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Translation - English Dr Chan - Appreciation of yen good for HK shares
On April 27, U.S. Federal Reserve keeps interest rates unchanged. So did Bank of Japan (BOJ), which on April 28 announced interest rates should remain unchanged. Both countries' decision to not adjust their interest rates is a good news for the United States, which saw its stock markets recording an immediate rebound in the afternoon.
For Japan, however, it is a bad news. In the afternoon of April 28, the Japanese stock markets took a dip. Before the slump, Japan's benchmark Nikkei 225 was hovering around 17,572 points, only to have plunged to 16,652 points shortly after. It managed to recover slightly to 16,666 points just before market closure. An one-day dip of 920 points – 5.2 per cent – is sort of fear-mongering style of decline.
Japan Nikkei opened the day with a higher level, and before BOJ completed its meeting Nikkei was still hovering high. As BOJ announced the decision of the meeting to maintain same interest rates for Japanese yen, the Japanese stocks saw a sharp decline.
Singapore and Hong Kong and regional stock markets also reported a downfall against the backdrop of stock decline in Japan.
The effect of the up and down of interest rates depends on whether or not the outcome is same as what the market expected. U.S. announcement to remain same rates is what the market expected earlier; Japan's decision to maintain same rates is contrary to market expectation.
The market was expecting Japan to cut rates further, and the governor of BOJ has recently been revealing to the media that good-quality quantitative easing – in Japanese style – would be enhanced.
The meeting of BOJ, however, decided they should do nothing.
Quite a number of investors shored up Japanese stocks, but pressured yen downward. And they now cannot but to sell off stocks. As a result, yen recorded a sharp increase, while Japanese stocks plunged.
In the aftermath of 2008 global financial crisis, the world has witnessed numerous incidents previously deemed unthinkable by economists. Governments and central banks of a number of countries did something which many economists described as – in Chinese saying, literally, departing from the classics and rebelling against orthodoxy.
Such rebellions – in the eyes of economists – included China's four trillion yuan infrastructure projects, quantitative easing in United States, negative interest rates in Europe, and Japan's interest rates dipping into negative territory – while the Japanese claimed theirs as a bettered version of quantitative easing.
The aforementioned measures deviated away from conventional economics theories; and it comes as no surprise when many economics scholars opposed to them. The point is – even after they opposed these measures – the economists themselves could not but to eat their humble pie. The U.S. economy is recovering for real; Eurozone is shrugging off the pressure of debt crises; China was the first country to have recorded accelerating growth rate after global financial crisis, and the Chinese economy is still the fastest growing in the world.
With a slower pace, Japan waited until end of 2012 when Shinzō Abe took over as prime minister to rescue Japanese economy. Before Abe took office, many Japanese prime ministers held the post and
were forced to resign – all in the matter of a year or so. Abe is the one who holds on to his premiership rather steadily – which is over three years until now. What we observed is that Abe revived Japanese economy, and Nikkei Index increased two fold or more since Abe took office. Which explains why he is now unbeatable.
Among economists, many of them do not really believe that quantitative easing helps revive the economy. Nor do they believe that printing money or negative interest rates helps resurrect the economy. These economists – who read and understand books and theories as they literally meant – have missed the opportunities which popped up since 2008 until today.
Economists are against quantitative easing and money-printing because economics textbooks said printing money is a sure way to lead to severe inflation. What happened in 1948 Chinese Nationalist
Party era and Zimbabwe of modern days – are the consequences of anyhow printing money.
Four-trillion infrastructure programme in China caused inflation, which was promptly controlled. As of today, China has a low inflation rate; in Japan it is experiencing deflation; and in United States the
Americans are witnessing zero-inflation or very low inflation rate.
Does money-printing necessarily cause inflation? It depends on who are getting the money, and how many people in the world are willing to accept and keep the money.
If a government prints money to pay salaries to civil servants, as well as to build better infrastructure, the civil servants and infrastructure-related workers would then enjoy the perks. When they have more money they are likely to spend more, and it thus is an inflation created by the consumers who are spending more money.
The U.S. government printed money – not to distribute it to ordinary Americans – but to acquire national bonds, to buy up the shares of corporations which are 'too big to fail'. The U.S. government
pumped in money to resurrect these big companies.
As a result, stock prices recorded new high, and the government sold off its shares and made money.
Today's Japan is even more magnificent – the Japanese government printed money to directly buy up shares in the stock markets. And such measure shored up stock prices.
Of late, many conventional economists opposed quantitative easing in Japan. They opined that such measure is departing from the classics and rebelling against orthodoxy. But the fact is quantitative
easing shored up the stock markets with flying colours.
In early April, the market prediction was that Japanese government would add up money supply to create inflation. As a result, the stock markets are either reporting a sharp increase or decrease. If worst
comes to worst, the stock markets might as well back to square one, and this should not be a big problem.
On May 1, U.S. stock markets have already rebounded, and they are no longer affected by the slump in Japanese stock markets.
A decrease in stock prices – either investors are selling off to cut losses or to reap profits – usually does not linger for too long. My suggestion is that investors can keep the shares which we invested earlier, and at the meantime we should observe the trend of U.S. stock markets and Japanese yen. Should U.S. stock markets recover and stand firmer, that would be a good news for Japanese stock markets.
Since U.S. decided to maintain current rates, investors can perhaps also look into stocks which are sensitive to interest rates. The most sensitive of all are property stocks. Despite a downward pressure of
property prices in Singapore and Hong Kong, the decline of property prices has limited room.
Property companies are doing well in selling new apartments. Those are rich corporations which can afford to offer higher mortgage ratio to home buyers. Which explains why new apartments are more
attractive than second-hand or resale apartments.
Looking at property stocks, they have a lower price to book (PB) ratio and price to earnings (PE) ratio.
Another plus is that they offer quite a good dividend yield rate. These factors make property stocks more attractive.
Meeting of oil-producing nations in Doha reached no consensus; crude oil price first saw a dive, before standing firm again shortly after. U.S. stocks too recorded a fall, followed by a subsequent increase.
As a result, stock markets in Asia Pacific all reported an uptrend. Among the rising stocks, HSBC Holdings (0005.HK) is particularly impressive. As soon as the management of HSBC Holdings
publicly revealed a preparation to buy back own shares, HSBC Holdings registered a surge of 3.7 per cent – greater than Hang Seng Index which recorded 1.3 per cent increase that day.
Some time in the past, Henderson Land (0012.HK) has been proactive in buying back its own shares.
Lee Shau-kee – majority owner of Henderson Land – opined that stock prices of Henderson Land are now much lower than what they actually worth. And he thus acquires the company's own shares.
Understandably, prices of Henderson Land did not go up and up without coming down; share prices are always about up and down. Majority shareholder acquiring own company's shares is nothing different from investing into other shares; every investor is trying to buy low and sell high amid the up and down of the stock markets. Of course, investors can always acquire more shares when the prices are low so that they can hold more stocks in hands.
I appreciate it when a corporation is buying back its own shares. If a listed company is able to acquire its own shares with the cash in the company, it means the company has a very strong cash flow. Or
perhaps the cash is now too much and the company has nothing better to invest. Buying back own shares is better than hoarding cash and earning low interest rates. Buying back own shares is also a good way to utilise cash, for the acquiring process helps support stock price so that it can go further up.
Other than supporting stock price, a corporation buying back own shares also means better capability to pay dividends. When a company buys back its own shares with its own funds, the shares would be written off, and those shares are no longer available for sale in the market. When the volume of shares decreases, the company would have lower pressure to pay dividend. And fewer shareholders would be waiting in line to share the profits of the business. Same profits for fewer shareholders is certainly a
good news for small investors.
When a listed company buys back its own shares with its own funds, the shareholders jointly share the money; if a majority shareholder buys back own shares, the shareholder is adding up his or her
shareholder equity ratio.
Chinese to English: Taiwan News: Renowned doctor earns kickback and buys luxury watches Detailed field: Journalism
Source text - Chinese 名醫涉收回扣 買百達翡麗
Translation - English Renowned doctor earns kickback and buys Luxury Watches
– 35% commission of drug price; granted bail for one million NTD
Reported by Kuo Chih-yu, Wang Yin-fang, and Wu Huei-fen (transliterated)
KAOHSIUNG, July 23, 2016 – Lin Chien-hung (transliterated), orthopedic department head of Kaohsiung Municipal Min-Sheng Hospital, was alleged to have collected 35% of kickback from pharmaceutical dealers. Lin's illegal commission was reportedly accumulated up to several million NTD in nearly five years. Prosecutors earlier searched Lin's home and found cash totaling 1.2 million NTD, as well as eight luxury watches of Rolex and Patek Phillippe. After interrogation the prosecutors proceeded to detain Lin under corruption charge, but the court deemed detention unnecessary and set bail for Lin at one million NTD.
55-year-old Lin is the orthopedic department head of Kaohsiung Municipal Min-Sheng Hospital, and he specializes in minimal-incision total hip arthroplasty. His great medic skills won him good reputation among the patients, and thus nicknamed 'number-one surgeon Lin'.
Having concluded his interrogation yesterday, Lin rushed back to the hospital to carry on with surgery scheduled earlier with his patients. Attempts by reporters to contact Lin were futile, meanwhile Kaohsiung health bureau halted Lin's administrative tasks but allowed him to conduct diagnosis and surgery duties.
A say in drug procurement
Prosecutors pointed out that as a department head at the hospital Lin has the right to recommend procurement of drugs and materials. With a say in procurement matters, Lin was often lured by major pharmaceutical dealers, who sent sales executives to introduce Lin new drugs outside his clinic.
Prosecutors charged Lin for allegedly abusing his medical duty to earn kickback from dealer company which is also an exclusive agent for hyaluronic acid.
100 NTD for each injection
Investigators also founded out that the medicine, costs 1099 NTD each, aims to cure degenerative joint disease among the elderly. Since September 2011, Lin was reportedly reaching an agreement with the pharmaceutical dealer for a commission of 100 NTD for each injection in orthopedic department.
Having calculated monthly volume of drug usage, Lin was alleged to have collected money from pharmaceutical dealer in his office or clinic. In recent years, Lin went even further to request a 35% kickback from the dealer.
Investigators reprimanded and described Lin's 'an exaggerating act', for doctors usually received kickback in the form of speech fees. And Lin's proportional earning was rarely seen in the past.
'Unsurprising if I have one million cash'
Prosecutors on several days earlier raided seven places, among others, Kaohsiung Municipal Min-Sheng Hospital, Lin's home in Cianjhen District of Kaohsiung City, as well as the pharmaceutical dealer's office in Taipei.
At Lin's house the prosecutors found cash of 1.16 million NTD, and 1,895 Australian dollars (equivalent to approximately 46,000 NTD). Some cash was kept in yellow-colored envelopes. Eight watches raided include luxury watches of Patek Phillippe, market price 2.87 million NTD for each new item, as well as Rolex, priced at 390,000 NTD each in the market.
Denied taking kickback, Lin said that given his over 300,000 monthly salary, it was only unsurprising if he has million-dollar cash at home. He also added that all cash was his hard earned money, and the luxury watches his private collection.
The pharmaceutical dealer's statement, however, confessed that the yellow-colored envelopes confiscated by the prosecutors were the envelopes used to keep and deliver money for Lin.
Prosecutors found Lin highly suspicious in the case and applied to the court for a detention. But the court ordered Lin to be remanded on bail of one million NTD, while Li, a regional manager of the pharmaceutical dealer, bailed for 100,000 NTD.
Another seven individuals, including a doctor by the surname Zhou, were released.
Profile of 55-year-old Lin Chien-hung
Current position: Orthopedic department head, Kaohsiung Municipal Min-Sheng Hospital.
Education: Department of Medicine, National Yang-Ming University.
Experience: Attending physician, chief resident doctor at Kaohsiung Municipal Min-Sheng Hospital.
Expertise: Treatment of bone fracture, minimal-incision total hip and knee arthroplasty. An excellent medic nicknamed 'number-one surgeon Lin'.
Allegation: Received kickback from pharmaceutical dealer; the prosecutors raided Lin's home and found million-dollar cash and eight luxury watches, including Patek Phillippe and Rolex.
Source: Apple Daily reports
Bachelor's degree - National Taiwan Normal University
Years of translation experience: 10. Registered at ProZ.com: Apr 2008.