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Alternative Strategies - A year away from the City - December

Patrick HealyXin chao from Vietnam.

I am now a few weeks in to the traditional part of my gap year, which is to say that yesterday was spent in part on the wooden seats of a very basic train from Hanoi to Haiphong and then with chickens and ducks on the rusting deck of a ferry crossing Halong Bay.

The other side of this is that as I write I can look up and watch the bustle of colourful fishing boats, a beautiful harbour and a bay full of islands.  My vantage point on the 11th floor of my hotel also has the great merit of excluding the unattractive strip development of the shoreline and in particular the 13 storey monstrosity in which I am staying, which seems to have been designed with the Costa del Sol circa 1975 as an inspiration.

Despite this and some other modern uglification, Vietnam is a very beautiful country.  We have now spent some time around Hanoi and in the hills around Sapa near the Chinese border and the landscape is simply gorgeous.

The phrase ‘developing economy’ takes on a sharper and more real definition when travelling somewhere like Vietnam.  The economy seems to be growing as you watch it.  This, I think, should be very good for Vietnam and hopefully also for the 50% of the Vietnamese population that lives on less than $2 a day.  It is notorious that the benefits of economic growth do not spread evenly, particularly in developing countries.  I thought of this today as I watched a man plough a field with a wooden plough towed behind an ox.  In Hanoi I was able to amuse myself by speculating on the professions of the people driving enormous black Volvo C70s and BMW X5s.

It has to be said, of course, that any sane person would want to drive a big 4x4 if they had to drive in Hanoi.  Getting around, even on foot, is like being in the old video game of Space Invaders, except that in Hanoi the missiles rushing toward you are motor scooters, with the occasional tiny taxi thrown in for good measure.  This is a scooter town and they rule the roads and park on all the pavements too.  There may be groups of people selling food on the footpaths and the occasional ad hoc restaurant but just about every other inch has been turned into an officially patrolled scooter park.  You have no choice but to play chicken with the traffic.  A number of things we treat as rules; one-way streets, obeying traffic lights, a preferred side of the road to drive on, for example, are distinctly more optional here. We have met tourists whose only journeys on foot have been around their own block for fear of crossing the road.  I walked around with a steely glint in my eye as I tried to face down the waves of scooters heading for me.  The steeliness of a short spear might have been more comforting.

Perhaps it is not too surprising that people have mixed feelings about the rules of the road as there seems to be a lot of ambivalence about law making in general and the government, both local and national, in particular, and I have heard more than a few angry comments about the corruption of the political system.  This is, after all, an old-style communist state, although with aspirations along Chinese lines, and a trend in economics that Marx might have some difficulty recognising as his.

The Vietnamese people are generally helpful, confident and polite.  It is good that they have all these positive characteristics, as in their grappling with the basics of capitalism they seem to be taking a very short term view of what must be one of their major foreign currency earners i.e. me, or more broadly me and the other tourists.  The Vietnamese approach to tourists seems to be akin to strip mining, with the aim being to extract as much as possible as quickly as possible.  I have experienced short-changing, price scalping and ludicrous overcharging even in the short time I have been here.

Every second shop in Hanoi seems to be a travel agency and, with only limited exceptions, they seem to be set up to maximise the prices and minimise the service offering.  If the amounts involved were not piddling then it would be more than an annoyance and I suspect that for many visitors it will sour their experience of this lovely country.  A pity.

Back to the unreal world

News from the outside about life in London’s financial services industry seems to continue to be cautiously optimistic.  The US and eurozone out of recession, although the UK still lags, and in my own patch I note some money going into new hedge fund start-ups.

There has also been some success in the pushback against the proposed new EU rules for hedge funds.  My role at Man gave me considerable exposure to the impact of the last set of rules and the cost in terms of time and effort of meeting them.  The first drafts of the proposed new rules were likely to create further time consuming compliance requirements and the rules on leverage were potentially more damaging again and the combination of these with a tighter lending market could have created a situation where it was impossible for many funds to continue to operate, at least in the EU.  Things look a bit better now but there seems to be some distance between the Commission and the European Parliament and the final legislation will not appear for some time.  It should not be impossible to have a coherent set of rules that protects investors and avoids pointless restrictions and reporting requirements.  Unless the final rules are sensible it is not just sabre-rattling by the industry to say that some funds will leave and some will shut.  Not good news for the City and not good news for investors.

Photo of Patrick climbing on a rock face

Patrick Healy was the Group Head of Risk Reporting for Man Group plc
© Patrick Healy

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