FLOPPY blue books hitting the letter boxes of Hong Kong bear a mixture of tidings, some good and some bad. As the floppy blue book in question is published by Jardine Fleming, readers will not be surprised to learn that there is more good news for fund managers in the book than for fund holders. Last year, when JF was asked why fees had soared by US$109.6 million or 214 per cent in the financial year to September 30, 1994, while net asset values had risen by a mere 473 per cent, it said money had flooded in during the bull markets, increasing the pool that JF had charges on. Oh, yes and it had doubled management fees on some funds. This year, the rate of growth has slowed and fees have even started to shrink as punters run screaming and bloody from their investments in the India Fund (and as its net asset value plummeted, of course). The India Fund showed a change in NAV per unit of 42.3 per cent to US$26.23 while fees slipped a more modest 14.7 per cent to only US$3.93 million. In 1994, the fees had rocketed by 2,413 per cent, so over three years, JF is still doing just a tiny fraction better than its punters. Aboard the big JF pick of 1996, the Japan Trust and the Pacific Securities Trust, the picture is interesting. Fees fell by 38.8 per cent as punters flooded back out and the NAV fell by only 12.1 per cent. Fees also plunged at the Pacific Securities Trust. They fell 25.5 per cent to US$6.01 million. NAV per unit fell 8 per cent. Alas, this reversal of last year's situation is unlikely to cheer punters up. Frisky risks LEVERAGE and lots of it, please: Is this the average Hong Kong share investor's big wish? Tricky question, but the answer seems to be 'err, possibly'. With warrant issues coming up more frequently than the sun this year and the market rising, it is pretty obvious there is demand for frisky products. Another way local investors can get leveraged is by borrowing investment cash. And rather than having an expensive margin account, Hong Kong traditionally borrows the tax-money then punts it on the market. Bank of America is offering tax loans of up to 200 per cent of actual tax bills to clients but at the more attractive interest rates given to borrowers for good causes such as the Government rather than as personal loans. BoA chief Sam Tsien calls it 'the tax season' and it isn't over yet, but the initial figures for borrowing patterns are interesting. This year 59 per cent of customers are borrowing more than 100 per cent of their tax-bill. Last year, the figure was only 50 per cent. It isn't certain all these borrowers are punting the extra cash but there is a definite shift in pattern. Mr Tsien said the number of customers pulling down large loans increased towards the end of last year's tax-season. 'I think there was some arbitrage going on,' he said. 'Shortly after the deregulation of deposits over seven days there was fierce competition among banks and people to take advantage. When the dollar peg came under attack there was one day when local rates rose as high as 13 per cent. Theoretically it is possible people locked into that.' Pay'N Gouge PAY'N Weep has bowed to consumer pressure and decided to allow customers not only to use their old Pay'N Weep cards, or their new ComPass Visa cards, but also to allow all Visa customers to pay for groceries with their plastic. We are tempted to claim responsibility for this change in plans announced by Pay'N Weep over the weekend, as we helped to make sure the sneaky transfer of confidential customer data from Hutchison (owner of PNS) to ComPass (a joint venture with OTB Card Company) was the public relations disaster it deserved to be. But we've moved on from the PNS card problem to the PNS checkout problem. One of our colleagues recently witnessed a lady being overcharged for an item in PNS - it was marked on the shelf as one price and rang up as a higher price. The customer complained. The till operator tried to use the presence of our gweilo colleague in the queue to pressurise the customer into giving up. The customer stood her ground and the item price was checked: She had been over-charged by more than 15 per cent. In many parts of the world, supermarkets will give away to customers any item found to be wrongly priced. In this way the supermarket has an incentive to make sure that its pricing is kept accurate and up to date. Smoke screen WHEN RTHK had a debate on advertising of tobacco products on January 18, the anti-tobacco lobby was rather surprised to be put in its place over comparisons to Canadian law on tobacco advertising to Hong Kong. Specifically, it had been said Canadian companies had certain legal protections not included in the HK Bill of Rights, which cancer-pedlars in Canada are currently hiding behind. 'Really,' said Bruce Ventura, a lawyer and vice-president of the Hong Kong Tobacco Institute (HKTI), of his opponent. 'I think she needs to take some further legal counsel. In HK, the courts have in fact determined that freedom of commercial expression is incorporated in the Bill of Rights.' Strangely, lawyers consulted by People For a Smokeless Society had never heard of this court case where the rights of commercial companies under the Bill of Rights were set out. Even more strangely, neither had the Attorney-General's office. Mr Ventura responded to a letter pointing this out: 'HKTI's legal position regarding the applicability of the Bill of Rights vis a vis Health and Welfare Branch's proposal have been set out in a submission to the Attorney-General. Of course the final analysis regarding a Bill of Rights violation will depend on the particulars of the Government's proposed litigation.' 'All righty,' as Mr Ventura's cinematic namesake might say. 'So has a court in Hong Kong actually decided on tobacco companies' rights to hard sell death to school-children or what?' Always late EITHER this is a case of mislabeling or the crabs are simply very, very small.
