Good taste also requires economic efficacy*

Big news in Hong Kong this week is the IPO of Milan Stations Holdings Limited.  As it was 2,100 times oversubscribed, it was Hong Kong's "most popular" IPO ever. Granted, it was a small offering (US$35 million), so it was kinda cheating, but everyone is all jazzed up about it anyway.

Why do you care? Good question. You probably don't. But I do because it illustrates a couple of really interesting points about Hong Kong. Allow me to tell you what they are.

First of all, what is Milan Station? Well, if you were to ask me two weeks ago, I would have told you that it is a fake handbag store on the corner of Wellington Street as you walk into Lan Kwai Fong.  But actually, according to its prospectus, it is a legit handbag store with numerous locations throughout Hong Kong, Taiwan and Macau that focuses on retail sales of unused and second-hand luxury branded handbags, such as Balenciaga, Bottega Veneta, Chanel, Dior, Fendi, Goyard, Gucci, Louis Vuitton, Miu Miu, Prada and Yves Saint Laurent (there are a few more, but I left out all the ones that require accents as I don't know how to make those on this computer despite having owned it for three years).  Which brings me to my first point about Hong Kong, which is that people LOVE their luxury goods. And, in particular, handbags. Ask any secretary in my office to inspect their handbag and I bet you it is significantly more expensive than yours. Not only that, said secretary probably already knows what it is worth on the secondary market (at Milan Station or otherwise), and also probably know how much it costs in Paris as opposed to Hong Kong, and can tell you where in Paris they went to get it (not at the store filled with mainlanders, of course).

Interesting, right? BUT, I also heard from someone (word on the street...I have my finger firmly on the pulse) that Milan Station is like a "ladies bank." I asked him what he meant.  Well apparently, Milan Station also purchases luxury handbags from a company called Yes Lady (I only tell you the name because it's an awesome name), a company which is principally engaged in "money lending."  When Yes Lady advances a loan to a borrower, the borrower deposits a luxury handbag with Yes Lady as security for the loan.   If the borrower defaults, Yes Lady takes possession of the handbag and sells it to Milan Station. So, basically, they are a pawn shop that only pawns luxury handbags...Yes Lady! According to CNN, interest can be "as low as" 28% (far less than the 42% maximum interest ceiling for normal pawn shops).  Which brings me to my second point about Hong Kong: people here love their luxury goods, and in particular, handbags.

Photo below: Although there are probably a billion photo ops of an obnoxious conglomeration of luxury goods stores (i.e. two Louis Vuitton stores across the street from one another) in this city, I don't have any such photos so you get this oldie but goodie from TST (maybe somewhere near the first Milan Station!).

I hope you found this little tangent interesting. I certainly did, especially considering that I've been a capital markets lawyer in Hong Kong for three years now and this is the first time I've read a prospectus.

*First advertising slogan of Milan Station, introduced during the economic downturn of 2001 (year first Milan Station was opened in TST).  Later advertising campaigns include "Affordability is still subject to availability! You may pursue, you may own. The shopping formula, Milan Station, is redefined." Don't worry about it - it  probably makes sense in Chinese.