Lai See

CLSA's head of oil and gas and pig research

PUBLISHED : Friday, 15 March, 2013, 12:00am
UPDATED : Friday, 15 March, 2013, 4:37am


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The mainland's dead pigs story has been viewed with some interest by some financial institutions in Hong Kong, and not just out of morbid curiosity.

The big fear, as CLSA observes, is that the number of dead pigs will grow considerably. In 2007, the number of pigs infected with blue ear disease grew 8,000 times the official figures and it will be recalled that the price of pork jumped 85 per cent in a year, contributing to inflation and causing the mainland authorities to release supplies from its strategic pork reserve.

The mainland's pig industry is delicately balanced and doesn't take much to throw it out. If, as is feared, the current numbers rise, the price of pork could increase significantly, adding to inflation.

Analysts are already whispering the "i" word, and if this materialises, then it would put the authorities in an uncomfortable position. They might be forced to take action to restrain inflation, which in turn could put the brakes on economic growth at a time when they would rather be easing it.

That aside, CLSA's pig research has been enhanced by the existence of the China pig database, which is maintained by Simon Powell, the head of oil and gas research. He assures all that an accurate count of the pigs on the mainland is integral to his call on PetroChina.


Clean-air tourism

One province has seized on the filthy air in many of the mainland's cities as a marketing opportunity. A television advertisement by its tourism bureau shows the province's lush, green mountains and sandy beaches. The views are crystal clear. "Take a deep breath," says the voiceover, "you're in Fujian."

Fujian launched its clean-air tourism in January, according to Zheng Weirong, a deputy director of the province's tourism bureau.

Boasting about clean air may seem to set the bar pretty low, as the website Marketplace World observes. But the strategy seems to be working given that only 1 per cent of 500 million urban residents on the mainland breathe air that is deemed safe.

That said, pollution in places such as Xiamen in Fujian, PM2.5 particulate matter still gets up to 45, which is dirtier than the most polluted day on record over 24 hours for Los Angeles. But then again, the air in Beijing is 10 times as bad as Xiamen.


Sevens and statistics

It's that time of the year when people contrive to arrange their business schedules to be in Hong Kong. This is because the Hong Kong Rugby Sevens kicks off a week today. HSBC, as one of the main sponsors of the event, has put its research team to work and come up with some unusual correlations between the winning teams over the years and the performance of different classes of assets and other indicators.

Investors shouldn't adjust their portfolios without considering, for example, that on average, consumer sector equities perform better in the years when Fiji wins and generally underperform when New Zealand triumphs. The metals and mining industries in Australia, India, Argentina and China all do well in years when England wins and/or New Zealand fails to win.

Elsewhere, we learn that this year's event is one of the more open, as not since 2007 has the Sevens World Series arrived in Hong Kong without a multiple winner. Five different teams have won competitions so far in the current series.

One player to watch out for, according to HSBC's report, is Carlin Isles of the US. His speed over 100 metres would have qualified him for the semi-finals of the London Olympics, making him probably the fastest man ever to play rugby. A convert from American football, he has burst into the Sevens scene in the current series, scoring three spectacular tries in the Las Vegas Sevens, where the US almost beat Fiji.


Cash is not always king

For those still in the banking industry - and hoping to benefit from their stock bonus schemes - things are looking up. Citi's stock is up 30 per cent since Michael Corbat took over from Vikram Pandit in October, although it was already rising then. Citi's share price has risen 75 per cent in the past seven months. Over the same period, Goldman Sachs' stock has climbed 50 per cent, JP Morgan's has gained 64 per cent, and Bank of America's has jumped 67 per cent. Cash is not always king.