Monday 7th May 2007

Dear Reader,

Here's something to think about while we await the collapse of the mainland market bubble. How high will it go and how long will it be before it bursts? Nobody knows, and that's what makes non-linear phenomena such as earthquakes, volcanoes, avalanches and market crashes so interesting. But it's certainly time to issue an avalanche warning. Take a page out of Taiwan's history book. Back on 10-Feb-90, the TSE Weighted Stock Index peaked at 12,495. It then crashed 80% to a low of 2,560 that year. Taiwan was then a closed market with strict capital controls. Market turnover that year was 500% of market capitalisation. Does any of this sound familiar?

Don's Donations (7-May-07) discovers a Government black-out on details of political donations, breaking its own law and making it difficult to identify individual donors who financed Donald Tsang's campaign in the recent pseudo-election. Despite this, by careful analysis we have been able to estimate who were the leading donors, several of whom used dozens of unlisted subsidiaries or obscure executives to mask the scale of their contributions. We call for campaign finance reform to cap individual donations and ban corporate sponsorship.

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David M Webb