Stanley Kwan, Creator of Hang Seng Stock Index, Dies at 86

January 07, 2012, 5:50 AM EST By Laurence Arnold

(Adds comments by former colleague in eighth paragraph.)

Jan. 6 (Bloomberg) -- Stanley Kwan, the banker whose 1969 creation, the Hang Seng Index, became a widely used gauge for the Hong Kong Stock Exchange, has died. He was 86.

He died Dec. 31 at Scarborough Grace Hospital in Toronto, according to the website of Toronto’s R.S. Kane Funeral Home. The cause was heart failure, the Toronto Star reported.

The Hang Seng Index is “the ultimate capitalist measure of Hong Kong,” Robert Nield, president of the Royal Asiatic Society’s Hong Kong branch, wrote in a foreword to Kwan’s 2008 book, “The Dragon and the Crown: Hong Kong Memoirs.”

As a banker at Hang Seng Bank Ltd. from 1962, Kwan saw his creation mirroring the growth pains of Hong Kong, with the index crashing during the 1974 world oil crisis and the 1983 impasse between China and Britain during handover talks, as well as benefiting from the opening up of the mainland. The index’s 48 members now include Industrial & Commercial Bank of China Ltd., the world’s largest lender by market value, and PetroChina Co., Asia’s biggest company by market value.

As Kwan told it in his book, the bank’s chairman, Ho Sin Hang, and general manager, Q. W. Lee, decided late in 1969 “that they needed a measure of the performance of the stock market for their own as well as their customers’ reference.” Kwan said Ho spoke of creating the “Dow Jones Industrial Average of Hong Kong.”

Setting Base Day

According to the draft notes for a speech Kwan gave in 2009 in Vancouver, the Hong Kong economy had hit “rock bottom” after riots related to the Cultural Revolution swept the city in 1967. He said some within Hang Seng Bank had questioned the plan for the index as it was “only a small Chinese bank.”

Kwan, who headed the bank’s research department, said he led a staff of seven in consulting government and university statisticians and economists.

“Stanley was willing to accept opinions and he was good at incorporating different ideas,” said Roger Luk, a former deputy chief executive officer at Hang Seng Bank who worked with Kwan for seven years. “He never gave himself all the credit for founding the Hang Seng Index. He seldom boasted about this achievement.”

For the index’s “base day” -- the normal period of trading that other days would be compared with -- Kwan and his group settled on July 31, 1964. The group chose the initial 33 companies that would be the index’s constituent stocks, as well as guidelines for replacing or adding other companies in the future. The Hang Seng Index debuted on Nov. 24, 1969.

No Lasting Fame

“In the end, the system worked well,” Kwan wrote. “By the time I retired in 1984, the number of companies listed on the Hong Kong Stock Exchange had increased to over 250, but the number of constituent stocks remained 33, and these companies still accounted for about 75 percent of total market value (based on the average for the last 12 months) and over 70 percent of total market turnover (based on the aggregate for the last 24 months).”

Kwan, who retired to Canada, said in a December 2010 interview with the Toronto Star that his role in history earned him no lasting fame.

“If I walked into the Hang Seng Bank head office today, no one would know me,” he said.

Stanley Shih Kuang Kwan was born on Jan. 10, 1925, in Hong Kong to a banking family, according to the funeral home. A survivor of the Japanese occupation of Hong Kong during World War II, he served as a wartime interpreter for U.S. troops on mainland China before starting his banking career.

Hired by Hang Seng Bank in part because he spoke both English and Chinese, Kwan was made head of research, according to the 2010 Toronto Star profile.

‘Test of Time’

“The index he created has stood the test of time,” said Andrew Sullivan, principal sales trader at Piper Jaffray Asia Securities Ltd. in Hong Kong. “It has given a good indication of the performance of the Hong Kong market in general and with a number of changes implemented over the years still does.”

After Kwan’s retirement, the index climbed to a high of 16,673.27 on Aug. 7, 1997, before the Asian financial crisis sent it tumbling. The government spent HK$118 billion ($15.2 billion) buying shares in the last two weeks of August 1998, supporting the gauge.

The Hang Seng Index also fell to a 4 1/2-year low in April 2003, when the city was swept by an outbreak of the severe acute respiratory disease, an illness brought over by a Chinese visitor, underscoring the city’s increasing ties with the mainland.

The index rose to a record 31,638.22 points on Oct. 30, 2007, a year before Lehman Brothers Holdings Inc.’s collapse and the global banking crisis drove equities down. As of yesterday, the gauge was 41 percent below its peak.

Kwan’s wife, Wing Kin, predeceased him, according to the funeral home. Survivors include their two daughters.

--With assistance from David Wilson in New York, Kana Nishizwa, Lynn Thomasson and Stephanie Tong in Hong Kong. Editors: Steven Gittelson, Stanley James.

To contact the reporter on this story: Laurence Arnold in Washington at larnold4@bloomberg.net.

To contact the editor responsible for this story: Charles W. Stevens at cstevens@bloomberg.net

View the original article here

Employment Index in U.S. Jumped to Three-Year High in November

December 07, 2011, 7:36 AM EST By Shobhana Chandra

Dec. 5 (Bloomberg) -- A measure of job prospects in the U.S. climbed in November to a three-year high, helped by growth in the world’s largest economy.

The Conference Board’s Employment Trends Index jumped 1.2 percent to 103.7, the highest level since September 2008, from 102.4 the prior month that was more than initially estimated, figures from the New York-based private research group showed today. The measure rose 6.4 percent from November 2010.

The report is consistent with Labor Department data last week that showed payroll growth picked up while the unemployment rate dropped to 8.6 percent. At the same time, the lack of faster hiring is limiting wage gains and restraining consumers’ ability to boost their spending, which accounts for about 70 percent of the economy.

“The better than expected growth in economic activity in recent months is likely to lead to some acceleration in job growth in the beginning of 2012,” Gad Levanon, director of macroeconomic research at the Conference Board, said today in a statement.

The Employment Trends Index aggregates eight labor-market indicators to forecast short-term hiring trends. On average, the gauge can signal a rebound in hiring as little as three months before the fact and can predict job declines six to nine months in advance, the Conference Board said.

Component Improvements

Improvements in seven of the index’s eight components contributed to the increase in the overall gauge. These included a drop in the number of consumers saying jobs were hard to get, fewer first-time claims for unemployment benefits and a rising demand for temporary workers, the Conference Board said.

Payrolls grew by 120,000 workers last month after a gain of 100,000 in October, the Labor Department’s report showed on Dec. 2. The median forecast of economists surveyed by Bloomberg News called for an increase of 125,000. The jobless rate declined to 8.6 percent, the lowest level since March 2009, from 9 percent, in part due to the departure of Americans from the labor force.

November payrolls included a 50,000 gain in retail trade as companies hired for the holiday shopping season. The number of temporary workers rose 22,300.

Macy’s Inc., the second-biggest U.S. department-store chain, increased mostly part-time staff by 4 percent for the November-December shopping season. See’s Candies Inc., a chocolate maker owned by Berkshire Hathaway Inc., said it would add 5,500 mostly temporary workers.

--Editors: Kevin Costelloe, Christopher Wellisz

To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

View the original article here

Investing Made Simple: Index Fund Investing and ETF Investing Explained in 100 Pages or Less

Find all of the following explained in plain-English with no technical jargon:

• Asset Allocation: What does it mean, why is it so important, and how should you determine your own?
• How to Pick Mutual Funds: Learn how to choose funds that are mathematically certain to outperform the majority of other mutual funds.
• Roth IRA vs. Traditional IRA vs. 401(k): What's the difference, and how should you choose between them?
• Financial Advisors: Learn what to look for as well as pitfalls to avoid.
• Frequent Investor Mistakes: Learn the most common mistakes and what you can do to avoid them.
• Calculate Your Retirement Needs: Learn how to calculate how much you'll need saved in order to retire.

Price: $13.95

Click here to buy from Amazon

U.S. Index of Leading Economic Indicators Falls 0.3%

May 19, 2011, 11:05 AM EDT By Alex Kowalski

(Updates with economist comment in fourth paragraph.)

May 19 (Bloomberg) -- The index of U.S. leading indicators fell in April after nine months of gains, depressed by a pickup in jobless claims that reflects temporary setbacks including auto-plant shutdowns.

The Conference Board’s gauge of the outlook for the next three to six months decreased 0.3 percent after a revised 0.7 percent gain in March, the New York-based group said today. Economists forecast a 0.1 percent increase, according to the median estimate in a Bloomberg News survey.

A jump in firings that moved opposite to increased hiring last month indicated unevenness in the labor market. At the same time, Federal Reserve policy makers noted during their April meeting that job prospects “continued to improve gradually” and economic growth will persist at a “moderate pace.”

“We’re probably not going to see the same pace of contraction as the first quarter, but the economy certainly has throttled back a little bit,” said Charmaine Buskas, chief strategist at 4Cast Inc. in New York. “The leading indicators are not only giving back some of the gains that we’ve seen over the last months, but we’re also seeing temporary setbacks, partly as a result of some shutdowns from the auto sector.”

Estimates of 58 economists in the Bloomberg survey ranged from a 0.2 percent decrease to a 2.0 percent increase.

Six of the 10 indicators in the leading index subtracted from the total, led by jobless claims, which took away 0.33 percentage point.

The Standard & Poor’s 500 Index rose 0.2 percent to 1,342.75 at 10:02 a.m., after the report was released. The yield on the benchmark 10-year note, which moves inversely to prices, rose to 3.22 percent from 3.18 late yesterday.

Jobless Claims

In April, the four-week moving average of jobless claims rose four out of the five weeks. The Labor Department attributed the gains to unusual events that seasonal variations failed to take into account, including a spring break holiday in New York, a new emergency benefits program in Oregon and auto-plant shutdowns caused by the disaster in Japan.

A report today showed fewer Americans than forecast filed applications for unemployment benefits last week, adding to evidence that temporary events caused last month’s surge.

Jobless claims declined by 29,000 to 409,000 in the week ended May 14, according to Labor Department figures. Economists in a Bloomberg News survey projected a drop to 420,000.

The gauge of supplier deliveries and the number of building permits also subtracted from the Conference Board index total.

The spread, or difference between the overnight federal funds rate and the yield on the 10-year Treasury note, boosted the index by 0.35 point.

Seven of 10

Seven of the 10 indicators that make up the Conference Board’s leading index are known ahead of time: stock prices, jobless claims, building permits, consumer expectations, the yield curve, factory hours and supplier delivery times.

The Conference Board estimates new orders for consumer goods, bookings for capital goods and the money supply adjusted for inflation.

The Conference Board’s index of coincident indicators, a gauge of current economic activity, rose 0.1 percent after a 0.2 percent gain the prior month.

The coincident index tracks payrolls, incomes, sales and production -- the measures used by the National Bureau of Economic Research to determine the beginning and end of U.S. recessions.

The gauge of lagging indicators increased 0.5 percent last month. The index measures business lending, length of unemployment, service prices and ratios of labor costs, inventories and consumer credit.

U.S. Economy

The U.S. economy grew less than forecast in the first quarter as government spending declined by the most since 1983 and household purchases cooled. Gross domestic product rose at a 1.8 percent annual rate from January through March after a 3.1 percent pace in the final three months of 2010, the Commerce Department said April 28.

Target, the second-largest U.S. discount retailer, posted a 2.7 percent gain in first-quarter profit that beat analysts’ projections, bolstered by the credit-card business. Still, Chief Executive Officer Gregg Steinhafel said a faster expansion would help boost consumer purchases.

“While the U.S. economy is showing some signs of improvement, we expect the recovery will continue to be slow and uneven, particularly for more moderate-income households,” Steinhafel said May 18 in a call with analysts. Those households “need to see further improvements in housing and income growth before they’ll have the capacity to meaningfully increase the discretionary spending.”

--With assistance from Chris Middleton in Washington. Editor: Kevin Costelloe

To contact the reporter on this story: Alex Kowalski in Washington at akowalski13@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

View the original article here