(BN) China Will Face Crisis Within 5 Years, 45% of Investors in Global Poll Say

How could a bubble come when every one is watching it?

Bloomberg News, sent from my iPad.

China Will Face Crisis Within 5 Years, Investors Say

Jan. 27 (Bloomberg) -- Global investors are bracing for the end of China's relentless economic growth, with 45 percent saying they expect a financial crisis there within five years.

An additional 40 percent anticipate a Chinese crisis after 2016, according to a quarterly poll of 1,000 Bloomberg customers who are investors, traders or analysts. Only 7 percent are confident China will indefinitely escape turmoil.

"There is no doubt that China is in the midst of a speculative credit-driven bubble that cannot be sustained," says Stanislav Panis, a currency strategist at TRIM Broker in Bratislava, Slovakia, and a participant in the Bloomberg Global Poll, which was conducted Jan. 21-24. Panis likens the expected fallout to the aftermath of the U.S. subprime-mortgage meltdown.

On Jan. 20, China's National Bureau of Statistics reported that the economy grew 10.3 percent in 2010, the fastest pace in three years and up from 9.2 percent a year earlier. Gross domestic product rose to 39.8 trillion yuan ($6 trillion).

Any Chinese financial emergency would reverberate around the world. The total value of the country's exports and imports last year was $3 trillion, with about 13 percent of that trade between China and the U.S. As of November, China also held $896 billion in U.S. Treasuries. The trade and investment links between the two nations were underlined with Chinese President Hu Jintao's visit last week to the White House for meetings with President Barack Obama.

Worried Neighbors

Investors' concern contrasts with Chinese government statements on the outlook for the economy, which is poised to overtake Japan as the world's second biggest. The Politburo said last month that the nation had a "sound base" for stable and fast growth in 2011 after consolidating its recovery.

In an interview in Davos yesterday, Li Daokui, an academic adviser to the central bank, said he doesn't expect any "hard landing" and the economy may expand about 9.5 percent this year.

Fifty-three percent of poll respondents say they believe China is a bubble, while 42 percent disagree. China's neighbors are the most concerned: 60 percent of Asia-based respondents identified a bubble in the world's second-largest economy.

Worries center on the danger that investment, which surged almost 24 percent in 2010, may be producing empty apartment blocks and unneeded factories.

'Major Dislocations'

Jonathan Sadowsky, chief investment officer at Vaca Creek Asset Management in San Francisco, says he is "exceptionally worried" that the Chinese would eventually face "major dislocations within their banking system."

Chinese authorities also raised interest rates twice in the fourth quarter in a bid to choke off inflation, a sensitive political issue since the 1989 Tiananmen Square protests, which followed uncontrolled price increases. Food prices last year rose 7.2 percent, according to the National Bureau of statistics.

Haroon Shaikh, an investment manager with GAM London Ltd., cited "rapid wage inflation" and soaring property prices as the financial markets' chief concern.

Li said rising real estate prices are the "biggest danger" to the Chinese economy, in an interview with Bloomberg News in Davos, Switzerland. The People's Bank of China should "gradually increase rates in the first and second quarter," Li said.

Since peaking on Nov. 8 at 3159.51, the Shanghai Composite Index has slid about 14 percent. "The market is right to be nervous," Michael Pettis, a finance professor at Peking University's Guanghua School of Management, wrote in his Jan. 26 financial newsletter.

Worst Market

Some investors remain unbowed. "China can continue to grow over 10 percent for the better part of the next five years," said Ardavan Mobasheri, head of AIG Global Economics in New York.

Still, the poll found other signs of mounting investor caution toward China, where three decades of market-oriented reform has obliterated a legacy of Maoist impoverishment.

Asked to identify the worst market for investment over the next year, 20 percent of poll respondents say China versus 11 percent in the last poll in November. Almost half of those polled -- 48 percent -- say a significant slowing of growth was very or fairly likely within the next two years.

Michael Martin, senior vice president of MDAvantage Insurance Company of New Jersey, says the Chinese government "has executed brilliantly" in managing the economy. The government's capacity will be tested as the economy grows and becomes more complex, he says.

Export Reliance

Chinese officials have said they intend to wean the economy off its reliance upon exports, the source of trade tensions with the U.S., in favor of greater domestic consumption.

Peter Hurst, a broker with Sterling International Brokers in London, says he's concerned China will struggle to complete the transition.

"Yes, there are 1.3 billion people in China," he says. "But are they rich enough to become consumers?"

If China stumbles, the global economy will feel the impact, says Suresh Raghavan, chief investment officer for Raghavan Financial Inc. in Houston. "If the PBOC is successful at lowering growth rates to 7 percent, it will still feel like a recession for a lot of people around the world," he says.

Political Stability

Most poll respondents remained confident of the Chinese government's ability to fend off demands for greater political liberalization. Just 1 percent expect a political crisis within the next year and 27 percent expect one within the next two to five years.

And by a 60 percent to 30 percent margin, those surveyed say President Hu's policies were favorable to investors. Hu tied with German Chancellor Angela Merkel for the poll's top spot.

"The Chinese politicians are able to act on all necessary issues. That gives them a huge advantage compared to the Western economies," says Henry Littig, who heads his own global investment firm in Cologne, Germany.

The poll was conducted by Des Moines, Iowa-based Selzer & Co. for Bloomberg and has a margin of error of plus or minus 3.1 percentage points.

To contact the reporter on this story: David Lynch in Washington at dlynch27@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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Muslim bodies irked by MM's remarks

this is a plaintive call for a certain section of community to move up together with the rest and not get left behind. True, those are neither new nor hard truths.

However, we all know it won't happen. its writing in the DNA of some of the people who happen to practice Islam, and its nothing to do with the faith itself.


Muslim bodies irked by MM's remarks
by Leong Wee Keat 05:55 AM Jan 29, 2011
SINGAPORE - Two Muslim organisations here have expressed "deep regret" at some of Minister Mentor Lee Kuan Yew's remarks about the community that were published in the new book, Hard Truths to Keep Singapore Going.

The Association of Muslim Professionals (AMP) and Perdaus - the association of Islamic scholars here - issued media statements to register their disagreement with Mr Lee's views, which they said were neither new nor hard truths.

AMP's board of directors feel that the printed comments "have hurt the community and are potentially divisive", while Perdaus says Mr Lee's call for Muslim Singaporeans to be "less strict" in practising Islam "is both unfair and unacceptable".

Hard Truths is published by Singapore Press Holdings (SPH). SPH says the book's title is a reference to Mr Lee's remark, repeated several times in his interviews with the writers, "that there are hard truths or facts about Singapore that cannot be changed, and that make it critical for Singapore to have a stable society and strong, effective government".

In the book, when asked to assess the progress of multi-racialism here, Mr Lee said: "I have to speak candidly to be of value, but I do not want to offend the Muslim community. I think we were progressing very nicely until the surge of Islam came, and if you asked me for my observations, the other communities have easier integration - friends, intermarriages and so on, Indians with Chinese, Chinese with Indians - than Muslims. That's the result of the surge from the Arab states.

"I would say, today, we can integrate all religions and races except Islam." He added: "I think the Muslims socially do not cause any trouble, but they are distinct and separate."

But Perdaus feels that the level of integration "has significantly progressed" and "a better understanding and appreciation" of Singapore's cultures now exist between Muslims and non-Muslims here. It cited the community's participation in Inter-Racial and Religious Confidence Circles and contributions by humanitarian relief organisation Mercy Relief as examples.

On Thursday, the Islamic Religious Council of Singapore (MUIS) had said that Islamic teachings do not hinder Muslims from integration in Singapore society. AMP echoed these views and said that "a good Muslim is duty bound, in Islam, to be a good Singaporean".

It added that there was "nothing wrong" in ethnic communities asserting their identities, for example, through the Speak Mandarin campaign for the Chinese Singaporean community.

AMP said it is seeking clarity from the Government over Mr Lee's latest comments and how Government policies may or may not be affected by perceptions about the Muslim community.

(BN) Microsoft Gets `Little Credit' for Gains Amid Windows Concerns

The strategy for ms is simple. Produce the same stuff but quicker. I don't want office to look different else I would have opted for Mac ( which sucks in it's word) or google docs which is way too slow. 

Bloomberg News, sent from my iPad.

Microsoft Gets No Credit for Gains Amid Windows Miss

Jan. 28 (Bloomberg) -- Microsoft Corp. fell after a report showing a shortfall in Windows revenue raised concerns about demand for the operating system and outshined better-than- predicted second-quarter sales and profit.

Windows sales of $5.05 billion missed the $5.2 billion average of analysts' estimates compiled by Bloomberg. That differed from the 55 percent gain in the Xbox unit, and numbers showing Microsoft's Office and Server businesses topped projections.

The contrast suggests that Microsoft may be losing sales as customers opt for competing devices, such as Apple Inc.'s iPad or Macintosh computers, rather than a new Windows-based machine, said Tony Ursillo, an analyst at Loomis Sayles & Co. in Boston. As rival operating systems gain ground, Microsoft's other products, such as Office, may also suffer, he said.

"The execution at this company has actually been pretty good over the last year," said Ursillo, whose firm manages $150 billion, including Microsoft shares. "The stock has gotten very little credit for it because the market is worried about the continued erosion of the Windows franchise and the potential erosion of the Office franchise."

Microsoft, based in Redmond, Washington, fell $1.12, or 3.9 percent, $27.75 at 4 p.m. New York time on the Nasdaq Stock Market. The shares lost 8.4 percent in 2010.

Tablet Makes Impact

Microsoft did see a "small impact" from tablets and other types of computing devices, though it was "not material," Chief Financial Officer Peter Klein said in an interview yesterday.

Apple sold 7.33 million iPad tablet-style machines last quarter, as well as 4.13 million Mac computers. Apple's share of U.S. PC shipments rose to 8.7 percent in the December quarter from 7.2 percent a year earlier, according to research firm IDC.

Those gains came at the expense of machines that run Windows. To catch up in tablets, Microsoft said this month it would make its next version of Windows run on ARM Holdings Plc's chip technology for the first time. The aim is to create smaller, thinner Windows tablets with better battery life.

Klein says the tablet market presents an opportunity rather than a threat in the long term.

"I'm more excited about the opportunity," he said. "All these new devices are market expansive for us."

Excluding the impact of a $1.71 billion in deferred sales recognized in the year-earlier quarter, Windows unit growth was in line with growth overall in the PC market of 2.7 percent as reported by Framingham, Massachusetts-based IDC. Still, some analysts had projected more.

Windows Phone 7

To address mobile market-share losses to Apple and Google Inc.'s Android operating system, Microsoft released its overhauled software for mobile phones -- Windows Phone 7 -- during the quarter. The company said this week it shipped 2 million licenses to use the software in handsets, a number that analyst Kevin Burden at ABI Research called disappointing.

The number was "in line" with what the company was expecting, Microsoft's Klein said.

"It's a good start," he said. "I recognize that it's early and we have a lot of work to do and we're going to continue to focus on that."

Second-quarter unearned revenue, a measure of multiyear

contracts, was $13.4 billion, missing analysts' $14.1 billion average estimate, according to data compiled by Bloomberg.

'Way Behind'

Results in Windows overshadowed signs that Microsoft is benefiting from rising demand for gaming devices and products aimed at businesses.

Net income was $6.63 billion, or 77 cents a share, compared with $6.66 billion, or 74 cents, a year earlier, Microsoft said in a statement. Sales rose 4.9 percent to $20 billion.

The results beat the average projections of 68-cents in profit and $19.1 billion in sales, according to data compiled by Bloomberg.

"Microsoft has been executing extremely well on the business side," Robert Breza, an analyst in Minneapolis for with RBC Capital Markets, told Bloomberg Television. "As people start to really focus on Microsoft and what they are doing in cloud computing -- with their Azure platform -- also with their new Office 365 program that sits in the cloud, hopefully that will get the company a little bit more respect."

In the Xbox division, the company kept expenses down, widening margins for a sixth straight quarter.

For some, that doesn't make up for Windows-related woe.

"Microsoft management has to be frustrated -- they've executed well for five quarters in a row and have got little to show for it in the stock price," Ursillo said. "But they have to take a look at themselves and realize they're losing share in their most profitable business and coming from way behind in the efforts they needed to stem those losses."

To contact the reporter on this story: Dina Bass in Seattle at dbass2@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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Mass Anti-Government Protests Rock Egypt

Egypt, tunisia...reminds me of obama and acheh. after the euphoria, people look at each other and ask, "you mean we still have to work?"


Egyptian protester flashes Egypt's flag as anti-riot policemen use water canon against protesters in Cairo, Egypt, January 28, 2011

Egyptian Protests Expected After Friday Prayers
Protests in the Arab World
Egypt's Opposition Gears Up for More Protests
Tens of thousands of protesting Egyptians flooded into the streets after Friday's prayers in mounting demonstrations calling for an end to President Hosni Mubarak's 30-year rule.

Security forces fired tear gas and rubber bullets at protesters in central Cairo, where some of the larger demonstrations were held. Trucks of police armed with water cannons lined Cairo avenues as government forces attempted to disperse crowds.

Internet service, a key tool for activists, was shut down across the country shortly after midnight. Cell phone text messaging and data plans were also disabled. Telecom company Vodafone says the Egyptian government ordered all mobile telephone operators to suspend service in parts of the country.

U.N. Secretary-General Ban Ki-moon appealed for Egypt's leaders and its people not to let violence escalate. He says world leaders should view the protests as a chance to hear the "legitimate concerns" of their people.

Earlier, Egypt's largest opposition group, the outlawed Muslim Brotherhood, says at least five senior leaders and five former members of parliament were arrested in raids.

The group has said it will join protests, but has not organized the demonstrations headed by young people angry at poor living standards and authoritarian rule.

At least five people have been killed and the government says 800 people have been detained since Tuesday. Human rights groups say there have been more than 2,000 arrests.

The 82-year-old Egyptian president has not been seen or heard from since the protests began Tuesday with tens of thousands marching in Cairo and other cities.

In Washington, U.S. President Barack Obama said political reforms were "absolutely critical" to Egypt's "long-term well-being," boosting pressure on Mr. Mubarak to implement changes while acknowledging he is a critical U.S. ally.

In his first comments on the unrest in Egypt, Mr. Obama on Thursday urged the government and the protesters to refrain from violence.

Stanley Ho Casino Stake Saga Continues With Lawsuit

Yeah! it just took less than 24 hrs for me to be proven RIGHT!



The three-day public wrangle over Stanley Ho’s casino empire took yet another twist as a lawsuit accused family members of illegally taking control of his assets, a day after the Macau billionaire said the dispute was settled.

Amid conflicting statements made by Ho and his family, his lawyer Gordon Oldham filed the writ late yesterday in Hong Kong’s High Court. While the 89-year-old Ho announced on television that he no longer needed Oldham’s services, the lawyer says he still represents the tycoon and the writ appears to carry Ho’s signature.

Claim and counter-claim over the transfer of Ho’s 31.7 percent stake in Sociedade de Turismo e Diversoes de Macau SA has driven down the shares of SJM Holdings Ltd. by 12 percent this week. SJM runs most casinos in the Chinese city of Macau, where gambling revenue is four times that of the Las Vegas Strip.

“This story continues to unfold in a dynamic way and it will continue to make the public shareholder base of SJM uncomfortable because of the possible strategic impact of this volatility,” said independent industry consultant Jonathan Galaviz.

SJM shares fell 3 percent to HK$12.72 at the market close today, reversing earlier gains made before the lawsuit was reported by other media.

Ho built his fortune over five decades after Macau’s colonial government in 1962 granted him and his partners a gambling monopoly. While that ended in 2004 with the entry of operators including Sheldon Adelson’s Las Vegas Sands Corp., Ho was ranked Hong Kong’s 13th-richest man, with a net worth of $3.1 billion, by Forbes magazine this month.

Family Succession

Succession tussles are becoming more common in Asia as tycoons who built their wealth after World War II start handing over control of their companies, Galaviz said.

Ho made a televised appearance yesterday, reading an off- camera cue card from a reclining chair as one of his daughters held a microphone.

“The big problem has been resolved,” he said.

Later one of his four children by his deceased first wife, Clementina De Mello Leitao, said that her siblings had been excluded from the division of assets and that this was in violation of Ho’s intention to divide the estate equally among his 16 surviving children.

Leitao’s connections in Portugal and standing in Macau society were a big factor in winning the gambling monopoly, Angela Ho said in a statement e-mailed by her assistant last night.

Pansy and Lawrence Ho

Ho’s suit seeks to bar his five children by Lucina Laam King-ying, including Pansy and Lawrence Ho, and Chan Un-Chan, with whom he has three children, from dealing with shares in Lanceford, the family vehicle that holds the biggest stake in STDM. It also seeks damages from Lanceford directors for breaching their fiduciary duties in the improper or illegal issuance of Lanceford shares.

Maggie Ma, a spokeswoman for Melco International Development Ltd. didn’t immediately respond to two telephone calls and one e-mail requesting a comment from Lawrence Ho, the company’s chairman.

A Shun Tak Group spokeswoman, Cyndi Tang, referred questions for Pansy Ho, the company’s managing director, to Brunswick Group LLP, the public-relations company representing the Ho family members being sued.

Crystal Chan of Brunswick declined to say whether the new controlling shareholders of Lanceford were seeking legal advice.

Legal Battles

This isn’t the first conflict within the Ho family that’s played out in public. Stanley Ho’s sister Winnie Ho lost an appeal in 2008, when she sought to block SJM’s initial public offering saying she was owed $386 million in dividends. In 2001, Stanley Ho threatened to disinherit daughter Pansy when she dated the son of a business rival.

The shareholding record for STDM has been misplaced by the company, and it’s unclear if Lanceford still owns the stake that’s been claimed, Winnie Ho said today in a statement e- mailed by her assistant. Macau’s court is helping the company replace the record, she said.

In a restaurant at Ho's Grand Lisboa casino in Macau, Comei Kou was at the all-you-can-eat sashimi bar having dinner. Kou, who has worked for more than 20 years at another Ho-owned casino, said her co-workers were gossiping about this week’s dispute.

“It is like we are watching a TV drama,” Kou, 47, said between bites of raw salmon. “Money caused the fights.”

The case is Dr Stanley Ho v. Ho Chiu Fung Daisy et al, HCA145/2011 in the High Court of Hong Kong.

(BN) Casino Billionaire Ho Ends Family Feud Reading Cue Card in Reclining Chair

It's all for the money. We haven't heard the end of this. 

Bloomberg News, sent from my iPad.

Billionaire Ho Ends Feud Reading Cue Card in Reclining Chair

Jan. 27 (Bloomberg) -- Hong Kong billionaire Stanley Ho withdrew a demand that family members return the bulk of his casino fortune and pronounced the end of an ownership dispute that threatened to split Asia's largest gambling empire.

Ho, 89, said yesterday in a televised broadcast that he had agreed to transfer his 31.7 percent stake in Sociedade de Turismo e Diversoes de Macau SA to five of his children and the woman he calls his third wife. The day before, he said those family members took the stake without his consent, and he was ready to take legal action against them to get it back.

"I have been really unhappy recently because of the disputes, my family members were unhappy as well," Ho said, reading an off-camera cue card from a reclining chair as his daughter held a microphone. "The big problem has been resolved."

Two days of conflicting statements from Ho's lawyer and the public-relations company representing some family members helped drive the stock price of STDM unit SJM Holdings Ltd. down by 4.9 percent yesterday, slicing about $480 million from its market value. SJM runs most casinos in the Chinese city of Macau, where gambling revenue is four times that of the Las Vegas Strip.

"I think it's still early to conclude that the dust has settled," Teng Yee Tan, an analyst with CIMB-GK Securities Ltd. in Hong Kong who has a "neutral" rating on the stock, said yesterday. "The families from the second, third and fourth wives have almost equal power in SJM."

Division of Assets

After the statement was broadcast on TVB, one of Ho's daughters said the recent share transfers don't conform to his repeated statements that his estate be divided equally among his children. Ho has 16 surviving children from four women.

The children of Ho's deceased wife, Clementina De Mello Leitao, were left out of the division of his assets, daughter Angela Ho said.

"My father speaks to me often and has stated publicly about how he intends to divide his estate evenly amongst his children," she said in a statement e-mailed by her assistant.

STDM owns 56 percent of SJM, according to data compiled by Bloomberg. The STDM stake transferred to Ho's family members may be worth at least $1.6 billion based on yesterday's closing price of SJM's stock, which fell 68 Hong Kong cents to HK$13.12 after earlier sliding as much as 8.8 percent. In December, Ho transferred a 7.7 percent stake in SJM to Angela Leong, mother of his five youngest children.

Lisboa, Venetian

Stanley Ho also dismissed a lawyer he earlier hired to contest the dispute, he said in the broadcast. He was flanked by Chan Un-chan, whom he refers to as his third wife, and their daughter, Florinda. When he finished, they rolled the chair, with him still in it, out of the room in Chan's house.

"It seems like it's drawing to a close but there's always a chance that something else will pop up," said Aaron Fischer, a Hong Kong-based analyst for CLSA Ltd., who recommends buying the stock. "We still maintain a positive view because we think the management of the company will remain in place."

SJM operates 20 of Macau's 33 casinos, and its Lisboa and Grand Lisboa compete with Wynn Macau and Sands Macao on the city's peninsula. Sands China Ltd., a unit of billionaire Sheldon Adelson's Las Vegas-based company, also operates the Venetian Macao, the world's biggest casino by floor area, on an area of reclaimed land known as the Cotai Strip.

Bigger Than Vegas

SJM, Sands China and Wynn Macau Ltd. surged in Hong Kong trading in 2010 as total gambling revenue rose 58 percent to 188.3 billion patacas ($23.5 billion) on spending by Chinese tourists. Macau's increase of $8.6 billion last year is 50 percent more than the total gambling revenue for the Las Vegas Strip for all of 2010, according to data compiled by Bloomberg.

The Grand Lisboa's main casino floor, as big as an American football field and clouded by cigarette smoke, was filled last night with hundreds of mainland Chinese, some shouting and pounding on tables. People still wearing winter coats bet as much as HK$100,000 ($12,843) on a single hand of blackjack, oblivious to the dancer performing a cabaret act nearby.

The announcements over the public-address system were in Mandarin.

Ho built his fortune by luring bettors into smoke-filled halls with fading paint and worn carpets after Macau's colonial government in 1962 granted him and his partners a gambling monopoly. Born into a prosperous Eurasian family in 1921, Ho fled to Macau from Hong Kong during World War II.

Family Conflicts

Macau ended Ho's monopoly in 2004, allowing the entry of operators including Adelson's Las Vegas Sands Corp. Ho was ranked Hong Kong's 13th-richest man, with a net worth of $3.1 billion, by Forbes magazine this month.

This isn't the first conflict within the Ho family that's played out in public. Stanley Ho's sister Winnie Ho lost an appeal in 2008, when she sought to block SJM's initial public offering saying she was owed $386 million in dividends. In 2001, Stanley Ho threatened to disinherit daughter Pansy when she dated the son of a business rival.

In a restaurant at the Grand Lisboa, Comei Kou was at the all-you-can-eat sashimi bar having dinner. Kou, who has worked for more than 20 years at another Ho-owned casino, said her co- workers were gossiping about this week's dispute.

"It is like we are watching a TV drama," Kou, 47, said between bites of raw salmon. "Money caused the fights."

To contact the reporters on this story: Debra Mao in Hong Kong at dmao5@bloomberg.net Wendy Leung in Hong Kong at wleung12@bloomberg.net

To contact the editor responsible for this story: Frank Longid at flongid@bloomberg.net

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