A currency tale of two cities: Hong Kong (China), Singapore and the British pound

Citation

Foo, C.T. (2013), "A currency tale of two cities: Hong Kong (China), Singapore and the British pound", Chinese Management Studies, Vol. 7 No. 4. https://doi.org/10.1108/CMS-10-2013-0184

A currency tale of two cities: Hong Kong (China), Singapore and the British pound

Article Type: Editorial From: Chinese Management Studies, Volume 7, Issue 4

This is an issue focusing on the theme “Managing Corporate Finance”.

Why should a journal on Chinese management bother about publishing papers on finance? Management has been about money: net profits and measuring this relationally ROI, ROE and ROA. Of these the most critical denominator is equity: for the board of directors are accountable to shareholders.

A CEO in a listed corporation who does not perform (meaning better than the industry) will be a target for replacement. It will not be wrong to say, across the world, money has become the ultimate measure of success.

Or precisely, how much money (cash, not just a mountain of debts) a firm (or businessman) makes in a year, as reflecting critical skills. However, there is a need to bridge the wide gap between what truly matters in the real world and research undertaken on finance.

I am very glad Professor Li Yuanhui has kindly accepted my invitation made to her during 2nd Global Chinese Management Studies Conference, 2012 to lead as Guest Editor for an issue on “Managing Corporate Finance”.

Her own Editorial provides a short introduction to the selected papers. Her contribution provides me the time and opportunity to reflect on writing my own Editorial. The topics covered here relate to what is topical in research undertaken under corporate finance.

These include the following: shaping a theory of corporate social reporting; investigating via a massive sample (6,065) the relationships between organizational structure and corporate performance; ownership, capital structure and institutionality; managing R&D based earnings; impact of the media on stock returns; optimality in capital structure; media reporting on corporate accidents; and institutional logic and corporate finance.

Maybe as a management journal, CMS should define what kind of research ought to be undertaken. That is, to suggest topics that are of vital importance to management. Recently, I have been emphasizing the need to generate new ideas, fresh thinking.

Compared to other regions in Asia, by inheriting the British rule of law, Singapore (independent, 1965) and Hong Kong (Special Administrative Region, China, 1997) are becoming the leading, dynamic, prosperous cities; both are the best competitive and attractive markets around the world (Table I).

Under the British system, no one is above the law: everybody has to play by the rules. An even playing field – fair play – is very much a British cultural attribute. That is why London remains today the leading financial center of the world. Besides law, the British also left behind government, administrative system and banking and financial institutions (Figure 1). As such, it will be interesting to take snapshots of Singapore with Hong Kong. Both share similarities; principally both are city-states having assimilated British values, beliefs and cultural institutions. Also the English language is a language widely used in both cities. And there is no doubt that both cities benefit from leveraging the eastern management concept and principle. They are both enjoying the blend of the culture from West and East.

Figure 1 British institutional framework, SAR Hong Kong

With the time available, I explored a few comparative statistical portraits of Hong Kong versus Singapore. Here I only have space to present just one intriguing pattern: Hong Kong dollar (HKD), China and Singapore (SGD) share a strikingly similar pattern in rates of exchange with the British pound (Figure 2).

Figure 2 Hong Kong and Singapore dollars and the British pound

You can even describe it in words: a zig-zag (HKD: GBP s, p and l; SGD: GBP s′, p′ and l′) followed by a sustained, upward slope (HKD: GBP; l, g and e; SGD: GBP l′, g′ and e′) against the English pound. This zig-zag, then up-slope pattern I have discovered for this period: five years back from July 5, 2013 (day of writing this editorial).

It is so intriguing: why? Maybe it is a chance event. Clearly, as reflected in the charts the gradient of the slope g for the line l to e, HKD: GBP is less steep. That of Singapore’s, g′ is visibly, that much steeper. Clearly this suggests the Singapore dollar has become “stronger” over the last five years.

My purpose is however to draw readers to a likeness in their patterns of strengthening against the British pound. Is there then a case to argue for blending the best of East (Chinese) with the pillars of the West (English) in management? Maybe we should begin to foster East-West collaboration in research on management?

Check Teck Foo

Founding Editor-in-Chief