Financial Update For Feb. 22, 2010

China's building bubble about to burst While you may think of China as just a country on the other side of the world, it could have enormous impact on our economy. Experts fear if air goes out of Beijing market, the world economic recovery may go flat.

“the overheated Chinese housing market is "Dubai times 1,000 — or worse."
“Luxury apartments, are priced at about 80 times the average income of the city's residents”. What do you suppose the tds is on those?

• TSX +14.45
• DOW +9.45
• Dollar +.09c to 96.11cUS
• Oil +$.75 to $79.81US per barrel.
• Gold +$3.30 to $1,121.30 USD per ounce

Women earn the freedom to opt out

Karen Mazurkewich, Financial Post

This year, American women will pass a major milestone: They will surpass men in the workplace. Canadian women passed the 50% threshold last year. The gender revolution has quietly overtaken us.

It has been 47 years since pioneering feminist Betty Friedan penned The Feminine Mystique, launching women on the road to economic empowerment. All these years later, memories of the injustices faced by grandmothers and mothers are fading. Sexism may have once been the norm but is now considered passé. Today, it takes a retro show like Mad Men, set in the 1960s, to remind us how far women have come in the workplace.

But here's the rub. Women have overtaken men in the workplace, but they still don't make as much money, and have barely made a dent in the executive ranks and boardroom.

Part of the reason is that women make up 70% of part-time workers in this country - so are paid less. But Rosenzweig & Company's fifth annual ranking of women in top jobs at Canada's largest public companies shows the numbers have slipped to 6.9% in 2009 from 7.2% in 2008.

"The number of women at the top is low because social arrangements haven't kept up with these changes," says Jay Rosenzweig, founding partner of the consulting firm. He's referring to day care and other social nets that particularly affect women.
But there is some good news: Women may be better suited than men to have and hold jobs in the future.

First, more women than men graduate from university, making the female workforce more educated. Now, a study from Harvard University suggests that in a world where job uncertainty is increasing, women can better adapt to career change.

Boris Groysberg, associate professor in the Organizational Behavior unit at the Harvard Business School, has studied star performers in the financial field. He discovered a significant gender difference: Female stars do not suffer when they jump jobs, but men do. Top male analysts who switched employers became average; women continued to be top performers.

Mr. Groysberg said the reason has to do with a predominately male corporate culture. Men build relationships with men in the company, he says. Successful women combat the institutional barriers inside their firms by building networks outside. It is those outside relationships, he says, that make women more portable.

The message to companies: "You should be hiring women [because] women may bring a lot more of their performance [to your company] than men," says Mr. Groysberg.
What's more: Women tend to do more due diligence when seeking new jobs. Whereas a man will maximize around career opportunity and salary, a woman will maximize around a job that allows her to be around her family, her values and meaningful work, says Beatrix Dart, executive director, Initiative for Women in Business at University of Toronto's Rotman School of Management.

Put simply: Women are more thoughtful at choosing their next employer. But there is a caveat. While women in knowledge-based jobs may be better suited for making lateral career moves, their strategy of developing outside networks will not help them climb the corporate ranks, says Mr. Groysberg. Women will continue to struggle for those top jobs in the corporate sector.

The answer for many is to opt out and take the entrepreneurial route.

Alison Snowball was on the corporate career path until her job on the institutional equities desk at TD Securities was restructured last year. She had prepared for this job for years. Not only did she graduate with a business of commerce degree from Dalhousie University, she had worked her way through school working at various financial institutions. Four years into a job at TD Securities, Ms. Snowball knew something wasn't quite clicking.

"From a generational perspective, the people still in power are 25 years older than myself and have a different mentality. It's like a locker room. That's just the reality," says Ms. Snowball.

So, rather than scramble for another position in the banking sector after she was laid off, Ms. Snowball decided to switch career paths. She has opened her own Toronto art gallery.

Ms. Dart of Rotman is seeing more women starting their own business because they can't maximize opportunities in a company setting. The most successful are those who have been strategic. "Women who leave careers to raise their kids during those critical years aren't as successful as those who seek jobs with more flexibility during those critical years," she says.

While the trend to start a small business is often painted as "opting out," Barbara Orser, of the University of Ottawa Telfer School of Management, argues that Canadian women "are some of the most entrepreneurial in the world." She says women are increasingly looking to export, thinking about enterprise growth and are becoming a bigger part of the Canadian economy as a result.

Read more: http://www.financialpost.com/news-sectors/story.html?id=2588533#ixzz0gCnFSPd5

China's building bubble about to burst
By David Olive Business Columnist Toronto Star
Frenzied developers with access to cheap money are creating a glut of premium office space and luxury apartments, priced at about 80 times the average income of the city's residents. Prospective middle-class homeowners, in panic-buying mode, are snapping up two properties at once, hoping to flip the second one to finance the first. Civic officials are encouraging the building boom.
The sale of vacant lots bolster their municipal coffers.
Banks eager to reap upfront fees are granting mortgages to all comers. Even factory owners are in on the speculation, generating more profit from flipping property than from traditional manufacturing, which increasingly is moving offshore to Vietnam, Malaysia and other nations with lower labour costs.
No, this isn't Toronto in the late 1980s, or Santa Barbara or Tallahassee six years ago at the height of America’s record housing boom, which culminated in a global credit crisis and ensuing recession.
This is Beijing today, where until recently one of the most popular programs on local television was a reality show called The Romance of Housing that spotlighted the struggles of families pursuing elusive affordable shelter.
And where the papers are reporting on suicides and violent protests after developers in cahoots with local officials seize someone's land for a new office building or apartment block.
The disturbing phenomenon extends beyond Beijing, where housing prices are far higher than in Dubai's overbuilt property market before that red-hot Persian Gulf economy imploded last year. In December alone, Chinese housing prices rose almost 8 per cent in 70 major Chinese cities, while housing starts leapt by 34 per cent nationwide.
Jim Chanos, the legendary U.S. short-seller who thrives on post-bubble bargain-hunting, claims the overheated Chinese housing market is "Dubai times 1,000 — or worse."
Chanos has an obvious stake in chaos. Not so Patrick Chovanec, as associate professor at the business school at Beijing's Tsinghua University. Chovanec cites the intoxicating impact of Beijing's $586-billion (U.S.) stimulus package and an additional $1.4 trillion in lending by state-controlled banks to real estate and other industries last year alone.
With easy money in such abundance, it's no wonder developers are on a building jag.
"You have state-owned enterprises using borrowed funds from the stimulus bidding up the price of land in Beijing — not even desirable plots of land — to astronomical rates," Chovanec told Bloomberg News last week.
"At the same time, you have 30 per cent-plus vacancy rates and slumping rents in commercial property. So it's just a case of when (lenders] recognize the losses — or don't."
For the moment, there are two Chinese property markets. There's an over-served premium-priced office and luxury apartment sector, and a neglected affordable housing market so underserved for lack of profit margins that Beijing recently pledged on its own to build 15 million units of shelter for low-income people.
Limited though the boom is to the high end of the market, the stupendous sums tied up in it have the potential to impede, if not halt, China's fast-track Industrial Revolution when the boom inevitably ends.
"It's simply a matter of time before the Chinese real estate bubble bursts," insists Yi Xianrong, longtime student of Chinese property trends at the finance department of the Chinese Academy of Social Sciences. "A bubble burst in China would not only deal a fatal blow to our own economy, but would also extinguish the world's hope for recovery."
Indeed, Western economies are counting heavily on China to lead the nascent global recovery. China's projected GDP growth this year of about 9.5 per cent will account for about one-third of global economic growth this year.
China has been providing one of the bright spots in the recent global downturn.
Bankruptcy victim General Motors has lost money in North America and Europe for years, but it profits from booming Chinese sales.
And Paul Otelli, CEO of California-based Intel Corp., the world's leading computer-chip maker, recently said, "Thank God for China. It buoyed our company through the depths" of the recent global downturn.
China has just overtaken Germany as the world's largest export economy, and eclipsed the U.S. as the biggest vehicle market.
Wen Jiaboa, the Chinese premier, has acknowledged that "property values have risen too quickly," and vowed a crackdown on speculators. China's central bank has twice this month raised the amount of capital Chinese banks must hold in reserve to cover losses, reducing funds available for property loans. But government officials are in a quandary over how hard to apply the brakes. A sudden about-face in Beijing's easy-money policy of ultralow interest rates could trigger widespread property devaluations that would hit not only homeowners but also construction, finance, steel, furniture and other sectors tied to the real estate market.
Yet the longer the bubble persists, the more punishing the inevitable implosion, as Western economies learned from the collapse of the U.S. housing market in 2007-08.
So, uncertainty rules.
A soft landing can be engineered if China's recent, modest steps to cool the market send a powerful enough signal to developers and panic buyers — and provide enough time for a rise in average income levels to match exorbitant housing prices.
In the meantime, there are a few signs the mania is exhausting itself. The new "instant city" of skyscrapers and thousands of villas built in the coal city of Ordos in China's Inner Mongolia is largely vacant — a sobering sign to overzealous developers.
"Who would go there?" a downtown resident told Bloomberg Business Week recently of the sprawling metropolis taking shape in the nearby suburban desert. "It's a city of empty buildings."
The Romance of Housing show was yanked from the air in November, ostensibly because state officials were offended by a scene depicting a corrupt state official. But the show more likely got the hook over concerns that it celebrated recklessness with personal finances. And in Beijing, dirt is accumulating around the entrances to the newly built twin-tower head office complex of the Bank of Communications Co.
In a business district with a 35 per cent vacancy rate due to over-exuberant developer activity, the lobby of the BCC landmark is now used as a bicycle parking lot.
http://www.thestar.com/business/article/769105--olive-china-s-building-bubble-about-to-burst