Monday 6th February 2017

Dear Reader,

No, you haven't missed any newsletters - this is our first in over 3 months, and before today's article, we want to explain why.

Every year at Webb-site, our editorial board, consisting of me, myself and I, takes a look back at whether I am making any real progress with the policy issues I've been pursuing from the top of the system to the bottom, whether it is the governance structure of HK, the increasingly interventionist economic and fiscal policies, laws which inhibit free markets or free speech, or the detailed regulations of our financial markets. I try to push hard on unlocked doors, and not to waste time trying to create doorways in brick walls. Over 18 years of running this publication, I've tried to focus my efforts on issues where a result is, even if unlikely, more probable than others, putting utility above futility and, I hope, those efforts have made a difference.

However, at present, most of these doors are firmly locked and the opportunities for reform in HK are extremely limited. We have an increasingly assertive mainland Government, which through its proxies in HK is tipping towards the draconian option discussed in our article One HK, two possible outcomes (9-Oct-2014). It had to go one way or the other, as the current mix of freedoms without democratic accountability is unsustainable and results in policy paralysis. But although the draconian option of tighter control of the legislature, strict "national security" legislation and an end to protests and filibustering may appeal to some, it will come at the price of protectionism of vested interests and increased intervention, whether in the form of populist handouts or subsidies of land, make-work schemes or other resources for favoured sectors. Vested interests will take priority over the public interest and economic rationality, and the result will be less optimal.

That process will take some years to play out, but until either the mainland Chinese population or their government realises that central planning and authoritarianism cannot sustain economic growth, we will not see the free and open China that its people deserve, and Hong Kong and its policy choices will be constrained accordingly.

I've also spent too much time over the years documenting and illustrating practically all the possible ways in which investors in our market can be abused and the systemic weaknesses that facilitate this, writing repeated case studies about the laws and rules that need to change and the crooks who never get caught. There is no point in covering more horror stories if policy makers or enforcers are unwilling, or structurally unable, to act. The archive of work can speak for itself.

So for the foreseeable future, you will be receiving my articles in Webb-site Reports less often, and only when I feel compelled to speak up or one of those doors is unlocked. All the features of the Webb-site Who's Who database on HK's organisations, companies, people and the market will continue to be maintained, and I may expand the functionality further, but I'll also be diverting time to personal interests, including rolling up the investment snowball that will perhaps allow me to have a greater impact when the time is right.

Thank you for reading. Now, something has to be said about this:

West Kowloon needs tender care
We urge the board of WKCDA, which was bypassed for months in the planning of the Palace Museum, to put the main architectural services contract out to tender, given that there is still no binding contract with Rocco Yim's company. Let him compete for the work, in line with HK's commitments to free and fair trade under WTO obligations. We estimate the contract size at HK$140m. (6-Feb-2017)

Operators jailed for defrauding Employees Retraining Board of HK$250k
ICAC, 27-Jan-2017
Of course, the bigger question is why taxpayers, via the Government, are subsidising beauty parlours by paying for "nail technician training" courses rather than letting employers train them on the job.

PECS Register monthly update
HK Government, 27-Jan-2017

SFC bans Ma Yu Lung, ex-SHK & Co, for 8 years
SFC, 26-Jan-2017
In a devious scheme, Mr Ma got two account holders to place orders that were really coming from third parties, whose names Mr Ma says he cannot recall. Reading between the lines, the SFC was probably investigating suspected market manipulation. The events in question took place almost 7 years ago, but he was licensed to SHK until June 2013.

12, including a Police Superintendent, arrested on suspicion of nightclub kickbacks
ICAC, 25-Jan-2017
A superintendent normally commands a Headquarters Unit or Police Division, so this is serious stuff.

Lucy Michaels v The Apex Horizon
HK Court of First Instance, 25-Jan-2017
Couldn't she just write a bad review on TripAdvisor?

SFC seeks court orders against Hanergy (0566) directors
SFC, 23-Jan-2017
The SFC is going after the controlling shareholder Li Hejun and all 4 INEDs for turning a blind eye. The court can remove and disqualify INEDs, but of course, independent shareholders cannot, because in HK, "independent" directors are elected by controlling shareholders, making a mockery of the term.

And much more besides...
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David M. Webb