Bloomberg gets a taste of the Dalai Lama effect
We hear that Bloomberg is paying the price for its examination, two months ago, of the wealth of the extended family of Xi Jinping, the man expected to be China's next president. None of the assets, which ran into hundreds of millions of US dollars, were linked to Xi, his wife or his daughter.
Most, according to Bloomberg, were owned by Xi's older sister, Qi Qiaoqiao, her husband, Deng Jiagui, and Qi's daughter, Zhang Yannan. Bloomberg was careful to say in its story: "There is no indication Xi intervened to advance his relatives' business transactions, or of any wrongdoing by Xi or his extended family."
However these precautionary words do not appear to have saved Bloomberg from retribution.
The company derives most of its income from selling data via its Bloomberg terminals. However, we have heard that several of the company's salespeople in Hong Kong have found it virtually impossible to sell new terminal services to mainland financial institutions, particularly the banks, and that some of these institutions have been reducing the number of terminals they use, quite sharply in some cases.
This has led some people to conclude that this apparent decline in interest on the part of the banks is related to Bloomberg's recent story.
Bloomberg is not alone in copping this kind of reaction. In a study published in October 2010, Andreas Fuchs and Nils-Hendrik Klann of the University of Gottingen in Germany tracked the international movements of the Dalai Lama since 2002. After stripping out the impact of other influences, such as the world trade cycle, they found that, on average, countries whose senior government ministers held official meetings with the Dalai Lama suffered a 12.5 per cent fall in exports to China the following year. This is an effect that generally lasts for two years.
The study doesn't say if victims of this effect can get time knocked off for "good behaviour".
Critic's elevation a good sign
Last week, we wrote that Christine Loh had accepted an invitation by C.Y. Leung to join his administration as undersecretary for the environment. We gather that she has weathered the steely glare of Beijing and an announcement is imminent, possibly today.
Her appointment, we understand, will be one of about four or five undersecretary positions that will be announced. As we indicated earlier, Loh's appointment will give Leung's administration, which is looking somewhat ragged at present, a welcome lift.
It is a signal that this government intends to do something serious about the environment, principally Hong Kong's dirty air.
Donald Tsang Yam-kuen, for reasons best known to himself, chose to do nothing about the problem, which unsurprisingly is getting worse. Loh presumably has CY's support in this, and it should go a long way to making the city a better place to live in.
This is surely no bad thing, and it remains a puzzle as to why Tsang was so reluctant to act.
Much to thank Asia for
Vikram Pandit, Citi's chief executive, was in Hong Kong recently as part of his annual swing through Asia. The area contributed about one-third of Citi's global net profit of US$2.9 billion for the second quarter.
This year, he had cause for an extra spring in his step, having achieved 10 consecutive quarters of profit - not bad going for a bank these days. The other cause for excitement at Citi is that the bank is celebrating its 200th anniversary.
The people at Citi will also have been pleased that Pandit poured cold water on the suggestion recently by a predecessor, Sandy Weill, that the bank should be broken up so that it is no longer too big to fail.
"What's left here is essentially the old Citicorp," Pandit told the Financial Times in a recent interview. "That's a tried and proven strategy. Why did it work? Because it was a strategy based upon operating the business and serving clients and not a strategy based on deal-making. That's the fundamental difference."
Maybe so, but it took a financial crisis to bring it to this point.
Given the importance of the region to the bank, it is surprising he doesn't come here more often or, indeed, move out here permanently.