Lai See

Jury still out on real state of local property market Analysts were mixed over whether the ho-hum bidding at the government's biggest land auction in two years meant developers' sentiment towards the property market was cooling. Sino Land's lowball winning bid of HK$10.4 billion for two Tai Po residential sites was 'unexciting' compared with pre-auction estimates of up to HK$13 billion, said analysts at Royal Bank of Scotland's ABN Amro unit. The results were an indication that 'even as luxury properties continue to attract local and mainland cash-rich investors and set record prices, developers are cautious in their price projections', they wrote in a research report. Indeed, the 28 per cent run-up in average residential prices so far this year has a lot more to do with low interest rates and mainland banks pumping out cash than it does with the sluggish fundamentals of the job market or personal incomes, which, while recently 'less bad', are still in worse shape than a year ago. However, other analysts sought to play down the auction results as a sign of a cooling property market. Several argued that Sino Land's existing land bank in Tai Po was a deterrent to other developers eyeing the sites, which might have acted as a barrier to entry to the bidding process. Sino Land led a consortium that snapped up three other sites in the area two years ago. 'This should not be interpreted as a negative market signal,' Morgan Stanley analysts held. 'Bidding for the new plots did not surpass expectations, owing mainly to the high entry barrier posed by Sino Land and not tepid sentiment.' Developers' sentiment towards the market may be a point of debate, but the market's sentiment towards developers appears to be more evident. The Hang Seng Property Index is down 8.3 per cent from its October peak, lagging a 6.3 per cent dip in the benchmark index from its highs last month. Tiger's fall in dollar terms What is the economic fallout to shareholders of a firm whose celebrity spokesman gets involved in a scandal? And what if that celebrity happens to be Tiger Woods (below)? In two short weeks, shareholders of Nike, Gatorade and other Woods sponsors have lost a combined US$5 billion to US$12 billion in market value in the wake of the scandal involving his extramarital affairs, researchers at the University of California, Davis have found. Two UC Davis economics professors looked at the share price performance of nine firms associated with the golfing great's sponsors over the two weeks that followed his November 27 car crash, benchmarking the returns on shares in each of the nine firms against those of their closest competitors. 'Total shareholder losses may exceed several decades' worth of Tiger Woods' personal endorsement income,' said professor Victor Stango, a co-author of the study. 'Our analysis makes clear that while having a celebrity of Tiger Woods' stature as an endorser has undeniable upside, the downside risk is substantial, too.' Anything for you, dear Macau is a hot ticket for New Year's Eve but one Indian man appears to have taken celebratory plans a step too far. In order to raise enough cash to treat his girlfriend to a trip to the gambling enclave, 22-year-old Pawan Verma faked his own kidnapping in an attempt to extort US$40,000 in ransom from his father, according to an Agence France-Presse report. 'His girlfriend wanted to celebrate the New Year's Eve in Macau,' a senior police officer in New Delhi was quoted as saying. 'He wanted to fulfil her wish but was not able to bear the expenses.' Time for change Venezuela's hands-on government is taking a novel approach to electricity shortages: it is reportedly considering cutting electricity use by switching time zones. 'If the drought problem gets worse, we will be forced to resort to anything that allows us to save water to generate electricity, so for the moment I do not rule out changing the time zone,' Angel Rodriguez, Venezuela's electricity minister, was quoted by agencies as saying. The Hugo Chavez government has blamed severe electricity shortages on drought and wasteful electricity use, but critics blame the administration for mismanaging water resources and under-investing in the electricity sector. We think the time zone plan should work. Chavez has already dragged Venezuela back decades in regard to some market reforms, so another hour or two shouldn't make much difference.