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An interesting story from Bloomberg:

For Hong Kong, North Korean Nuclear Test May Bring Stock Record

By Darren Boey

Oct. 16 (Bloomberg) — North Korea’s claim to have tested a nuclear weapon may have an unintended consequence: sending Hong Kong’s Hang Seng Index to a record.

Stocks rose for four straight days in Hong Kong, Asia’s second-biggest market, after dropping at the start of last week on the announcement. The Hang Seng is just 1.7 percent below its all-time high, set in March 2000.

Hong Kong stocks have held up better than markets in South Korea and Japan, which are closer to North Korea, as the country has stepped up its nuclear program. The city also has benefited from the end of the Federal Reserve’s interest-rate increases in the U.S., a benchmark for local borrowing costs.

“To the extent that Hong Kong is a less risky place, then people may move money there,” said Tim Leung, who helps oversee $1 billion at IG Investments Ltd., a money manager based in the city. “Investors have been buying Hong Kong on the back of a peaking of interest rates.”

The Hang Seng has beaten the Morgan Stanley Capital International Asia-Pacific Index since Aug. 8, when the U.S. Federal Reserve stopped raising rates after two years. Last week, Hong Kong’s index gained 0.5 percent as the MSCI Asia Pacific index rose 0.1 percent.

Shares of companies with ties to China’s mainland are aiding the rally as a strengthening of the country’s currency, the yuan, lifts returns for dollar-based investors. Industrial & Commercial Bank of China Ltd.’s initial stock sale this month, set to become the world’s biggest ever, may bring further gains. Read the rest of this entry »

Fromhttp://chinadigitaltimes.net/2006/10/wang_guangmei_chinas_former_first_lady_died.php

Wang Guangmei, wife of Liu Shaoqi, former president of People’s Republic of China, die in Beijing on Oct. 13, Singtaonet said. Wang’s death was still not publicized in China.

The legendary former first lady was jailed and tortured for 12 years after his husband was removed illegally by Mao Zedong in the Culture Revolution. Liu was once considered the successor of Mao, but his moderate economic policies and rising political position displeased Mao, who remove Liu and further more, expelled him from the Communist Party. Liu died tragically, humiliated as a “traitor”, a “scab”, and “the biggest capitalist roader in the Party”.

Graduated from Fu Ren University (北京辅仁大学), Wang was named as “Queen of Math” and “the first master of atom physics”. Wang spoke French, English and Russian. Her brother, Wang Guangying, was the vice chairman of National People’s Congress and the founder of China Everbright Group, one of the biggest state-owned conglomerates.

Wang Guangmei’s death became particularly sensitive as this year is the 30th anniversary of Mao Zengdong’s death. To commemorate it, the central government just held a nation-wide memorial.

- Also read report from China Times (Chinese)

- Taiwan’s United Daily published two stories (Chinese), one about Mao Zedong and Liu Shaoqi, one about Wang Guangmei and Jiangqing, Mao’s infamous wife.

One-trillion-dollar is a significant threshold for China’s foreign exchange reserves. Holding large amounts of reserves is not only a tremendous waste of resources, but also a heavy burden pushing China to raise currency value. It’s not strange that the country’s money supply will also increase, to keep in pace with the exchange reserve surge. The central bank has to trade dollars with yuan to balance currency value. The consequent money-supply generated by the tradeoff will fill the market with too much liquidity. The result is an inevitable inflation, which China is dieing to avoid. The only solution to this dilemma is the appreciation of the yuan.

From the Wall Street Journal:

China’s foreign-exchange reserves, the world’s largest, rose to just below $1 trillion at the end of September, while money-supply growth eased, according to data issued Friday.

As China continues to record large trade surpluses, analysts expect that foreign-exchange reserves will remain on a strong upward trend. At the same time, money-supply growth, while slightly slower than in the previous month, remains above the central bank’s target.

China’s foreign-exchange reserves totaled $987.9 billion at the end of last month, up 28.5% from a year earlier, the People’s Bank of China said. Read the rest of this entry »