HKMA warns on structured products

HKMA warns on structured products
By Chen Weijie

china daily

Hong Kong Monetary Authority (HKMA) cautioned on Wednesday that structured investment products such as stock accumulators entail tremendous investment risks despite attractive returns.

Stock accumulators allow investors to buy an agreed number of stocks at a “discount” to the strike price on a regular basis at the date of the contact. The heavy global market sell-off provoked by the collapse of the US investment bank Lehman Brothers in 2008 inflicted serious investment losses in stock accumulator or decumulator investments in Hong Kong. It was estimated that the losses were around HK$600 billion and affected 5000 to 6000 local investors.

HKMA Executive Director (Banking Conduct) Meena Datwani urged investors on Wednesday to study these investment products carefully.

“The share purchase discount price in the stock accumulator contact in fact comes from the premium the investor receives from selling the options to the counterparty of the accumulator contract and as a result, the investors are obliged to purchase the agreed amount of shares at the strike price. Though the investors obtain a price discount the risks also rise accordingly for them,” Datwani said in an article.

Datwani warned that the downside risk of the stock accumulator contracts may be magnified if these contracts include multiplier effects or investors purchasing these products on margin financing.

oswald@chinadailyhk.com

理政欠佳的唐英年

理政欠佳
現年59 歲的唐英年，自1991 年擔任立法局委任議員起涉足政壇，直至2002 年任職工商及科技局局長；2003 年擔任財政司司長；2007 年成為政務司司長。外界普遍對其能力有質疑，過去四年的政務司司長生涯中一度被投閒置散，被冠以「管樹大隊長」的稱號，他又因多次失言，導致民望跌至最低點。
唐英年，令人印象最深的成績是其2003 年接擔任財政司司長後，取消遺產稅，帶動資產管理業務發展。
2007 年，唐英年自始被視為2012 年行政長官大熱。不過，一向對工商及財經事務駕輕就熟的唐英年，轉任專責處理政治事務的職位後，並沒有交出亮麗成績。如政務司司長其中一項重要工作是協調政府各個部門的政策措施，2008 年先後發生雷曼迷債事件、泰國包機問題以及的士堵塞公路等大事，前政務司司長陳方安生就質疑，唐英年沒有發揮作用。

２０１１年９月２１日,"東張西望"訪問雷曼苦主.

大聯盟召集人回應鐘慧冰女仕

在 [新報] 發表之文章" 將失去轉化為祝福"及[東張西望]之訪問


鐘小姐：
我代表眾多苦主感謝你的同情，但我們的情況與你並不一樣。如你所說，你買的是“雷曼債券” ，而銀行出售給大眾市民是複雜金融產品的“衍生工具” 。這是一個欺騙，是否賠8-9成就當事件解決？好比那些所謂“祈褔黨” 給警察捉了，能否拿錢出來賠償了事？其二，是政府屬下金管局和證監失職，將這些複雜金融產品流落於市面上，容許這些有毒“債券”荼毒市民。站在一個負責任的政府上，能否容許『有毒』蔬菜輸入香港？
今天各銀行相繼作出賠償，証明香港銀行觸犯香港法例。金融機構犯下系統性毛病而被證監處罰。處罰當中為甚麼仍要將苦主劃分不同等級！不同產品，由處罰『證券商』和『銀行』可見一斑。苦主今日仍站立街頭示威，是對我們的『金融中心』地位的一種諷刺。提醒市民金融機構的貪婪，對社會『炒』風整頓！況且他們今日爭取的，是他們應有的金錢。 能喚醒多少站立金融中心的從業員之銷售時應謹慎及對產品之認識，不應祇顧“佣金”及“營業額” ，貪圖“私利” 見 [蘋果日報] 匯豐經理涉呃婦孺。亦是對『炒』家之警惕，多謝他們對香港『國際金融中心』作出之貢獻。

陳浩偉
母親與太太同屬苦主

9月21日「雷曼苦主」證監"遍地開花"大行動─傳媒現場攝錄

南洋總行7月16日遍地開花 1

誰能做到

從不放棄 (雷曼苦主)

Lehman+Brothers+loses+bid+to+recoup+%24500+million+from+Barclays

Lehman+Brothers+loses+bid+to+recoup+%24500+million+from+Barclays

Wall St. Protesters Say They’re Settled In

Wall St. Protesters Say They’re Settled In: ABC News’ Erin McLaughlin reports: Protesters who vowed to “occupy Wall Street”  are holding their ground in downtown New York, and say they have no plans to leave anytime soon. The protest started Saturday with a “Day of Rage,” when thousands of people gathered in...

Anonymous Amongst Protestors in Occupy Wall Street Demonstration

Anonymous Amongst Protestors in Occupy Wall Street Demonstration A mass protest against the monetisation of basic needs is being held in Wall Street, NYC. Adbusters and Anonymous warn that they will be there for weeks.

On September 17th 2011, protestors gathered in Wall Street, New York City, for a demonstration which is set to last for weeks. Activists Adbusters raised the call, in July 2011, in a bid to have ’20,000 people flood into lower Manhattan, set up tents, kitchens, peaceful barricades and occupy Wall Street for a few months.’ It is being described as America’s ‘Tahrir Square moment.’ Hacktivists Anonymous are amongst the demonstrators joining together, in the financial heart of the USA, in a rally against profit over people.


The One Demand of Protestors in the Occupy Wall Street Campaign

Demonstrators are angry about the influence that corporations and wealthy lobbyists have over the democratic process in the USA. They are calling upon President Barrack Obama to create a Presidential Commission ‘tasked with ending the influence money has over our representatives in Washington.’ Tired of policies perceived as putting profit over the basic needs of the American people, Occupy Wall Street was conceived as a way to communicate this to the highest levels of government.

Amongst the campaign sites is We Are the 99 Percent, which highlights some of the concerns of demonstrators. They include the monetisation of healthcare, with the poorest people unable to afford essential medication and treatment; soaring unemployment, seen as being a result of a recession caused and perpetuated by bankers; homelessness through mis-sold mortgages and the inability to pay rents; and environmental pollution at the hands of industry. The 99% refers to the wealth that is reportedly in the possession of just 1% of American citizens.

This comes in a week when the US Census Bureau released figures showing that poverty amongst Americans is at a seventeen year high.


Who are Involved in the Occupy Wall Street Campaign?

While Adbusters sounded the call for action, several other organisations and ordinary people answered it. Amongst the more celebrated protestors are hacktivists Anonymous, who have promised a physical presence under the banner #OccupyWallStreet.

However, they are not alone. The NYC General Assembly and US Day of Rage are two of the pressure groups angry at the observed corruption of politics by wealthy corporate lobbyists. New Yorkers Against Budget Cuts are railing against the acceleration of defence spending, while there are domestic issues. Their website exclaims, ‘One cruise missile could pay 10 teacher’s salaries for a year!’ Before raising their slogan, ‘We need jobs, health care and education! Not continued budget cuts, prisons and war.’

They are just some of the organised groups joining the protest, in Wall Street, New York City, on September 17th 2011. Others are simply individuals who agree with the basic tenets of the day, without being affiliated with any particular cause.

Lehman Collapse: 3 years hence. Where do we stand? - Views on News from Equitymaster

Lehman Collapse: 3 years hence. Where do we stand? - Views on News from Equitymaster

The current week marks the anniversary of two main historic events that changed the face of the world. The first event was undoubtedly the terror attack that had gripped United States in 2001. But the second event was the one that marked the onset of the current global financial crisis. We are referring to the collapse of Lehman Brothers . The financial behemoth went under nearly three years ago. The collapse brought into the spotlight the stark need for financial regulation. But it also brought with it the legendary economic stimuli that nearly every country dished out in order to revitalize their economies. But one thing that was common to every programme that was thought of - the need for globalization. No country thought of or planned to adopt protectionist measures.

Three years hence and times have changed. The world is still facing a crisis. And this time the solution is not so simple. The developed world is grappling with higher debt levels that combined with lackluster economic growth have sent tremors that shook the entire world. To add to this, the emerging markets are fighting a battle of their own with blazing high inflation rates brought about by higher commodity prices which in turn were a result of the economic stimulus measures offered in the 2008 crisis. As a result, dishing out more stimuli for the emerging market appears to be out of the question. On the other hand, the developed world already has so much debt that adding more to the base by dishing out another stimulus measure does not seem to be economically viable. And printing more money also has a limit to it.

So what is the step being taken by the countries? The answer to this is weird. They are adopting protectionist measures. In simple terms, protectionism is the practice of shielding a country's domestic industries from foreign competition. A country may do this through methods like imposing tariffs on imports, preventing foreign companies from take-over of domestic markets, imposing restrictive quotas etc.

The US may have in the past criticized protectionist measures adopted by other countries. But then the recent measures that the government has announced with regards to outsourcing and visa rules , etc are protectionist measures too. US has been trying to protect domestic industry with the hope that it would help boost employment in the country that is currently witnessing a sharp increase in unemployment rates. Even UK has followed suit by imposing strict rules on companies that send work out of the country. Other European countries like France, etc are also thinking about their own protectionist measures.

It is not just the US or Europe that have adopted protectionist measures. Other countries too have followed some form of protectionism or the other. Countries like Brazil and Switzerland have gone all out to protect their own currencies from excess capital flows. The reason they have cited is that if they allow this huge flood to enter their markets then it would lead to their own currencies getting dearer. This in turn would harm their export engines. There are several other nations like Malaysia and Thailand who have also announced similar measures as well. By the looks of it, this is just the first step. If the developed world continues to adopt protectionist practices, it would not be long before the emerging markets follow suit. After all, if the developed world closes its doors for industries of emerging countries, why would the latter allow the former's companies to flood its markets with their goods?

But what happens if the entire world decided to go back to the era of protectionism? Will that help to solve the global problems? Will that help the world in coming back on the track of growth?

Not really. The countries are no longer independent entities that can survive if they cut themselves off from the rest of the world. Each one needs the other for survival and long term growth. The politicians and their advisors seem to be adopting a myopic view on how to rectify the short term problems. Sure that will help as it makes them appear well off in the eyes of the voter community. But that does not solve the larger problem. Protectionist measures like economic stimulus are just short term solutions. The larger problem remains that the world has allowed itself to get too big for its own boots by taking on too much debt. It is best to let countries that have committed these mistakes go ahead and suffer its consequences. The others should try and make themselves more competitive and comparatively insulated to shocks by increasing their own competitiveness.

Protectionism is not a solution to all problems. History tells us that when the world had decided to adopt protectionism just after a financial crisis, the entire world sank into the Great Depression of 1939. Let us hope that the economists and country leaders have learnt their lessons from history and do not allow it to repeat itself. Otherwise, Lehman Brothers would not be the only financial behemoth to have lost its life. World over such events would become daily news. And like a pack of dominoes the whole world would start sinking lower.

gulfnews : With a fresh tide of products, a new wave of concern

gulfnews : With a fresh tide of products, a new wave of concern

Regulators around the world have been putting in place rules to protect consumers in the aftermath of the 2008 financial crisis, which brought to light risks hidden in a number of investments.

Despite this, fears remain that not enough is being done to protect retail investors navigating a new wave of complex products.
Hong Kong experienced its own consumer crisis in 2008 after more than 30,000 investors lost money in so-called minibonds, which promised investors a return on capital that was dependent on Lehman Brothers remaining solvent.

After the financial services firm collapsed, minibond investors demanding their money back staged daily protests outside the city's banks. Following some arm-twisting from the the Hong Kong Securities and Futures Commission, a deal was struck in March this year whereby banks will pay back as much as 96.5 per cent of consumers' original capital.
In the US, "target-date retirement" funds, which aim to reduce risk as retirement age approaches, became notorious after the financial crisis, when it became clear some included a higher exposure to volatile equities than investors had realised.
The US Senate's special committee on ageing has warned that such funds, used by millions of citizens in their workplace pension schemes, could contain risks that consumers do not understand.

Some employees had believed their funds could not decrease in value, for example — but in 2008 many of those belonging to people due to retire in 2010 fell more than 20 per cent. In July, the Consumer Financial Protection Bureau was established as part of the Dodd-Frank reform law, with the aim of providing education about finance and protection from financial companies.
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Russel Kinnel of Morningstar, a research firm, says he is wary about the recent rise of "absolute return" funds in the US, where the name may appear to promise consumers some sort of guarantee on their capital, which the funds do not in fact have.
Some global regulators are threatening to ban products that might mislead consumers about the level of risk involved. Belgium's new financial services and markets authority proposed this summer that financial companies voluntarily withdraw complex structured products aimed at retail investors.

The UK's Financial Conduct Authority, which will come into existence next year in place of the Financial Services Authority, is expected to go increasingly down this route.