HK property agents were warned they face stiff punishment if they use their own money to pay developers in the hope of being allotted a chance to buy homes at popular projects

Agents warned on paying for shot at homes
Friday, January 24, 2014
Property agents were warned yesterday they face stiff punishment if they use their own money to pay developers in the hope of being allotted a chance to buy homes at popular projects.

Fines of up to HK$300,000 and licenses suspended or revoked were cited by Vivien Chan, chairwoman of the watchdog Estate Agents Authority.

“The authority is highly concerned about agents offering financing for homebuyers,” she said, noting there are clear guidelines that ban such action.

Agents are said to be drawn into such dealings when developers announce oversubscription figures at projects, hoping to boost sales.

Potential buyers have to register and provide cashiers’ cheques to a developer, which is how developers can gauge responses to a project.

Chan said the worry about this becoming a problem means more undercover checkers are being sent to watch agents, though only three violations of the money rule are suspected at this time.

The warnings on payments came as the authority revealed it had received a total of 494 complaints last year, with 44 of them from the primary market.

But that compared with 547 received in 2012.

It is also a fact that the number of agent licenses has been falling – it lately stood at 35,900 – since April last year.

The trend has reflected a lackluster market for homes, indicated clearly yesterday when a 1,600-square-foot unit at Harbourfront Landmark in Hung Hom sold for HK$32 million after the asking price had been reduced by HK$3 million.

And a survey by online property platform GoHome, which had 2,575 respondents, showed around one-third of local people interested in buying a home in the first half this year are being tempted by developers’ discounts and rebates.

Still, 86 percent of respondents also said that homes were still too expensive, while 38 percent believed prices will fall.

It was also noted that more than half of the respondents claimed they would consider buying property in Singapore, Malaysia or Thailand.

HK hospitals suffering from bad debts, with more than half the culprits being non-residents

Hospitals suffering from bad debts
Hilary Wong
Friday, January 24, 2014
The Hospital Authority says it has incurred bad debts totaling HK$49 million, with more than half the culprits being non-residents.

It said in its annual report that absconding pregnant woman from the mainland alone were responsible for HK$10 million of this amount.

Secretary for Health Ko Wing-man said he is greatly concerned as the number of bad debts has increased sharply from the previous year.

“We took stringent measures to prevent bad debts, including deposits by non-local patients,” he said.

Ko admitted it will be hard to recover the money if the patients had left Hong Kong as this will require additional resources.

“The deposit system is used when patients are referred to a hospital,” he said.

“But if a pregnant women arrives at the accident and emergency ward we have to provide medical services on humanitarian grounds and charge the patient later.”

He said the government and the authority will work together on prevention measures and he asked the public to understand the difficulties encountered on this issue.

Meanwhile, Ko said there are two peak periods of seasonal influenza, at the end of a calendar year and again in spring.

He said the Centre for Health Protection has been monitoring the incidence rate of influenza by examining samples from clinics or hospitals and collecting information about the patients who had upper respiratory infection symptoms similar to influenza.

Ko said the number of influenza cases this year is higher than the previous two years. He said since the outbreak of H1N1 in 2009, it had became one of the main viruses found in seasonal flu, accounting for 40 percent of all tested samples.

“With the flu season peaking in March and April we need to prepare to face any pressure to the medical system.”

Ko said despite the low death rate, flu can cause complications. “We still need to carefully monitor the situation so no conclusion can be made now.”

Charles Lee Yeh-kwong, the first chairman of Hong Kong Exchanges and Clearing (0388) became the chairman the Academy of Chinese Studies after stepping down from the top of the financial pyramid

Pivotal pioneer
Ling Wang
Monday, January 20, 2014

Charles Lee Yeh-kwong, the first chairman of Hong Kong Exchanges and Clearing (0388) became the chairman the Academy of Chinese Studies after stepping down from the top of the financial pyramid.

Lee now endeavors to promote Chinese culture.

Last year marked the 20th anniversary of the first mainland enterprise listing in Hong Kong, and indeed, it was Lee, 77, who had pioneered the watershed event.

Mainland firms now account for more than half of Hong Kong’s total HK$24 trillion market capitalization.

In addition to bringing H shares to Hong Kong, Lee has been credited with being a prime mover in pushing through the merger of the city’s stock and futures exchange.

He also encouraged many of the territory’s biggest companies, including major developers to go public, as chairman of the Mandatory Provident Fund Schemes Authority.

Born in Shanghai in 1936 during the Sino-Japanese war, Lee moved to Hong Kong with his family in 1949, attended Wah Yan College, then studied accounting before going Britain to qualify as a lawyer.

Returning from London, he took various roles, including politician, solicitor, administrator, reformer, academic and charity worker. Now, he prefers people to call him a “messenger of culture”.

Mr Lee told Sing Tao Daily, The Standard’s sister paper, he likes the saying from The Analects of Confucius: “While wealth is covetable for a gentleman as well, he takes it in its natural course.”

Recalling the global financial crisis in 2008, He added: “So long as it comes to humans, things are not easy to control because humans are greedy by nature.” Therefore, edification brought by culture education was important.he lays blame on greed of Wall Street elites. “That was a grave lesson. But with days gone, people seem to forget the pain as Wall Street’s greed comes back again,” Lee said. “Governments want to correct the situation, but how?”

He paraphrased a story circulated in Pingyao, Shanxi Province, from where he has just returned.

The city was the financial center during the Ming and Qing dynasties. In the transition period between dynasties, the currency of the former dynasty depreciated sharply.

An owner of a private bank took pity on civilians who lost almost half of their life savings through currency depreciation, and deciding to exchange their currency with real gold prices.

“He suffered a great loss, of course, but it is a good example of doing business with morality,” Lee said.

He believes such good Chinese history is a treasure that deserves deeper exploration. The Academy of Chinese Studies is a non-profit organization established by renowned scholars in 1998. Lee is dedicated to promoting the website “Splendid Chinese civilization” (http://hk.chiculture.net).

The website has been running for more than 15 years, but has never had a high profile.

However, it has attracted a lot of overseas visitors, and the academy is translating the content into English. “You will be completely wrong if you think it’s an easy job,” Lee said.

“An article tens of thousand of words long needs more than one translator, but too many hands might spoil the coherence.” Despite the challenges, he would never give up. He believes that people should persist with meaningful things.

“It is a pity when you are capable, yet do nothing. When you are capable, then turn impossible into possible.”

In the past three decades, he has had numerous public roles. He feels sorry for the younger generation who show little enthusiasm for public service.

“The older generation felt they wanted to give something back to society when they tasted success. But the younger generation seems to think in a different way. They lack enthusiasm.”

There were lots of reasons for this, and politics was only one of them .

Asked if he would go back into public service, Lee said: “Opportunities should be left to the younger generation.”

But his public gowns have not disappeared for good.

He now heads the Hong Kong- Taiwan Economic and Cultural Cooperation and Promotion Council, and has been appointed as pro-chancellor. He has also been busy fund-raising for the Journalism Education Foundation to help it build a museum in Central.

As it gets harder for the government to find talent, Lee quoted a metaphor as food for thought.

“Man always complains it is hard to look for a girlfriend. For sure, it will be difficult when you require both beauty and brains. Sometimes you should lower the standards.”

He disagrees with those who criticize the young, saying: “Years ago, only one percent of people were admitted to university. Now over 60 percent attend colleges and universities, and one percent are as excellent as their predecessors.”

Although he was born in Shanghai and raised in Hong Kong, Lee’s family originated from Chiu Chow. He and another Chiu Chow tycoon, chairman of Cheung Kong (Holdings) Li Ka-shing have a close friendship.

He helped Cheung Kong to list in 1972 and held a role of director in all Cheung Kong-related companies. Last year, he became independent non- executive director of Cheung Kong and Hutchison Whampoa on a promise made 16 years ago.

“I joined the Executive Council in 1997, so I had to quit all the positions in listed companies. He [Li Ka-shing] said it was good to serve society, but when you finish the job in Exco, please come back to help me,” he said.

Li Ka-shing commented on current affairs and business issues in an interview conducted by mainland media last November. Asked how he sees his old friend’s remarks, Lee laughed and said, “Of course I cannot tell you.”

At 77, Lee still has lots of energy. He walks quickly, and still visits the office of Woo Kwan Lee & Lo law firm, which he co-founded in 1973. He is also a regular at a coffee shop in The Landmark..

Asked his opinion on Occupy Central, he said: “It’s OK to express ideas, but you have to adhere to the law.”

He likes scuba diving. His endurance of staying under the water would put many young divers to shame.

“People say diving is dangerous, but actually its the safest to stay under water. If I am under water when a tsunami hits, I would not feel it.”

Company chiefs in Hong Kong are earning as much as HK$31 million a year – but the city’s top and senior executives are still getting far less than their counterparts in Singapore and Japan

HK, Singapore CEOs tell a tale of two salary scales
Eddie Luk
Friday, January 24, 2014
Company chiefs in Hong Kong are earning as much as HK$31 million a year – but the city’s top and senior executives are still getting far less than their counterparts in Singapore and Japan.

The Hay Group found that salaries and year-end bonuses of CEOs in large listed companies in Hong Kong ranged from HK$13.63 million to HK$31.3 million a year.

But this is 34 percent less than that pulled in by top executives in Singapore.

And another survey showed that even senior executives in Hong Kong get 14 percent less than their counterparts in Singapore.

That’s according to Towers Watson, a professional services firm, which compared the salaries of senior executives in business corporations in Asian economies that also included Vietnam, Indonesia and others.

Based on the Hay Group survey, CEOs in banking, finance, telecoms and “consumer discretionary” industries are generally highly paid, taking home as much as HK$31.3 million a year.

Those in the financial/ banking and communication/ telecom sectors are paid HK$28.03 million and HK$20.68 million, respectively.

CEOs in the industrial sector are paid around HK$13.63 million a year.

On average, the salary of CEOs in the top 25 percent was HK$22.17 million a year.

The middle 50 percent took home HK$10.62 million and the bottom 25 percent got HK$4.82 million. Hay Group Hong Kong general manager Thomas Higgins said: “Changes in total CEO remuneration value is not always obviously linked to performance.”

Chinese University economics professor Terence Chong Tai-leung said: “As the retail industry is booming, particularly for firms selling watches, handbags and cosmetic products, they are willing to pay high salaries for the best CEOs.”

“In Singapore, firms are willing to offer extremely high salaries to lure talented people.”

Centaline Human Resources Consultants managing director Alexa Chow Yee-Ping agreed with Chong, saying that in recent years Singapore’s economic development has been stronger than Hong Kong’s.

India’s Decade of Decay; Manmohan Singh’s decade of disastrous leadership has been characterized by weakness and decay. India will suffer the consequences for years to come

India’s Decade of Decay

01-24 18:01 Caijing

Manmohan Singh’s decade of disastrous leadership has been characterized by weakness and decay. India will suffer the consequences for years to come.

By Jaswant Singh

NEW DELHI – Indian Prime Minister Manmohan Singh, who has been in office since 2004, recently held what was only the second press conference of his current five-year term, which is rapidly approaching an inglorious end. Betraying his yearning for approval, Singh told the assembled journalists that he hoped that history would judge his tenure more kindly than his political adversaries do.

That outcome seems unlikely, at best. On the contrary, Singh’s once-great Congress party is now at a political impasse, from which it can escape only if it frees itself from its destructive dynastic leadership. After more than a half-century in government – much of India’s modern life as an independent country – the era of Congress dominance appears to be over.

Perhaps the clearest indication of the party’s decline occurred in December, when it suffered crushing defeats in four key state-assembly elections. In Rajasthan, Congress won only 21 seats, while India’s second-largest political force, the Bharatiya Janata Party (BJP), won 162. This represents a massive shift from the 2008 election, when Congress gained 96 seats, compared to the BJP’s 78.

Likewise, in Delhi, Congress was reduced to just eight of 70 seats after 15 years in power, with even Sheila Dikshit, Delhi’s longest-serving Chief Minister, losing her seat to a political newcomer. Only in the small northeastern state of Mizoram did Congress retain its majority.

This was an unprecedented rout – and does not bode well for Congress in the upcoming national elections. To see why – and to determine whether the party can stem its own decay – requires understanding what has happened since Congress regained national leadership from the BJP-led National Democratic Alliance in 2004.

As the largest party, Congress became the hub of the newly established United Progressive Alliance (UPA). But, in a surprise move, the party’s leader, Sonia Gandhi, declined to become Prime Minister, naming Singh – an academic and civil servant, with no electoral experience – as the UPA’s choice. After nearly 40 days of melodrama, Singh was finally sworn in, though he had not won voter support directly in any constituency.

This unnatural arrangement instantly earned acid comments. As one observer astutely remarked, “Where there is authority, there is no ability; but where there is some ability, there is no authority.” Despite Singh’s academic abilities, his potential as India’s top politician was severely limited. Over time, it became apparent that Singh’s government was worse than ineffective; it was doomed to fail, because Singh’s strengths lie in serving as an obedient and capable subordinate, not as an agenda-setting leader who acts decisively.

Consider his role in managing India’s economic transformation when he was the country’s finance minister in the early 1990’s – an effort that his supporters have often cited as an example of his vision and ability. Last year, former External Affairs Minister Natwar Singh disclosed that it was actually then-Prime Minister Narasimha Rao, a shrewd and experienced Congress veteran, who pushed India’s economic reform and restructuring. Singh, reluctant to do what was needed, would have achieved very little had Rao not provided a platform – and the needed political support – to pursue the government’s agenda. Early on, there were intimations that Singh should neither be underestimated as a political manipulator, nor overestimated as an effective economic manager.

But Singh’s ineptitude as a leader was already apparent before the revelation of Rao’s role. Not only has economic reform come to a virtual standstill since he took office, but he has also acquiesced to all of Gandhi’s demands, legitimate or otherwise.

As a result, governance, and thus the economy, has been deteriorating. India has been taken hostage by an extra-constitutional body composed of NGOs, brought together under the National Advisory Council, which is chaired by Gandhi. With the cabinet having become superfluous, the NAC’s decrees – including half-baked ideas inspired by the European welfare state – became policy.

As a result, Singh has presided over a sharp economic slowdown and soaring prices, especially for food. Meanwhile, political scandals, financial scams, and other criminal activities have proliferated under Congress rule since 2004. The UPA regime has effectively looted the country, and rampant corruption and a lack of accountability have decimated its leading party’s credibility.

Through all of this, the supposedly economically literate Singh was little more than a silent spectator, offering only denials of responsibility or trite remarks from the perspective of a political outsider. And, while the damage that he has caused to Congress is for the party to solve, the damage that his aloofness has caused to the institution of Prime Minister is a problem for all Indians.

Manmohan Singh’s decade of disastrous leadership has been characterized by weakness and decay. India will suffer the consequences for years to come. Far from vindicating him, historians will know exactly whom to blame.

Jaswant Singh, a former Indian finance minister, foreign minister, and defense minister, is the author of Jinnah: India – Partition – Independence and India at Risk: Mistakes, Misconceptions and Misadventures of Security Policy.

Tesla makes electric debut in China market despite hurdles

Tesla makes electric debut in China market despite hurdles

Xinhua

2014-01-25

US electric vehicle maker Tesla made its debut in China this week amid applause over its lower-than-expected price tag, but consumers are still concerned about issues such as battery charging.

The company plans to have showrooms and maintenance centers open in more major cities in east China this year as part of its outreach to consumers in the world’s largest auto market, Veronica Wu, Tesla’s vice president, told Xinhua on Friday.

She also said CEO Elon Musk wants to double Tesla’s auto production this year and sees China as a key driver of its global auto sales growth.

Despite these ambitions, its efforts to build a strong presence in China face many hurdles.

Wu said pre-orders of its Model S in China have been dynamic in the past few months, but prospective car buyers in China are still resistant to the idea of driving a purely electric vehicle, mostly out of concern that it is hard to find places to recharge the car.

At Tesla’s Beijing showroom — the first and so far only one in mainland China — Xinhua reporters found customers gathering around the company’s popular Model S, with some venturing inside to try driving an electric vehicle.

A sales representative at the showroom said people who check out the Model S come with a broad range of questions, but the most frequently asked is where to charge the car, especially when running long-distance trips.

Tesla has said it will build free-to-use charging stations along expressways linking Beijing and Shanghai. The Model S can run up to 500 km after an hour of charging at one of these stations.

The insufficient infrastructure will likely hold back Tesla’s sales and expansion in China. But Wu expressed confidence in the Chinese government’s commitment to advancing its green initiatives. “Based on our contacts with officials in central and local governments, we find that authorities are very open to discussions about sustainable solutions to problems posed by growing automobile ownership,” she said.

Wu labels Tesla’s commitment to the Chinese market “unprecedented” compared with many multinational firms such as Apple and Motorola that she has previously worked for.

Tesla marked its entry to the highly competitive Chinese auto market with an online announcement on Thursday that the price of its Model S constitutes only its original price in the United States and unavoidable taxes and shipping costs.

Yet competitive pricing alone does not promise strong sales in China. A host of big Chinese cities have moved to cap the growth of automobile ownership to alleviate traffic congestion and air pollution.

Authorities have been encouraging purchases of hybrid and electric cars by granting more quotas and subsidies for buyers, but Tesla has yet to make the official list of cars eligible for such preferential policies.

Wu said Tesla is in talks with relevant government departments over this issue, recognizing that Tesla’s inclusion on the list would make its cars much more attractive to Chinese consumers.

She said the company has grand vision for its China business, even though its current China-based team of less than 30 people is building from scratch.

Wu also said she felt encouragement from the fact that China has seen “leapfrog development across many industries in the past” as an unsatisfactory status quo in many sectors has led to faster adoption of the latest technologies.

Kingston Chang, Tesla’s general manager in China, also added, “Though we sell cars, we are more of a tech company and we are in a business consistent with China’s goal of developing more sustainably. This means huge opportunities for us going forward.”

Taiwan topped the global rankings in patent activity and was ranked as the 10th most innovative nation in the world and the fourth most innovative in Asia

Taiwan tops global patent rankings

CNA

2014-01-25

Taiwan topped the global rankings in patent activity and was ranked as the 10th most innovative nation in the world and the fourth most innovative in Asia, according to the Global Innovation Rankings released by Bloomberg on Thursday.

According to Bloomberg, the patent activity category looked at resident patent filings per million residents and per US$1 million of research and development spent, as well as patents granted as a share of the world’s total.

In addition to patent activity, Taiwan finished second in high-tech density and tertiary efficiency in the Bloomberg innovation rankings.

The high-tech density category calculated the number of hi-tech publicly listed companies as a percentage of all listed companies. The United States came in first.

The tertiary efficiency category, measuring the number of secondary graduates enrolled in post-secondary institutions and the percentage of the labor force with tertiary degrees, in which Canada was ranked first, also looked at the annual number of science and engineering graduates as a share of the labor force and as a percentage of all tertiary graduates.

In addition to the three categories, the Bloomberg global innovation rankings weighed four other factors: R&D density, productivity, researcher concentration, and manufacturing capability.

The rankings evaluated more than 200 countries and regions based on the seven factors.

South Korea came in first in the overall innovation rankings but did not lead in any of the seven categories, according to Bloomberg.

Sweden was ranked the second most innovative nation in the world ahead of the United States, Japan, Germany, Denmark, Singapore, Switzerland, Finland and Taiwan.

China finished 25th in the overall innovation ranking but placed first in manufacturing capability, which measured manufacturing value as a percentage of a country’s gross domestic product and as a share of the world’s total value-added manufacturing.

South Korea came in second in the manufacturing capability category, according to the rankings.

Pharmas face closure if they fail to meet Beijing’s new regulations; Most drug makers who passed the new regulation are now facing idle capacity because their capacity had been enhanced to meet standards

Pharmas face closure if they fail to meet Beijing’s new regulations

Staff Reporter

2014-01-23

Drug manufacturers in China that have not passed new regulations under the Good Manufacturing Practice for Pharmaceutical Products (GMP) will face closure until they pass the verification process devised by the new GMP regulations, according to the China Food and Drug Administration.

Chinese pharmaceuticals can be divided into two categories — sterile medical products and non-sterile medical products.

The administration stated that all the sterile drugs manufactured by existing drug manufacturers had to meet the requirements of the new version of GMP before the end of 2013.

As of Dec. 31, 2013, the number of sterile drug producers was pegged at 1,319, with 796 passing the new GMP regulation and 523 trying to meet the new requirements or waiting to be merged with other companies.

The administration stated that those who have not met the requirements of the new GMP regulation could continue operating after they pass, but those who fail to pass the exam would be closed or merged, according to the Shanghai-based Economic Observer.

Most drug makers who passed the new regulation are now facing idle capacity because their capacity had been enhanced to meet standards, said a worker at China Shineway Pharmaceutical Group.

For drug producers, trying to meet the new GMP regulation is exerting mounting pressure as a result of idle capacity, bank loans, development for new drugs and capital flow.

Non-sterile medical products, on the other hand, have to meet the requirements of the new GMP by the end of 2015, said the report.

As of Oct. 2013, only 778 out of the total 3,839 non-sterile drug manufacturers passed the verification process.

An official at the China Association of Pharmaceutical Commerce said that at least 1,000 non-sterile medical producers have to be shut down or merged with other firms after the deadline passes in 2015.

Market observers are of the view that China’s pharmaceutical industry should be controlled by large pharmaceutical firms, which could help enhance quality, improve competitiveness and internationalization.

266 SMEs debut on China’s New Third Board

266 SMEs debut on China’s New Third Board

Xinhua

2014-01-25

A total of 266 small and medium enterprises (SMEs) started to be traded on the New Third Board on Friday, marking a considerable expansion for China’s over-the-counter (OTC) market after the board was officially established one year ago.

The move, bringing the number of companies listed on the New Third Board to 621, represents China’s efforts to encourage the development of SMEs against the current economic downward pressure.

The New Third Board, or National Equities Exchange and Quotation (NEEQ) system, serves as a national share transfer system for SMEs to transfer shares and raise funds.

Of all the debuting companies, which come from 28 provinces across the country, over 75% are engaged in innovative hi-tech sectors, covering high-end manufacturing, information transmission, software, research and development, technological solutions and cultural services.

23% of the companies have capital stock between 5 million yuan and 10 million yuan (US$820,000-$1.65 million), while enterprises with 10 million to 20 million yuan (US$1.65 million-$3.3 million) take up 24%.

Companies with capital stock of 20 million yuan to 50 million yuan (US$3.3 million-$8.26 million) and of above 50 million yuan account for 34% and 19%, respectively, of the total.

Half of the enterprises posted revenue of over 50 million yuan (US$8.26 million) in 2013 and a quarter reported 100-million-yuan (US$16.5 million) revenue with net profits surpassing 10 million yuan (US$1.65 million).

Confronted with a potential slowdown in economic growth, widespread industrial overcapacity and weakening investment increases, China’s economy is increasingly reliant on SMEs to generate growth.

Currently, such enterprises contribute 50% of national tax revenue, 60% of GDP, 80% of employment and 74% of technological innovation, the China Securities Journal reported on Friday.

However, SMEs in China still struggle with financing, regardless of whether they are trying direct or indirect ways of raising money, and are encumbered by intrinsic factors such as high risks for start-ups, lack of information and an opaque financial condition.

Prompted by the situation, the New Third Board was initiated in 2006 as an experimental platform to facilitate financing for China’s non-listed small and promising high-tech enterprises in Beijing’s Zhongguancun Science Park. Companies nationwide are now allowed to file applications.

The present system was officially established on Jan. 16, 2013 after years of trials in cities including Shanghai, Wuhan and Tianjin.

It complements the existing main board, the SME board and the ChiNext board, being seen as an easier financing channel with low costs, simple listing procedures and a short application period for start-up firms unqualified to be listed on major exchanges.

The State Council, China’s Cabinet, released policy measures in June 2013 to support adjustment and upgrading of the country’s economic structure, putting great emphasis on the OTC market in a bid to set up a multi-layered capital market.

Data from Straight Flush, a securities information service provider, showed that 355 enterprises listed on the New Third Board completed 60 issuance projects in 2013, raising over 1 billion yuan (US$165 million) and with aggregate market value surging 64.55% year on year.

Xie Geng, general manager of the NEEQ, revealed that the new transaction platform for the board is scheduled to begin operating in May while a system for market makers could also be expected in August.

Yang Xiaojia, chairman of the board of the NEEQ, promised to expand cooperation with commercial banks and other financial institutes and build a connecting mechanism for the Third Board and other exchanges markets as well as regional markets.

A guideline for supervision over mergers and acquisitions of non-listed companies is being drafted and will be released as soon as perfected, said the China Securities Regulatory Commission on Thursday via its account with Sina Weibo, the Twitter-like microblogging service.

China overtakes Japan for highest rate of death from overwork

China overtakes Japan for highest rate of death from overwork

Liang Shih-huang and Staff Reporter

2014-01-25

China has surpassed Japan to become the country that posts the highest rate of deaths caused by excessive work, with one Chinese website noting that the problem is acutest in the manufacturing sector.

According to some media reports, around 600,000 people or over 1,600 persons a day die as a result of overwork in China every year.

The manufacturing sector has seen the highest number of such deaths, reported iheima, a website offering consulting services to entrepreneurs, followed by PR, media, e-commerce, start-ups, finance, communication, internet, gaming and courier services.

“The invincible Chinese workers produce cheap, quality goods for the world, but pay the high price of health and lives,” iheima said, citing the example of Taiwan-based contract manufacturer Foxconn Group, which produces consumer electronics at its plants in China.

The website also cited the example of a 24-year-old employee at advertising agency Ogilvy & Mather’s Beijing office, who died suddenly in May last year after working overtime for a month.

However, such sudden deaths are excluded from accident insurance policies in China and have resulted in several disputes, the Chinese-language Beijing Business Today reported.

As a result, CIGNA and CMC Life Insurance Co recently launched the country’s first insurance policy that covers sudden death, although industry insiders pointed out certain existing life insurance policies also covered such deaths.

35% of top brands’ toxic childrenswear made in China

35% of top brands’ toxic childrenswear made in China

Staff Reporter

2014-01-25

A report released recently by Greenpeace claiming that the childrenswear lines of renowned international brands contain toxic chemical residues has caused a stir among Chinese consumers.

The clothes of twelve brands, including Burberry, Adidas, Nike, H&M, Primark, Puma, Li Ning, Disney, American Apparel, C&A, GAP, and Uniqlo, were found to have contained toxic ingredients, such as nonylphenol ethoxylates (NPEs) and phthalates, according to the report. The finding is based on samples of 82 items of childrens’ clothing purchased by the organization in 25 countries and areas during May-June of 2013, with production sites including China, Bangladesh, India, Indonesia, Italy, Mexico, the Philippines, Thailand, Tunisia, Turkey, Vietnam, and the US. “The problem may lie in the lining and the dyeing process,” remarked Xiao Danlai, vice secretary general of the Hubei Textile Industry Association.

Twenty nine, 35%, of the toxic samples came from China, which is the world’s largest textile producer, consuming 42% of textile chemicals worldwide.

The report points out that 50 of the 82 samples contain NPE ranging from 1.1-17,000 micrograms per 1.000 grams, higher than the allowed maximum of 1 microgram per 1,000 grams. Three samples had NPE residues exceeding 1,000 micrograms per 1,000 grams, including a Disney skirt, with 3,900 micrograms per 1,000 grams, C&A footwear, with 2,000 micrograms per 1,000 grams, and an American Apparel babywear garment, with 2,000 micrograms per 1,000 grams. A Burberry T shirt also contains 780 micrograms per 1,000 grams.

NPE is a chemical widely used in the textile production. When NPE is discharged into the environment, it can turn into nonylphenol (NP), an even more toxic environmental pollutant, which can disrupt the endocrine system of animals.

The report urges governments and enterprises to manage chemical ingredients throughout their life cycle, starting from the sources, by formulating complete policies and regulations.

Magnum, a Hong Kong nightclub launching its IPO, explains how a nightclub works, the popularity of the Jagerbomb and that, sometimes, people drink while dancing

With This Initial Public Offering, There’s a Lot to Drink In

Hong Kong Stock Pitch Explains Scene: Jagerbombs Sell Big; Club Hopping Poses a Risk

ISABELLA STEGER

Updated Jan. 21, 2014 10:58 p.m. ET

Gold toilet at Magnum Club in Hong Kong Isabella Steger/The Wall Street Journal

When a company is going public, it is important that prospective investors understand its business.

Magnum, a Hong Kong nightclub, is launching an initial public offering on Thursday, and its prospectus explains the following: how a nightclub works, the popularity of the Jagerbomb and that, sometimes, people drink while dancing.

“Clubbing is a popular night time activity which has evolved from the discotheques of the 1970s into a modern form of social gathering with lively music, elaborate lighting and a dance floor, supplemented by both alcoholic and non-alcoholic beverages,” the IPO-prospectus overview begins.

And it describes the scene: “The aura and atmosphere of the modern clubbing scene is filled with images of people moving in unison to the beat of synthesised remixed dance and electronic music spun out by a DJ perched upon an elevated stage.”

Late on a Saturday night, the line to get into the Magnum Club can sometimes stretch down the block. As busy as Magnum gets, far more people want to buy into the company’s IPO than to dance amid its flashing walls and use its diamanté-encrusted toilets.

Investors placed orders for over 3,000 times the number of shares available in the HK$126 million ($16 million) IPO, making it one of the hottest stock offerings in the city’s history. The prospective buyers are betting that the stock of the nightclub chain will skyrocket when it starts trading on Thursday.

As with any coveted IPO, brokers give their best customers the first crack at the shares so they can earn quick profits if the stock pops when trading starts. In Hong Kong, that would include an army of mom and pop stock traders, many of whom spend their days hanging around brokerage offices and some who have likely gone to bed before Magnum gets hopping.

“Lots of my clients want to get their hands on Magnum’s shares,” said Arthur Lui, senior sales manager at Prudential Brokerage.

Peter Wong, 38 years old, works at a brokerage and visits the Magnum club twice a week. “I would actually be interested in the IPO, but it’s very hard to get into,” he said as he poured from a HK$5000 ($645) bottle of Belvedere vodka Saturday night at Magnum.

But he wouldn’t stay for the long haul. “I would dump the shares quickly,” Mr. Wong said. One reason: “People are fickle and will just move on to whatever the hottest new club is.”

The prospectus acknowledges that patrons might not hang around all night. “There has been a trend of ‘club-hopping’ developing in Hong Kong in recent years which means customers have the tendency to visit multiple clubs in one night,” the document continues. “Customers may choose a Club based on their mood on a particular evening.”

The IPO is tiny by most standards. The club’s owner, Magnum Entertainment Group Holdings Ltd., runs three nightclubs within blocks of one another in Lan Kwai Fong, a densely packed, occasionally rowdy neighborhood of bars and restaurants just up the hill from Central, Hong Kong’s main business district.

Magnum tries to differentiate its three clubs: Magnum, Beijing Club and Billion Club. The Billion Club boasts life-size bronze bulls on its outdoor terrace and Magnum has a crystal-studded DJ booth. Billion and Magnum have diamanté-decorated toilets. Proceeds raised from the IPO will go to opening another club, Zentral, this year.

The nightclub company and its bankers and lawyers wouldn’t talk ahead of the IPO.

Magnum topped the record set by Milan Station Holdings Ltd. 1150.HK +2.17% ‘s IPO in 2011, when investors placed orders for more than 2,000 times the number of shares available. Milan Station occupies a unique niche in brand-obsessed Hong Kong, selling secondhand designer handbags for prices ranging from a few hundred to a few thousand dollars. Hong Kong’s individual investors typically flock to small IPOs like these, looking to make a quick buck by selling the shares once the company starts trading.

Magnum makes most of its money selling drinks, “generally known as alcoholic beverage served by glass and prepared by bartenders mixing different alcohol and ingredients,” according to the prospectus.

The drinking habits of Magnum’s patrons have changed recently. According to the IPO prospectus, Magnum’s clients have widely divergent and rapidly changing tastes. The club’s highest-grossing drink is Moët & Chandon Magnum Champagne.

But the most popular is the Jagerbomb, typically defined as a shot of Jagermeister—a German liqueur made from 56 herbs, roots and spices that tastes heavily of anise—dropped into a glass of beer or energy drink. The Jagerbomb overtook a Smirnoff vodka that was the most popular drink for the previous three fiscal years, according to the prospectus.

Magnum’s IPO is getting an unlikely boost. While Hong Kong residents aren’t known to be big drinkers, the prospectus gives credit for the company’s growth to a 50% surge in expatriate professionals in Hong Kong after the financial crisis.

“It is believed that this leads the Hong Kong alcohol consumption and night entertainment scene closer to the consumption patterns observed in western countries,” the document says.

Smiggle kids stationery retailer expands to UK; large shopping centre landlords are keen to have Smiggle as a tenant because there is little risk of sales leaking away to the internet

Smiggle kids stationery retailer expands to UK

Published 22 January 2014 12:00, Updated 23 January 2014 11:48

Simon Evans

The Smiggle chain’s bright colours and cheap and cheerful stationery have proven a hit with Australia’s nine-year-old girls and boys. Now Mark McInnes is hoping youngsters in Britain will have the same appetite for Smiggle’s rucksacks, pencil cases, lunch boxes, drink bottles and erasers.

The former boss of department store chain David Jones, who has been chief executive for almost three years at ­Premier Retail (the retail business owned by billionaire and BRW rich lister Solomon Lew’s listed Premier Investments ­vehicle), believes Smiggle can be a ­global champion.

He’s about to find out if Smiggle, which has 124 stores in Australia, can become a serious player in the $2.4 billion British market. The first Smiggle store is set to open on February 20 in Britain in Westfield Stratford City, the giant shopping centre which opened in 2011 and is adjacent to London’s Olympic Village.

McInnes, Smiggle group general manager John Cheston and the Premier Investments board are aiming to have 200 Smiggle stores operating in Britain within five years. This will make the British Smiggle business much larger than the Australian operations, which are rapidly approaching saturation point with 124 stores.

Smiggle also has 17 stores in Singapore after first entering that market two and a half years ago, and that business is tracking solidly. Mr McInnes thinks Smiggle has the right stuff to become a highly pro­fitable global brand as it attempts to muscle in on Britain.

“We’re not competing with the Zaras of the world. There aren’t many global companies that can talk about their ­target market being nine-year-old girls and boys.”

Smiggle’s biggest competitor is the private equity-owned Paperchase, which has about 100 stores in Britain and much larger store footprints of about 200 to 250 square metres. Paperchase has 70 per cent of its range focused on adult stationery. Another competitor is WH Smith, a newsagent, bookseller and stationery group.

Cheston says large shopping centre landlords are keen to have Smiggle as a tenant because there is little risk of sales leaking away to the internet. The average transaction size of Smiggle customers is about $20 each visit, as children shop with a parent and younger teenagers make purchases of fashionable stationery with their pocket money. Smiggle has a small internet presence but makes most of its sales in stores.

The former Just Group paid $29 million for Smiggle in 2008 when it was just 20 stores and sales revenue has risen from $19 million to more than $90 million. Premier Investments bought Just Group for $800 million in late 2008.

Will the 2nd Great Machine Age be a frightening jobless dystopia?

Will the 2nd Great Machine Age be a frightening jobless dystopia?

Machines have been displacing jobs for years and the rate is accelerating

By Ambrose Evans-Pritchard

12:11PM GMT 25 Jan 2014

Thanks to lightning-speed advances in hi-tech, humanity (or part of it) is close to achieving its dream of prosperity without toil. We are already starting glimpse the awful consequences. As Voltaire said, work is the triple tonic for needs, vice, and boredom.

A Davos vote split 51:49 on whether “technological innovation” will keep displacing jobs – and at an accelerating rate – leaving us with a deformed world where hundreds of millions are left on the unemployment scrap-heap (205m so far).

The waters have been so muddied by the global financial crisis – and the 1930s response to it in some quarters – that it is hard to separate the chronic job wastage caused by “robots” (to use a metaphor) from the temporary effects of scarce global demand.

Phillip Jennings, head of the UNI global labour federation, said it would be a “miscarriage of justice” to blame the 32 million job losses since the Lehman-EMU crisis on the iPad or the driverless car.

“You can’t put technology in the dock for 50pc youth unemployment in Greece or Spain. I blame the EU Troika. It was the economic and political decisions taken that have led to the collapse of jobs. In Greece it has gone beyond depression into a humanitarian crisis,” he said at theWorld Economic Forum.

He said some $2 trillion of corporate cash is on the sidelines in the US, $700bn in the UK, and another $2 trillion in the rest of the world. “There is an investors strike. This is a problem of demand in our economies, they are comatose,” he said.

This has a kernel of truth. The current policy settings are pushing the global savings rate to a record 25.5pc of GDP, creating a chronic surfeit of capital over labour. It is a Marxian world.

You can blame this on the “savings glut” in Asia and Northern Europe, or Chinese industrial policy, or regressive tax systems, or labour arbitrage that lets multinationals play off cheap labour in the East against the West, or growing inequality on the GINI index (all linked). As Mr Jennings says, “the social contract has been ruptured.” I would go further. We risk losing social/liberal democracy altogether.

And yet, there is a deeper story. Larry Summers, the former US Treasury Secretary, told the same panel that the post-Lehman jobless spike is of course due to a failure to take “economics seriously” – though he mercifully spared us the names of his “avatars of austerity”, the guilty men. We know who they are. It is a crisis caused by lack of global aggregate demand.

But he also said machines have been displacing jobs for almost half a century. The proportion of those aged 25-54 (the relevant cohort) that is not working in the US has tripled since 1965. This cannot be blamed on globalisation alone. “It predates meaningful trade with China. It is a long-term trend and it is accelerating.”

For those tempted by cry Luddism, hold your thought. This is nothing like the switch from agricultural revolution to the first machine age. The new displaced cannot migrate into textiles mills and great manufacturing hubs on the 19th Century. Labour-saving technology is now sweeping all sectors, including services. “The challenge is that much more immense now,” he said.

A single professor can teach 150,000 students the same academic course through digital lessons. While it still takes the irreplaceable creativity of human beings to play a Haydn Quartet, the same disc can be sold to millions, he said.

This is not a counsel of utter despair. Governments can rewrite the rule book, though that is a tall order in our global race to the bottom, with footloose capital. As Mr Summers says, the abuses did not self-correct even in the late 19th Century and early 20th Century. “It required a Gladstone, a Bismarck, a Roosevelt to make it work,” he said.

Prof Erik Brynjolfsson, a tech guru at MIT, said tax policies can change the game. Some 80pc of US taxation is now on labour. But how do you shift this burden to wealth taxes in a world of open capital flows and competing national tax jurisdictions? (Protectionism perhaps, but I wash my mouth out with soap for even muttering it)

Nor will the emerging economies escape this curse. Indeed, they are in the “bulls eye”, said Prof Brynjolfsson.

Apple’s new Mac Pro will be made in Austin, Texas. Robots have rendered the labour cost irrelevant. The BRICS and mini-BRICS can longer under cut on price.

“Wages don’t matter any longer. Off-shoring was just a way station.” We are back to reshoring, but without jobs. Welcome to our brave new world

NYSE Euronext Files to Allow ‘Nontransparent’ ETFs to List, Trade; Mutual funds look to gain ETF foothold

NYSE Euronext Files to Allow ‘Nontransparent’ ETFs to List, Trade

ETFs Would Be Listed on NYSE Euronext’s Arca Trading Platform

MURRAY COLEMAN

Updated Jan. 23, 2014 6:07 p.m. ET

Exchange-traded fund managers got a boost to their efforts to capture a bigger part of the $7 trillion market for stock mutual funds.

The operator of the New York Stock Exchange filed a request with the Securities and Exchange Commission on Thursday to adopt a new rule that would permit “nontransparent” ETFs to list and trade on its platform.

The ETFs would be listed on the Arca trading platform of the NYSE Euronext, a unit ofIntercontinentalExchange Group Inc. ICE -1.22%

ETF sponsors currently must report securities held in each portfolio on a daily basis. Officials at NYSE Euronext, the exchange’s parent, are now asking for permission to trade ETFs that only have to report quarterly, much like traditional mutual funds, according to a copy of the filing on the exchange’s website. An NYSE official confirmed to The Wall Street Journal that the request was sent to the SEC.

“We’re finally seeing some real momentum in the move to gain regulatory approval for nontransparent ETFs,” said Kathleen Moriarty, an ETF pioneer who is now an attorney at Katten Muchin Rosenman LLP in New York. She was on the team that developed theSPDR S&P 500 ETF, SPY5.LN -1.56% the first exchange-traded fund, which launched in 1993.

Developers of nontransparent ETFs say they are getting more feedback lately from regulators after seeing their proposals sit on the SEC’s shelf for years. But Ms. Moriarty said that shouldn’t be taken as a signal of a warming by the SEC to such proposals.

“What it really shows is that they’re finally getting around to considering these proposals, not that they’re leaning in any particular direction,” she said. More rounds of comments between regulators and ETF sponsors could stretch out for more than a year, she predicted. Also, advancement of any proposal would need to go before the public. Processing of such comments could take even more time, she noted.

“Nontransparent ETFs still face an uphill battle,” she said.

Regulators have been busy dealing with ETFs that use derivatives and leverage, said Dave Nadig, chief investment officer at San Francisco-based market researcher IndexUniverse. “They’re fearful of products that investors can’t see what’s inside, especially if they trade throughout the day,” he said.

But that hasn’t been the big holdup for the SEC addressing nontransparent ETFs, according to Mr. Nadig. “Developers of these new proposals are fighting more of a culture of risk aversion,” he said. “The SEC hasn’t been open to much in the way of ETF innovation for years. We’re finally starting to see a thawing in that type of an attitude.”

Much of any debate over relaxation of current reporting guidelines will probably focus on “window dressing” of portfolios, according to Mr. Nadig. The practice involves managers who are trying to boost their performance numbers at quarter’s end by unloading underperformers beforehand. “It’s the oldest game in town, and although nobody knows how widespread it is, the SEC is going to have to be concerned about potentially opening the ETF marketplace to that type of influence,” he said.

The NYSE’s request comes a day after Precidian Investments, of Bedminster, N.J., filed the first proposed prospectus detailing how such ETFs might work. The document lays out guidelines for three proposed U.S. stock portfolios—one covering large caps, another investing in domestic mid caps and the last taking a multi-cap approach. The funds would use a custodian and a blind trust to help shield key information about holdings until the end of each quarter.

The NYSE filing describes ETFs much in the same manner as Precidian’s system. Rival exchange operator Nasdaq OMX Group Inc. NDAQ -2.84% has also been working with other fund sponsors interested in bringing to market nontransparent ETFs, those familiar with the situation have told The Wall Street Journal. They expect a request laying out trading rules for a different set of nontransparent ETFs to be filed sometime in the first quarter, perhaps in coming weeks.

Other industry leaders have also filed with the SEC to move in the same direction, although those plans haven’t reached the stages of submitting a formal prospectus or definite trading rules, according to analysts. Those include BlackRock Inc., BLK -3.95%State Street Corp. STT -4.45% , Eaton Vance EV -3.25% and T. Rowe Price.TROW -3.18%

Separately on Thursday, a unit of Eaton Vance Corp. updated an earlier request to launch its version of a nontransparent ETF. The proposal seeks to come to market with a hybrid it is calling exchange-traded managed funds. Managers of such ETMFs wouldn’t be required to publicize positions being initiated or increased until the trades had settled. Since larger funds typically make such moves in stages, an investor might not see those positions for weeks.

Last updated: December 9, 2013 6:26 pm

Mutual funds look to gain ETF foothold

By Arash Massoudi and Tracy Alloway in New York

“To know your enemy, you must become your enemy” is an oft-quoted dictum for military and corporate strategists.

Mutual funds providers trying to grab a slice of the fast-expanding market for exchange-traded products are taking the tactic to heart.

Exchange traded funds (ETFs) have challenged the mutual funds industry and grown into a $2tn asset class by offering investors cheaper products that trade like stocks but passively track indices or other baskets of securities.

Initially sceptical that ETFs would gain traction with investors, asset managers are now working to gain a foothold in the market by creating their own specialised version of the products.

So-called “actively managed ETFs” do not track an index, allowing the basket of securities underlying the funds to change in real time and give investment managers control over the portfolio’s trading strategy, just like a mutual fund.

To date some 68 of the products exist, holding more than $14bn worth of assets, but many believe the market for actively managed ETFs could grow to be worth more than $100bn over the next five years – if regulators agree to one crucial tweak.

“For the most part, the traditional mutual fund industry has watched from the sidelines and they can’t afford to miss this next wave in the ETF market,” says Stuart Thomas, principal at Precidian Investments, which creates ETFs.

The challenge is creating actively managed ETFs that protect a mutual fund provider from having its “secret sauce”, or daily trading strategies, exploited by other traders who now know what assets its managers are buying or selling.

While mutual funds are required to disclose their holdings every quarter, ETFs publish their holdings daily because they need a variety of banks and brokers to make markets in the underlying stocks and create the ETF shares.

At the same time, the ETFs will need to function like traditional versions of the product by closely tracking the value of the underlying basket of goods in real time.

“Compared to mutual fund sales there’s a bigger ecosystem supporting the sales of ETFs,” says Deborah Fuhr, founding partner at consultancy ETFGI. “A lot more people are talking about them and monitoring what’s happening in the space.”

Guggenheim Partners, Eaton Vance, T Rowe Price and Precidian have put forward proposals in recent years to create so-called “non-transparent actively managed ETFs”, which would preserve the anonymity of their trading strategies.

If successful, the effort will allow mutual fund providers to challenge large asset managers such as BlackRock, State Street and Vanguard who have carved out dominant positions in ETFs and also submitted proposals to regulators for non-transparent, actively managed ETFs.

Asset managers have made their case for non-transparent, actively managed ETFs in recent phone calls with the US Securities and Exchange Commission, according to people familiar with the matter.

For would-be issuers who have been trying for more than five years to convince regulators to approve the new products, the detailed discussions are being viewed as a potential turning point in their long-running battle to win the SEC’s blessing.

Kathleen Moriarty, a partner and ETF specialist at law firm Katten Muchin Rosenman, says: “The regulators want to know, if you are not going to tell the arbitrageurs what is in the portfolio, what you are going to give them to let them perform the hedging function.”

Arbitrageurs, known as “authorised participants”, or APs, are essential to building the funds since they create and redeem the ETF shares, usually in exchange for baskets of the underlying securities from the ETF sponsor. APs typically sign on to support ETFs because they believe they can profit by arbitraging small differences between the price of the fund’s shares and the underlying securities being tracked.

In most of these non-transparent active ETFs, proxy portfolios are designed to replicate the performance of the real holdings while disguising the ETF’s actual holdings.

Mr Thomas, at Precidian, says he believes regulators will ultimately approve some of these new ETFs despite the potential murkiness of the proxy portfolios: “The industry realises that an ETF structure brings technological and structural efficiencies, which bring advantages to the manager and the investor.”

But even if mutual fund sponsors are able to convince regulators, there are still questions over whether the products will work properly and simultaneously be embraced by investors.

Says Ms Fuhr: “Until it really happens and is out there and is really being used, that’s when we’ll see whether there are any potential issues that might come to light.”

New ETF Of ‘Old’ Firms An Odd Bird; NYCC ETF fund holds U.S.-listed companies with at least 100 years of operating history

New ETF Of ‘Old’ Firms An Odd Bird

By Scott Burley

January 23, 2014

There’s something to be said for tradition. The latest hot IPO might be exciting, but you could be buying into a fad that won’t last. Facebook, less than a decade old, might already be past its prime, and Twitter has yet to turn a profit.

Better to buy stable companies with long histories of proven performance.

That’s the pitch for the PowerShares NYSE Century Portfolio (NYCC), which launched Jan. 15. The fund holds U.S.-listed companies with at least 100 years of operating history. The holdings list is full of names your great-grandparents might have recognized: Coca-Cola (founded 1886), Ford Motor (1903), US Steel (1901), Campbell Soup (1869) and AT&T (1885).

NYCC’s premise makes intuitive sense. If a company has survived the ravages and pitfalls of the last century—the Great Depression, wars, stagflation, bubbles, crises and vast economic, technological and social change—then surely one can count on it to stick around for another 100 years.

Or maybe it’s a dinosaur that’s seen better days. Is Sears (1893) a safe bet for the next decade, let alone the next century? What about the New York Times (1851)? J.C. Penney (1902)?

In fact, the fund uses a rather loose set of criteria in determining the age of a company, one that safety-seeking investors might not be comfortable with. The holdings list is littered with firms that have declared bankruptcy at some point in the past 100 years. That’s right, a Chapter 11 reorganization doesn’t automatically disqualify a company from membership in the fund’s index.

To take a recent example: Auto parts supplier Dana Corp. (founded 1904) declared Chapter 11 in 2006, canceling its stock and wiping out equity holders in the process. The company emerged from bankruptcy in 2008 and is held by NYCC today. Dana survives—but pre-2006 shareholders lost their entire investments.

There are other concerns. NYCC doesn’t add new holdings based on any measure of fundamental or technical strength. Rather, it picks up new constituents whenever they cross that arbitrary 100-year mark.

In the recent past, this would have led to some unfortunate timing. Both General Motors and lender CIT Group were founded in 1908, meaning that they would have been added to the fund (had it existed) at its annual rebalance at the end of 2008. Both went bankrupt just months later. Both companies, now reorganized and trading newly issued shares, are held by NYCC today.

But wait, it gets weirder. The fund holds Berkshire Hathaway. No problem there—Berkshire is a conglomerate of boring, stable businesses. Berkshire has a long track record of success under the leadership of Warren Buffett. It’s a stock-picker’s stock. But Buffett isn’t a centenarian, so what qualifies the company for membership in a century portfolio?

Buffett has controlled Berkshire since 1964, when it was a New England-based textile manufacturer. The company was created by the 1955 merger of Berkshire Fine Spinning Associates and Hathaway Manufacturing Co.

But NYCC’s methodology looks back further than that, taking into account the history of all predecessor firms. Hathaway Manufacturing traces its lineage back to 1888, meaning Berkshire easily meets the requirements for membership.

But does any of this matter? Berkshire sold off or shut down the last pieces of its textile business almost 30 years ago.

Investors buy the company today to get a stake in Warren Buffett’s investing empire, not Horatio Hathaway’s cotton mill. (Coincidentally, Hathaway’s old mill was demolished on Jan. 14, 2014, the day before NYCC launched. There’s a metaphor in this somewhere.)

Berkshire Hathaway isn’t the only company to make it into NYCC’s portfolio on a technicality.

The new fund holds a stake in private equity firm KKR, of 1980s leveraged buyout fame. Compared with some of the other companies in the fund, KKR is quite young indeed—it was founded as a private partnership in 1976, and only went public in 2009. Private equity as an industry, strictly speaking, didn’t exist until the 1940s. So what’s it doing in the PowerShares NYSE Century Portfolio?

In 2013, KKR acquired industrial machinery producer Gardner Denver, descendent of the Gardner Governor Co., founded 1859.

But here’s the catch: Buying KKR won’t get you equity in Gardner Denver; that belongs to the pension funds and other institutional investors that have contributed to KKR’s private equity capital. KKR makes its money on management fees, and might turn a profit on the deal—or not—regardless of Gardner Denver’s performance.

It’s hard to imagine a more tenuous connection to the past.

NYCC’s strategy is odd, no doubt. But is it bad?

Not necessarily. The fund is well diversified, with almost 400 names. Effectively, it’s a U.S. total market portfolio with a distinct value tilt, as there aren’t too many companies still in a growth phase after 100 years.

Technology and health care are underrepresented, for obvious reasons, with most of the balance going to industrials, utilities, materials and financials.

Also, equal weighting of the constituents tilts the fund toward mid- and small-caps.

There are worse choices out there. But there are better, cheaper ones too.

With a 0.50 percent expense ratio—$50 for each $10,000 invested—NYCC would have been a bargain among mutual funds not too long ago. But with the advent of efficient, index-based ETFs with single-digit price tags and broad exposure, it may simply be out of date.