Mountain of idle cash behind rebound in markets Strange things are happening. The Hang Seng Index has rebounded 1,000 points in two days and is now back to the level of two weeks ago when people were predicting a correction. In the residential property market, people were expecting a mini-boom this year, but few predicted it would turn into a rally - prices are up about 20 per cent year to date - that would last more than six months and show no signs of softening. Even Shih Wing-ching (below), the chairman of Centaline Holdings, was caught on the wrong side of the market. The man who has been bearish for most of the year had to admit yesterday in an editorial column in his am730 newspaper that he would no longer be insisting there was no solid reason behind the home price rally. 'I am a rational person, so I can't accept there could be a bull run in a market recession,' he wrote. 'But the market is not made of rational people and when most people are irrational, the market will [become] irrational.' So, why are people queuing up to buy flats when the jobless rate keeps going up? And why are rich people still chasing luxury flats when the rental yield is only about 2 per cent? The answer lies in the cash pile that is mounting up. As Mr Shih explained, many wealthy people sold equities and other assets last year because they believed 'cash is king'. Unfortunately, they got a bit bored holding onto the cash and so returned to the equity and property markets. Another reason for this pendulum effect is the fallout from the Lehman minibond scandal. Another property agency boss we spoke to suggests that because of all the publicity and the daily demonstrations against minibonds or equity-linked notes issuers, people are scared of buying 'funny' investment products. And we can't blame them. But when HK$1 million in the bank cannot earn you the price of a Starbucks coffee in interest, as one UBS wealth management banker put it recently, people are looking for investment gains elsewhere. So if you can't change your fate, change your attitude, just like Mr Shih. Richard Li's poor record We note that PCCW chairman Richard Li Tzar-kai has bought the company's stock five times since the start of the month. In all, he bought 9.64 million shares when the share price went below HK$2, spending a total of HK$19.2 million. His telecommunications flagship closed yesterday at HK$2.12. But wait, before you follow suit, CLSA yesterday warned investors of the risks of following Mr Li's lead in buying PCCW shares as they have usually not turned out to be particularly good investments. The brokerage tracked his record from November 2006 to before the latest purchases, during which time he made 14 forays into the market and all of the purchases are now below water. CLSA used to highlight the trading record of his father, Li Ka-shing, in Cheung Kong (Holdings) as a good indication of the stock bottoming out. Just another instance where father and son differ, we suppose. Skyworth's gloomy picture We remain baffled by Skyworth Digital Holdings' unusually frank chapter on investor relations in its latest annual report. Under headings such as 'A year in the tunnel' and 'Lost steam', the Shenzhen-based television maker paints a gloomy picture of selling itself to potential investors. It begins by saying that despite recording an excellent year with a set of historically high results 'it did not make the job of investor relations smoother', and then goes on to bemoan cut-throat competition in the market and its undervalued share price. As for road shows to drum up investment, Skyworth said it had been encouraged by the response to a European trip in October last year, but had taken the United States off the itinerary due to 'our fallen market capitalisation' which had resulted in the company 'dropping off the radar of major institutional investors'. The group said since December it had stopped organising road shows and had not been invited to any of the usual investment conferences on the mainland and Japan. As a postscript, Skyworth's founder and former chairman, Stephen Wong Wang-sang, who was jailed for six years in 2006 for stealing HK$70 million from the company, was released earlier this month.