Visit to Taipei

I had a revelation on a trip to Taipei last month. The place where I was born has become a modern world class city right under my nose.

I left Taiwan in 1978 and did not make a return trip until 1994. Since then I have been going back there every 3 to 4 years. On my initial trip back to Taiwan, the country was evolving. Conditions reminded me of the way Shanghai looks outside of the downtown area. Things were still under construction and had somewhat of a third world feel to it. The air was very polluted from factory pollution and construction sites. The traffic patterns was very much like they are currently in Shanghai - wild and not for the faint of heart.

Even though I have been going to Taiwan every so often since that initial trip, I somehow did not noticed the changes as they were subtle. During this trip, I reminisced about that initial trip and realized just how much the city has changed. The city now has a new subway system which has alleviated much of the traffic problems that plagued it the past. That along with the move of the manufacturing sector to mainland China has really lessened the pollution. The development of a highway system along with the completion of a high speed railway system has also led to an efficient transportation system.

The other aspect of improvement in Taiwan is the culinary scene. The native Taiwanese food has always been a favorite and is best eaten in the multitude of street stands. This is an aspect of dining that is far better than what Shanghai has to offer. There is also a high quality of fare of foreign influence.

Service has improved to an excellent quality in all aspects of the service sector. It appears that what American would consider a middle class lifestyle is within reach of many Taiwanese.

I still remembered on my initial trip back to Taiwan in 1994 I never thought that I could actually live in Taipei, but after my recent trip I must admit that my birthplace has become a very livable place.

Turmoil on Wall Street

The past two weeks have been incredibly eventful in the financial world. Several of the biggest names on Wall Street have either gone out of business, forced to be sold, or saved by the US Government.

This is very relevant to me since I use to work at one of the two remaining independent investment banks still embroiled in the turmoil. I have spoken to some of my former co-workers and can sense the nervousness about their uncertain future. It is likely that they will have to be forced into a merger considering the adverse market condition for an independent investment bank to operate under. This will most likely result in layoffs as there will be redundancies in any merger.

As this financial seismic event was taking place on Wall Street, people in China also felt it as their stock market dove in concert with the global markets. Its actually pretty amazing how many people in China actually know the names of Lehman Brothers, Morgan Stanley and Goldman Sachs. I don't think most Chinese actually know what these firms do, but then again it seems like the firms themselves don't seem to either.

Mid Autumn Festival (中秋节）

So today is the Mid Autumn Festival (中秋节）. This will be the first time in China where this holiday will be observed with a day off from work. Even though the actual holiday this year (its 8/15 on the lunar calendar) lands on a Sunday, businesses will be closed on the following Monday.

The Mid Autumn Festival is marked by the gifting of mooncakes (月饼）to friends and family members. I like to compare these mooncakes to fruitcakes that traditionally gets gifted around during Christmas time. Neither are particularly tasty but are both ubiquitous.

The gifting of mooncakes is such a tradition here that it is taking on a life of its own. Its similar to Christmas in some ways, except the only gift to give is the mooncake. Businesses make sure that they give mooncakes to their important customers, not doing so will be seen as a sign of disrespect.

I personally don't like to eat them, but we get so many from friends and business associates that we don't know what to do with them. Well, at the very least I get a day off from work and that would be the best thing about this holiday.

The bubble that was

This recurring theme continues to bear fruit. Who can resist talking about money? The Shanghai Stock Exchange Composite sits today 9/5/08 at 2202, a 64% drop from its high of 6124 on 10/16/07. This is also a 22% drop from my last blog entry (6/11/08 - 2856) about this historic collapse.

I no longer consider this a bubble anymore. By conventional measures, this index is probably close to its fair value (but still a bit on the high side). Of course this does not mean that the decline will halt because during a panic, stock market values tend to overshoot fair value to settle at below value. This could mean another several hundred points of decline in store for this market. To their credit, the Chinese government for the most part have not made any dramatic policy changes to placate the investors who have lost a considerable amount of their investment. Accountability should rest on the investors in order for capital markets to reach maturity.

The retail investors have really taken it on the chin. A cross section of society have been affected by this, and that is a pattern when a market is in a bubble. It can only get to that point when all kinds of people start to invest in it. Where I work there are people who are mail room clerks, landscapers and chauffeurs all investing in the stock market. Our maid have also dabble in it. This correction was necessary and imperative in order for this stock market to mature.

The latest development in the real estate market in China is that it is following the stock market in a correction. Sales volume have really slowed to a trickle for the past year and the prices are dropping throughout the country. We will see where all of this end soon enough.

Fortune Cookies in China

This goes to show you that something that is as ubiquitous as fortune cookies in America is actually not what it seems: