The inconvenient 17-year pause in global warming
We see the fact that the earth's temperature hasn't risen for the past 17 years is causing ructions within the Intergovernmental Panel on Climate Change (IPCC). Its previous forecasts of catastrophic consequences unless the world reduces its use of fossil fuels have been the driving force behind the billions spent by governments and corporations on mitigating the perceived problem.
The IPCC is due to issue its fifth major report - the Fifth Assessment Report - since 1992 on the state of the earth's environment and climate. According to leaked documents, the governments that finance the IPCC want a more adequate explanation for the 17-year "pause" in global warming than is currently to be found in the massive three-volume report. The dispute centres on the extent temperatures will rise in the future, and how much of the rise over the past 150 years - a total of 0.8 degrees Celsius - is due to human activity and how much to natural causes such as sun spot activity or ocean cycles. The IPCC's draft report says it is 95 per cent confident that global warming is due to human activity, compared with 90 per cent in its 2007 report. Many scientists believe that level of confidence is unwarranted.
One of the more obvious difficulties to resolve is that although there has been an enormous production of carbon dioxide over the past 17 years, the temperature hasn't changed. The Economist noted in a recent piece, "The world added roughly 100 billion tonnes of carbon to the atmosphere between 2000 and 2010. That is about a quarter of all the CO2 put there by humanity since 1750." Then there is the inconvenient truth that the sea ice in the arctic is 60 per cent greater than this time last year when it stood at a record low. And this is before the winter freeze starts. When the Northwest Passage from the Atlantic to the Pacific opened up in August 2007 it caused headlines around the world. In 2007 Wieslaw Maslowski, a researcher at the Naval Postgraduate School, Monterey, California, famously predicted the Arctic would be free of ice by 2013. But the Northwest Passage has been closed all this year by pack ice, trapping some 20 yachts whose owners presumably believed it would be open for years to come.
Much of the difficulty in this debate is to do with the models that scientists use. Most of them don't seem to work, and they don't even work backwards. Maybe the earth and its climate are too complex for current models to handle. That said, Lai See would just like to make it clear that while we believe there are grounds for scepticism over the arguments produced in support of global warming, this does not detract from our belief in the importance of controlling the use of fuels that pollute the air we breathe, which is a different matter.
Is the ChiNext a bubble?
While the main board of the Shanghai and Shenzhen stock exchanges are in the doldrums, the ChiNext - often referred to as China's Nasdaq - has soared 70 per cent this year to record highs. In its latest edition, the website Week in China (WIC), which is distributed by HSBC, wonders if it is a bubble waiting to burst. In November last year the market looked somewhat forlorn having dropped 44 per cent from its peak in 2010, and with 221 of the 355 companies listed on the board having slipped below their IPO prices.
The reason for the market's reversal in fortunes, according to WIC, appears to be due to a shift in policy in Beijing together with the practice of mainland investors, "who often focus on the policy tailwinds, rather than the fundamentals of company valuation". As a result of the noise from Beijing about encouraging the private sector in the economy, investors have been switching out of large state-owned industry stocks into smaller, more entrepreneurial plays.
Media stocks have been the main beneficiaries of the ChiNext boom with at least 14 shares in the "cultural sector" having tripled this year. The film company Huayi Brothers has become the board's most valuable firm having rocketed 300 per cent this year, which puts it on an extraordinary 160 times its 2012 profits. The board's stellar performance has not gone unnoticed by the China Securities Bulletin, which is quoted by WIC. "Many people reckon the ChiNext is now overvalued. But history tells us that an overvalued market remains overvalued until the bubble bursts," it opines. "When will this moment arrive?"