Editorial Notes

Panic is stock market's worst enemy, uproar over Japan's new stadium

Editorial Notes is a selection of editorials from newspapers in the Asia News Network (ANN).

Editorial Notes is a selection of editorials from newspapers in the Asia News Network (ANN).

1. Panic in stocks is the worst enemy

Chinese stocks jumped sharply July 9, 2015, after falling on opening for the third consecutive day.  PHOTO: EPA 

China Daily/ANN

In its editorial on July 9, 2015, the China Daily says the recent plunge in the Hong Kong stock market has been the biggest since 1987

Wednesday's big stock market falls took all investors by surprise. The benchmark Hang Seng Index at one point tumbled over 2,100 points in the afternoon session. It has been decades since the Hong Kong stock market last witnessed a plunge of comparable magnitude - in October 1987. Clearly, panic selling has unfortunately occurred.     

Uncertainty brought by the Greek sovereign debt crisis has been cited as one of the reasons behind the new round of sell-offs on the local bourse. But the real culprit is the severe liquidity squeeze in mainland markets.

The unabated slide in share prices there over the past four weeks has triggered numerous margin calls for many investors who have been trading on margin, and the mainland market's "circuit breaker" mechanism, or limit-down system, has prevented them from meeting margin calls by liquidating some of their mainland stock positions.

They have to raise cash from the Hong Kong market by selling down their positions in the local bourse. As a result, the Hong Kong bourse has become what investors call an "ATM (automated teller machine)".

There is no doubt the ongoing de-leverage process is behind the persistent slide of share prices in the mainland market. But there is no case for panic selling in the Hong Kong market.

The fundamentals remain basically unchanged.

The local economy remains solid while the mainland's economy is improving as suggested by the latest indicators. The Greek debt crisis did have a psychological impact on investor sentiment.

But any fallout from a Greek default or exit from the single European currency is unlikely to have much impact on the global economy, at least in the foreseeable future, given that the Greek economy accounts for a negligible portion of the world economy.

Panic is the worst enemy of the market. It leads to irrational actions such as the frantic sell-off on Wednesday.

With most of the locally-listed blue chips being reasonably priced at the current level, further corrections in share prices could prove to be opportunities for investors to build up their positions, rather than to reduce their holdings.

Investors might find out a few months afterwards that the recent sell-offs have provided good entry points for them. At a time when the herd mentality dictates the market again, it might be helpful if investors review investment guru Warren Buffet's well-known saying: "Be fearful when others are greedy and greedy when others are fearful."

2. A ridiculous, irresponsible decision on the exorbitant new National Stadium

An excavator operates on a construction site for a new stadium to replace the National Stadium in Tokyo, Japan. PHOTO: BLOOMBERG 

The Yomiuri Shimbun/ANN

In its editorial on July 9, 2015, The Yomiuri Shimbun questions the rationale to build the stadium when funding is not clear.

It is full steam ahead for construction of this project, even though it remains unclear where the money to pay for it will come from.

This is a ridiculous, irresponsible decision.

A panel of representatives from various fields at the Japan Sport Council (JSC) has approved a ¥252 billion (S$2.8 billion) construction plan for the new National Stadium, which will be the main venue for the 2020 Tokyo Olympics. The council is in charge of the stadium project.

The council will soon sign contracts with two major general contractors, and construction is likely to begin in October.

Completion is scheduled for May 2019, in time for the Rugby World Cup that Japan will host later that year.

The total construction cost is about ¥90 billion higher than the ¥162.5 billion cost estimate based on the basic design proposal.

A plan to install a retractable roof has been delayed until after the 2020 Games.

Given this, and other pending expenses, the total cost will swell even further.

We are flabbergasted that, at a time when government finances are so stretched, more than four times the amount of money spent on the stadium for the 2012 London Olympics will be poured into constructing the new National Stadium.

Quite clearly, the biggest factor behind the snowballing cost is the unique design featuring two gigantic arches.

Why was the basic structure not reviewed so costs could be cut? This is a classic case of a public works project that cannot be stopped once it has been signed off.

There also is no guarantee that construction will proceed as planned on a design unlike any other.

Members of the panel meeting included Yoshiro Mori, president of the Tokyo Organizing Committee of the Olympic and Paralympic Games; Toshiaki Endo, state minister for the 2020 Olympic and Paralympic Games; and Tokyo Gov. Yoichi Masuzoe.

We are struggling to comprehend why they gave the stamp of approval to starting construction on this project.

Where will money come from?

The panel's primary role should have been to admonish the JSC for any sloppy or precarious handling of affairs and to correct the course of its plans when needed.

Education, Culture, Sports, Science and Technology Minister Hakubun Shimomura feigned ignorance regarding the disarray over the stadium's costs, construction schedule and construction method when he said, "It seems we've reached this point without clearly knowing who is responsible for these matters."

The education minister has jurisdiction over the JSC, so surely Shimomura himself bears responsibility for this mess.

The only funds already secured for the stadium are a contribution from the central government, funds from the JSC, and part of sales of the sports-promoting "toto" soccer lottery.

Yet all this money combined will not cover even one-quarter of the construction costs.

On Wednesday, Endo asked Masuzoe to have the Tokyo metropolitan government help finance construction of the new stadium.

The governor must make his decision carefully after considering whether it is necessary and what the legal grounds are for pitching in tax money paid by Tokyo residents.

Shimomura plans to divert profits from the selling of naming rights to stadium construction costs.

However, we feel uncomfortable with the prospect that a corporate name could adorn a stadium representing the nation.

A massive sum of money will be needed to maintain and manage the new National Stadium even after it has been completed.

The estimate for major repairs that will be needed over the initial 50 years has reportedly jumped from the initial ¥65.6 billion to ¥104.6 billion. How will these costs be funded?

The bill for this "negative legacy" of the Tokyo Olympics must not be allowed to be passed on to future generations.

3. Towards Afghan reconciliation

Afghan President Ashraf Ghani (right) shakes hands with Pakistani Prime Minister Nawaz Sharif in Kabul on May 12, 2015. PHOTO: REUTERS


In its editorial on July 9, 2015, the Dawn urges Pakistan to continue with the peace process in Afghanistan.

It was the sign that perhaps all those on the side of peaceful conflict-resolution were looking for: the Pakistani state getting directly involved in bringing together representatives of the Afghan government and the Afghan Taliban to effectively discuss the possibility of a peace and reconciliation process.

That the US and China also had observers present at the Murree meeting suggests that it was a concerted, international effort - exactly what Afghanistan needs.

To be sure, a peace process needs to be Afghan-owned - without the government and the Taliban leadership fully on board, there is no possibility of stability in Afghanistan - and final terms will have to be negotiated directly between the state and the insurgents.

But regional and international support for a peace process is also key.

Perhaps until there is a full-fledged peace process, the outside powers can nudge efforts along to produce an Afghan-owned peace process.

Clearly, were it not for Pakistan's willingness to use its influence over the Afghan Taliban, the Murree meeting would not have taken place.

Until now, the degree of influence the state here has over the Taliban has been disputed by Pakistan.

The claim was that Pakistan's influence has diminished and it never was the master-subordinate relationship that many in the West allege the Pakistan-Taliban relationship to have been.

What was perplexing though was quite why Pakistan had not made an obvious effort to reciprocate Afghan President Ashraf Ghani's determined outreach to it.

Now, perhaps some of those doubts will dissipate. As the Foreign Office spokesperson indicated yesterday, the Murree meeting is not expected to be a one-off and that post-Eid another round of dialogue may be hosted by Pakistan.

There truly has not been a better moment for Pakistan to take the diplomatic lead on Afghanistan.

The American determination to withdraw militarily from Afghanistan, China's willingness to engage more on Afghanistan and Pakistani military operations in Fata having won back a great deal of space for the state here all mean that now is the time to encourage the Afghan Taliban to seek a peaceful compromise that brings stability to the region.

Yet, welcome as it is to see the Pakistani state play a frontline role in a possible peace process, there is still a long, long way to go and much can go wrong.

The most obvious challenge is that past apparent breakthroughs have gone nowhere and this time round, a talks process would play out with the Afghan Taliban having the momentum on the battlefield. Much as the world may want a peaceful settlement in Afghanistan, does the Taliban's leadership share that vision?

And even if it does, can the leadership convince the rank and file to lay down their arms, especially when the new generation has known nothing but war?

There are, as ever, many unanswered questions in Afghanistan.