubbed to be “colluding” with, well, anyone that they contact overseas. The Hong Kong government and China frequently refer to shady “foreign forces,” which sounds like an army, or the CIA, but can equally mean the World Association of Girl Guides and Girl Scouts. They never identify who these “foreign forces” are.

Hong Kong is preparing to hold joke elections on December 19. They’re a sham designed to pretend there’s any semblance of democracy in the city. But no pro-democracy candidates are running – they’re not allowed to, since only pre-screened “patriots” who support the mainland government and the Chinese Communist Party can take part.

The vast majority of opposition politicians have either gone into exile, or are in jail. The city’s most-popular newspaper, the pro-democracy tabloid Apple Daily, was forced to shut down when its accounts were frozen and its top executives arrested. On Monday, the newspaper’s founder, Jimmy Lai, was sentenced to 13 months in prison for attending a vigil honoring those who died in the 1989 Tiananmen Square massacre. Hong Kong used to mark the June 4 anniversary with a memorial service attended by thousands of people. It has been banned the last two years, under the pretense that it would violate Covid-19 protocols.

Lai, who was sentenced alongside seven other pro-democracy leaders, is already in prison. He was convicted of inciting people to participate in a rally for a cause that is, at least on paper, legal to celebrate. But the police didn’t approve the vigil – for political reasons they pretend are all about public health. A hand-picked judge doing Beijing’s bidding, Amanda Woodcock, insists there’s a need for “deterrent” sentences due to the disruption to public order and the way those attending “belittled” a public-health threat. She insists those convicted thought the Tiananmen Square massacre commemoration was “more important than protecting the community.”

They thought nothing of the sort. Lai wrote a mitigation letter that you can find here. Any punishment will see him share the “burden and the glory” of those who shed their blood to proclaim truth, justice and goodness. “May the power of love of the meek prevail over the power of destruction of the strong,” he says.

These social issues bubble away, a poisonous undercurrent beneath society. It is the issues over U.S. listings that have depressed the city’s stock market this year, not to mention the forced deleveraging of the Chinese property industry. Hong Kongers will remain depressed as long as they’re oppressed by the dictatorship sitting atop them.

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.

‘The End of Hong Kong’ in New Treason Law

May 22, 2020 By in Business, China, Communist Party, Hong Kong, Stock market Tags: , , , , , , , , 1 Comment
‘The End of Hong Kong’ in New Treason Law

Beijing has given up playing the game of pretending that Hong Kong is governing itself. You could potentially be charged under the city’s new national-security law.

China’s showcase political conflab, the National People’s Congress, began today. First item on the agenda? A full-frontal attack on Hong Kong freedoms.

The second order of business was an item of non-business. Premier Li Keqiang opted not to set a growth target for 2020, something that’s always established when the meeting normally meets in March.

It had planned to set a rate of “about 6%.” But the uncertainties surrounding the Covid-19 recovery and global growth, not to mention the rekindled U.S.-China trade war, have scotched all that.

That first item is sending Hong Kong stocks south, with the Hang Seng plummeting 4.6% in early afternoon trade. The benchmark started lower, and just keeps going down. Shareholders should be very worried about their holdings in Hong Kong.

Chinese shares are also dragged down, with the CSI 300 of largest stocks in Shanghai and Shenzhen down 1.6%. There should be intense political pressure on China over this issue. We will see how far Britain and the United States are prepared to push Beijing over rights when money and trade is at stake.

Don’t be fooled by the coverage of this issue, which mainly indicates that a “controversial” new law has been proposed.

It’s not just controversial, it’s illegal. Pro-democracy lawmaker Dennis Kwok is only slightly exaggerating that “This is the end of Hong Kong.” It means Beijing will directly rule Hong Kong.

When China got its hands on Hong Kong in 1997, it promised that the former British territory would be allowed to keep its laws and operate autonomously for 50 years, until 2047. It signed the Sino-British Joint Declaration to that effect, a legal contract lodged with the United Nations. Hong Kong also established its constitution, the Basic Law, and elected its own government.

That government decides Hong Kong’s laws. It says so in the Basic Law. The government is stacked to Beijing’s favor, with half its members appointed rather than elected. Even then, the pro-Beijing camp struggle to shove through their legislation.

With this new law, the mainland government is simply enacting a new law of its own directly, in Beijing, and imposing it on Hong Kong. It plans to write the new “security” law into the Hong Kong constitution directly, bypassing the Hong Kong government altogether.

So Beijing is dispensing with any pretence that Hong Kong governs itself. It says it got “frustrated” with waiting for the proper legal process to occur.

It would be, I suppose, similar to the federal government bypassing states altogether and writing a sedition law, perhaps with capital punishment, directly into the state constitution of all 50. It would mean the end of any power for state governments.

That is vitally important in the case of this new law. Hong Kong, which guarantees free speech, has a totally different view of what kind of conversations about the government are allowed. Mainland China restricts free speech massively, censors discussion, leaving no one comfortable in criticizing the Communist Party in public. You can get locked up for decades for doing so, potentially executed. The international coverage of this issue is being blacked out on TV screens and blocked online as I write.

I can currently criticize the Communist Party all I want, here in Hong Kong. With this new law, my ability to write these articles will be severely curtailed.

All this is being done under the guise of “national security,” the catch-all phrase beloved by dictators and authoritarian governments the world over. “National security is the bedrock underpinning the stability of the country,” Zhang Yesui, the spokesman for the National People’s Congress, said as the Communist Party’s flagship meeting kicked off on Friday.

It’s a poorly run, unstable and weak country if its bedrock is stopping criticism of that country. A proud, strong nation should be able to take criticism on the chin.

We don’t yet know what will be in the new law. The central government is today due to table a resolution to allow the Standing Committee of the National People’s Congress to craft and pass the new national security law for Hong Kong. Translation: the rubber stamp government will approve the top leaders writing a treason law for Hong Kong.

The new law will ban secessionist and subversive activity, as well as foreign interference and terrorism, according to the sources at the South China Morning Post. So foreign entities and people can also be charged.

It presents a real dilemma for Secretary of State Mike Pompeo. He has delayed a report on how autonomous Hong Kong actually is until after this meeting in Beijing. He must certify an annual assessment that Hong Kong is self-governed enough to justify separate trade status. That is very much in doubt.

China is already referring to last year’s pro-democracy demonstrations as terrorism, and says anyone flying a foreign flag at a march is promoting Hong Kong independence. Of course, the Communist leaders are furious that people have been burning and stamping on the Chinese flag, booing the national anthem, and even breaking into the government chambers here to spray-paint over the Hong Kong flag.

Hong Kong’s constitution does state that the city has to pass a national security law, in its Article 23. So-called Article 23 legislation was put forward by the Hong Kong government in 2003, but pulled after 500,000 people marched in opposition to it in the streets.

Now the Beijing government has lost patience with playing the rigged game that it set up. It figures that it will simply directly rule Hong Kong in this case, banning criticism of itself, how China is governed, how Hong Kong is governed. Presumably you, in the United States, could be prosecuted for “foreign interference” should you criticize the party and step foot in Hong Kong.

So beware. This law really does mean the end of Hong Kong’s autonomy. It is dangerous for us all.

This story originally appeared on Real Money.