Recruiting in China

Fancy cars, private jets, diamond watches and designer clothes are attracting well-heeled buyers at Shanghai Top Marques 2006, a four-day luxury lifestyle expo at the Shanghai International Convention Center in Pudong. The organizer expects visitors to spend 500 million yuan (US$62.5 million) on luxury goods. The list of pricey products includes a rare 89.98 million yuan woodcarving, a 9.99 million yuan Koenigsegg CCR sports car - the fastest in the world - and a 7 million yuan Porsche.

Chinanews, Beijing, Oct. 12 ¨C Foreign investment activities in Chinese property market reached a climax during the first half of this year. According to Daily Economic News, a report titled "Globalization Leads to Investment Boom" and released by Jones Lang LaSalle, a world real estate services and money management firm, shows that as a burgeoning market, China remains attractive to foreign investors. During the first half of this year, direct investment in Chinese real estate market reached 4.75 billion US dollars, doubling the figure of the corresponding period of last year. The first-tier cities such as Beijing and Shanghai have become foreign businesspeople¡¯s most favorable places for making investments.

Global funds management companies have placed a large amount of their money into the Shanghai property market. By September 2006, 15 buildings had been entirely sold to one company. Transaction volume of these buildings reached 1.8 billion US dollars, most of the buyers being foreign investing companies based in the United States, Europe and the Asia-Pacific region. Among these 15 buildings, seven are luxury hotel-style apartments or high-class residential houses later renovated into hotel-style apartments. Insiders say the best time has come for investors to buy luxury hotel-style apartments located in a good place in Shanghai, and their rents are climbing steadily.

Senior manager in Jones Lang LaSalle's China office Deng Wenjie predicted that multinational companies would continue to expand their business in China. As China further opens its finance sector, more A-class offices will be in demand. As the number of foreign staff workers increases in China, it will stimulate the demand for luxury hotels and hotel-style apartments. Meanwhile, people¡¯s increasing disposable income and the ever-expanding middle class group will benefit domestic shopping malls greatly. As the market becomes more transparent, it will attract more foreign investment.

He also predicted that during the latter half of this year, more transaction deals would be clinched in China. Foreign investors who have a clear investment plan will further increase their investment in China. As competition becomes fierce in the first-tier cities, investors will shift to the second-tier cities to seek for gains.

SINGAPORE Andy Xie's resignation as Morgan Stanley's chief economist in Asia last week followed an e-mail message in which he characterized Singapore as an economic failure.

Xie, a Shanghai-born economist who worked at Morgan Stanley for nine years, sent the message to his colleagues after attending the International Monetary Fund and World Bank annual meetings last month in the Southeast Asian island state.

In the e-mail message, he questioned why Singapore had been chosen as host for the conference and said that delegates "were competing with each other to praise Singapore as the success story of globalization."

Xie also made unsubstantiated allegations about the use made of Singapore's financial services by corrupt officials and businessmen in Indonesia.

The $118 billion Singaporean economy has experienced three recessions since the 1997 Asian financial crisis, and is expected to grow by as much as 7.5 percent this year.

The city-state is grappling with growing competition from China and India, the most populous and second most populous countries, respectively, where labor costs are less than a quarter of those in Singapore.

Prime Minister Lee Hsien Loong of Singapore said last month that the city- state's economy could sustain annual growth of 3 percent to 5 percent for the next 10 to 15 years as the country expanded industries from information technology to tourism.

Singapore is ending a four-decade ban on casinos. The government plans to triple tourism revenue to $19 billion and double visitors to 17 million by 2015.

Officials from the public relations departments of the Monetary Authority of Singapore and the government information service declined to comment on the contents of Xie's message. They also declined to be identified.

When reached on his cellphone Monday, Xie said that he had not decided on what he would do next.

"I'm not at liberty to comment on anything," Xie said. "I'm in Guangzhou, and I'm taking a break on top of a mountain. It's quite nice here."

Morgan Stanley confirmed the contents of the e-mail message, but the firm, based in New York, said that it did not elaborate on the reasons behind departures of employees.

"This is an internal e-mail based on personal suppositions and aimed at stimulating internal debate amongst a small group of intended recipients," Cheung Po-ling, a spokeswoman for Morgan Stanley in Hong Kong, wrote in a statement. "The e-mail expresses the views of one individual, and does not in any way represent the views of the firm."

"Morgan Stanley has been a very strong supporter of Singapore, and has a great deal of respect for Singapore's achievements," Cheung said.

Morgan Stanley has handled $1.5 billion in merger deals in Singapore this year, according to data compiled by Bloomberg News.

It advised Temasek Holdings, the Singapore government investment company, in its purchase in March of a 9.9 percent stake in Tata Teleservices, based in Mumbai, India.

Xie worked at the corporate finance division at Macquarie Bank in Singapore before joining Morgan Stanley.

BEIJING (Reuters) - Morgan Stanley's star Asia Pacific economist, Andy Xie, has resigned and is expected to embark on a new career elsewhere, the U.S. investment bank and an industry source said on Sunday.

Xie, whose widely-read reports on the Chinese economy have boosted Morgan Stanley's image in the region, tendered his resignation last week and had left the firm as of Friday, said Hong Kong-based spokeswoman Po-ling Cheung.

"An internal memo was sent out (on Friday) informing employees that he has resigned from the firm," she said by telephone.

"He has left the firm," she added.

Xie confirmed the news by telephone, but declined to say what he would do next.

A source close to Morgan Stanley said that Xie would likely join another firm in the industry in the near future.

BEIJING — American life insurance companies are pressing China to make good on WTO commitments to give them equal access to its booming market, arguing that they can help meet the needs of a fast-aging population, the head of an industry group said Tuesday.

Insurers want Beijing to remove obstacles that limit their ability to set up nationwide operations and cap foreign ownership of a Chinese insurer at 50 percent, said Frank Keating, president of the American Council of Life Insurers.

He said China's life insurance market, now about one-tenth the size of the $540 billion-a-year U.S. market, could grow in coming years to become the world's biggest.

Keating said his group pressed regulators in meetings this week to bring China's licensing system in line with its promise to the World Trade Organization to treat foreign and Chinese insurers equally.

China's current system requires foreign insurers to apply to open new offices one at a time, while Chinese competitors can win permission for a nationwide operation, Keating said.

China promised in 2004 to end such geographic restrictions and officials acknowledge that they are no longer required by regulations, but regulators still use the old system, he said.

"Our message here was a gentle chiding message that as this process goes forward it is important to be prompt, to be fair and to provide a competitive market for all," Keating told reporters.

China faces a Dec. 11 deadline for meeting commitments to open its banking, insurance and other financial industries to foreign competitors.

Trade groups say Beijing has met most of its commitments to repeal formal barriers to foreign competition. But they say that in some areas, companies are still waiting for promised regulations that are meant to put them on an equal footing with Chinese competitors.

Keating said he told Chinese officials that foreign insurers can help Beijing cope with the needs of a rapidly graying population by selling life insurance, annuities and other retirement-related services to millions of families who can afford them.

That would let government focus on helping the poor, he said.

Keating, a former governor of the U.S. state of Oklahoma, said he plans to meet with U.S. Treasury Secretary Henry Paulson in hopes of having equal treatment in insurance made part of a U.S.-Chinese dialogue on economic matters.

The dialogue was launched last week when Paulson visited Beijing.

Keating also said that while Beijing has met its WTO commitment to let foreign investors own up to 50 percent of a Chinese insurer, his group wants to see that limit raised to allow full ownership.

The American Council of Life Insurers represents 377 companies that sell life insurance, annuities and pensions, including about 20 that operate in China.

U.S. insurers accounted for $1.5 billion of the $61.6 billion in life insurance premiums paid in China last year, according to Brad Smith, the insurance group's vice president for international relations.

The Chinese market for insurance has been growing by 15 percent to 20 percent a year over the past decade, Smith said.

Smith said he couldn't estimate what share of China's insurance market foreign companies might be able to capture. But elsewhere in Asia, foreign companies account for 25 percent of Japan's insurance market and 13 percent of South Korea's, he said.

Insurers hope to see Beijing create tax and other incentives for families to invest in annuities, long-term health care policies and other retirement services, Keating said.

"That will free the government to focus on the 60 million poorest people," he said. "That's good public policy."

The California Public Employees Retirement System, the largest US public pension fund, is considering investing for the first time in Chinese companies, aiming both to capitalise on the country's booming economy and to raise its exposure to emerging markets.

Such a move by Calpers, which has not invested any of its $208bn (€164bn) portfolio in Chinese companies because of poor corporate governance standards, could have a ripple effect on other US public pension funds and increase demand for Chinese shares.

In an interview with the Financial Times, Russell Read, Calpers' recently appointed chief investment officer, indicated that the fund could begin by investing in Chinese companies with US or international listings through American Depository Receipts and Global Depository Receipts.

He said the pension fund's staff could recommend the strategy to Calpers' board in the coming months.

Mr Read, who shaken up Calpers' investment strategy since joining in June, said the issue of how to invest in China and other emerging markets was a primary focus for the Sacramento-based fund. "Investing properly in the emerging markets . . . is fundamental to our investment success," he said.

Calpers, which has a reputation as a tough guardian of shareholders' rights, has so far excluded China from its list of investable markets.

The list is updated yearly and is up for re-evaluation by the Calpers board in February, although permission to invest in ADRs and GDRs could come sooner.

In spite of China's fast-growing economy, its capital markets have proved disappointing to foreign investors. The local stock markets have been volatile and are closed to all but a small group of investors picked by the Chinese government.

However, several big companies, including the state oil giants Petrochina and CNOOC and telecommunications operators China Telecom and China Mobile, have listings in Hong Kong and trade ADRs in the US.

Calpers has some real estate holdings in China. Other US public pension funds also have a degree of exposure to China, although in most cases it appears to be limited to real estate.