Chinese reconfiguration of economy and preparation for cultural export

Chinese programmes and media corporations have greatly filled their coffers these past few years with their tremendously popular song competition programmes which have seen influence in South Asia.

take a look at the scale of these programmes

and these are done on weekly basis.

So recently, there has been a bit of restrictions from the authorities, clamping down on the impressions that these shows will make on the youths.

https://www.zhihu.com/question/50167758

去年7月，广电总局曾就发出了《关于加强真人秀节目管理的通知》，要求真人秀节目避免过度明星化，摒弃“靠明星博收视”的错误认识，不能把节目变成拼明星和炫富的场所，并提出真人秀节目应注意加强对未成年人的保护，尽量减少未成年人参与。

That's not all. Culture is one of the biggest export a country has. In fact, without cultural export, you can forget about Margin. This is also one of the reasons Japanese and Korean exports have reversed positions over the past 17 years.

Previously Japanese cultural export via their anime, manga, movies, songs has tremendous benefit and supports their exports of other products. In recent decades, they have been taken over by Korea. You can see this effect on your supermarket selves or cosmetic products.

China, it seems, realizes this:
http://baike.baidu.com/item/%E9%99%90%E9%9F%A9%E4%BB%A4

随着萨德系统的部署，传言中国政府限制韩国艺人和节目的举措全面开启，中国广电总局的禁令包含：禁止Bigbang、EXO等团体中国演出；停止新的韩国文化产业公司投资；停止韩国偶像团体面向1万名以上观众演出；禁止新签韩国电视剧、综艺节目合作项目；禁止韩国演员出演电视剧在电视台播放等多项规定的措施已经传达到各电视台，并要求在9月1日开始实施。
2016年11月，有韩国媒体不断炒作中国发布“限韩令”的消息。中国外交部发言人耿爽已在21日的例行记者会上表示，没有听说所谓的“限韩令”。[1] 2016年12月6日，上海市文化广播影视管理局日前批准韩国双人组合乐童音乐家在上海举办演唱会。这是自2016年10月以来中方首次批准韩国歌手在华举办演唱会

Fintech taking over

singapore pushing for fintech

See more at Source: Visual Capitalist

Libor’s rise worth keeping an eye on

https://www.ft.com/content/edde5624-5f08-11e6-ae3f-77baadeb1c93

Libor has undergone big changes since it was subject to widespread manipulation and became known colloquially as “Lie-bor”. But it is still important — it represents short-term bank funding costs, and trillions of dollars worth of derivatives, mortgages and business loans are linked to its level. So the rise has begun to generate some chatter in the financial industry. Libor climbed higher when the Federal Reserve raised interest rates last December, and was nudged up by the brief financial tremors caused by the UK’s vote to exit the EU on June 24. But the latest upward march has been caused by a long-awaited US regulatory change that is only now beginning to feed through. 

New rules slapped on the US money market fund industry in the wake of the financial crisis are due to come fully into effect in October. The changes have spurred a gradual investor exodus from the funds, and the conversion of “prime” MMFs which invest into corporate debt into ones that only invest in Treasuries (which are less affected by the new regulations). Funds are now hoarding cash in case of further outflows. That is in turn limiting their capacity to buy short-term securities from banks, pushing Libor higher. 

Bank analysts are mostly playing down the rate move, but it has the effect of tightening financial conditions on the edges. Higher Libor rates could also spur some European and Japanese banks to tap long-dormant dollar swap lines with central banks. Once the October 14 deadline has passed, the rise of the Libor rise should abate. Still, keep an eye on it.

Ruble a top performing currency among increasingly higher valued EM currencies

keeping an eye

http://www.bloomberg.com/news/articles/2016-08-11/to-see-where-world-s-easy-money-is-going-look-at-russia-s-ruble

The future’s looking brighter, too, with options traders the least pessimistic on the ruble’s long-term prospects since mid-2014.
Years of easy-money policies in developed economies have pushed yields below zero from Japan to Europe -- in stark contrast to Russia, whose 10.5 percent main rate makes it a popular destination for money borrowed cheaply elsewhere.
“The ruble is going to be one of the outperformers in the emerging markets,” said Saad Siddiqui, an analyst at JPMorgan Chase & Co., which topped Bloomberg’s latest currency rankings for Europe, the Middle East and Africa. “It offers one of the best carry trades.”
JPMorgan is predicting a 5 percent gain in the ruble to 61.36 per dollar by year-end, from 64.72 in Moscow on Friday. That contrasts with the 1 percent drop forecast in a Bloomberg survey of analysts.

The Yuan Anniversary that Really Matters Is 2005, Not 2015 and Yuan joining the basket on Oct 1

keeping an eye.

http://www.bloomberg.com/news/articles/2016-08-12/the-yuan-anniversary-that-really-matters-it-s-2005-not-2015

Back in July of 2005, China’s central bank broke a decade-long peg to the dollar. It’s an anniversary that attracted far less attention, but the move 11 years ago helped set the stage for China’s emergence as an economic superpower.
Authorities pegged the currency back in the mid 1990s to stoke exports and economic growth, shortly after abandoning a dual exchange-rate system for imports and exports. Governments in the U.S. and Europe criticized China for running up a huge trade balance by keeping its currency artificially undervalued in their view. 

"In 2005, we were in a global supercycle, helped by an unsustainable credit boom in the west and China’s industrialisation and urbanization," Mann said. "In the last few years we have been seeing policy makers coming to terms with sluggish growth in the post credit boom west and east. China is easily the most dominant driver of global growth, accounting for a third of world growth even as it slows and transitions towards services and consumption."  

The yuan is set to join the International Monetary Fund’s elite basket of reserve currencies on Oct. 1. That entry could attract as much as $1 trillion of buying by global reserves managers. China also has opened a network of yuan clearing-banks around the world. 

But for all the hype, the yuan remains some distance from being viewed as a global reserve asset in the way that the dollar or euro is. While authorities preach liberalization, at the same time they have enforced strict rules on moving money out of the country after a record exodus in 2015. And some analysts still fear a steepdevaluation. 

For now, the lesson from 2005 is that shock currency events are ultimately just growing pains for a rapidly changing economy. With the passing of time, 2015 can be viewed in the same way, Bloomberg Intelligence economists Fielding Chen and Tom Orlik wrote in a note. 

"A year on, the PBOC’s surprise move is looking less like a disastrous misstep, and more like a necessary evil on the path to a more flexible exchange rate regime," they wrote.
"Significant progress has been made."

EM currencies performing very well for the year

US treasuries yields turn negative for Japanese buyers on carry trade

can more rate cuts save this fixed income play?

http://www.bloomberg.com/news/articles/2016-08-07/bond-market-s-big-illusion-revealed-as-u-s-yields-turn-negative

Last month, yields on U.S. 10-year notes turned negative for Japanese buyers who pay to eliminate currency fluctuations from their returns, something that hasn’t happened since the financial crisis. It’s even worse for euro-based investors, who are locking in sub-zero returns on Treasuries for the first time in history. 

Ten-year yields in the U.S. are currently 0.23 percentage point below a basket of bonds from Australia, France, Germany, Italy, Japan, Spain and Switzerland on a hedged basis, versus 1.4 percentage points above on an unhedged basis, according to data compiled by BlackRock. At the start of the year, hedged Treasuries yielded over a half-percentage point more.

In Japan, where 10-year government bonds yield less than zero, the advantage for Treasuries has dwindled from a percentage point at the start of the year to less than 0.1 percentage point now. Without much added value for overseas investors, it’s harder to see foreign demand driving Treasuries to new records, especially as the Federal Reserve moves toward gradually raising rates.

But now, because the rate has turned negative, they’re effectively paying interest to lend the yen, which eats into their bond returns. That’s on top of the Libor rate they’ll need to pay for borrowing the dollars, which currently stands at 0.79 percent over three months. The basis, as it’s known, is currently minus 0.62 percentage point for yen-based investors, which is close to the most expensive in five years. For those with euros, the basis is minus 0.42 percentage point. That’s more than twice as costly as the average over the past three years.

Is it time for risk on again?

I wonder.

https://www.linkedin.com/pulse/finally-michael-a-gayed-cfa

Financials are starting to lead, as Utilities begin to break down.  All it took was one of the most historic 6 week drops in the VIX ever to finally create a flip in market leadership.
Whereas emerging markets, when they opened the morning session weak would continue to be weak in the past, now buyers are stepping in causing many broad based overseas ETFs to outperform by end of day.  On strong dollar days driven by improving economic data and expectations of Fed hikes, cyclicals power through.  Risk-on is looking more and more risk-on.  Risk-off then becomes exceedingly risky for asset allocators who have tilted their portfolios towards yield.  Bonds and dividend plays from a buy and hold perspective may be in a world of hurt if this trend continues.

comments on Rolf’s View of the World and Singapore’s Economy – The whole world has been leveraging up! (Part 3)

comments on: http://www.rolfsuey.com/2016/08/rolfs-view-of-world-and-singapores.html?showComment=1470506201574#c4614877967689040021

not an inapt comparison.

"Imagine you held currencies worth US$35 since 1970. Fast forward more than 40 years today, while the paper US$35 currencies are still the same dollar notes, the purchasing power of the currencies have fallen dramatically.  In retrospect, if you bought 1 ounce of gold in 1970 which cost US$35, the dollar value of that ounce of gold is worth US$1,350 at present time. This is a whopping increase of >38 times."

and you see the effect on longer dated bond prices.

During the GFC, QEs were used to acquire assets of longer maturity as well as the distressed mortgage backed securities from US government sponsored Fannie Mae and Freddie Mac, thereby lowering longer-term interest rates. Thanks to QE1 implemented in Nov 2008, just one year after the worst crisis since Depression, business remarkably went back to usual. Subsequently, QE2 took place in Nov 2010, followed by QE3 in Sep 2012. 

it will require coordinated central banks together with coordinated fiscal policies.

Janet Yellen, the current Fed chairwoman was left behind an enormous public debt problem in US today (~19 trillions) that I reckon there is no way she can turn back, but to continue the artificial support of the world’s economy. It is possible that any major tightening of money supply will possibly lead to collapse of the entire market. 

for the personal, just simply reduce your debts.
but the interesting immediate consequences of a gradual rate hike is the effect of this on currencies and trade balances.
as of now, it seems while EU and BOJ haven't abandoned their monetary stimuli, the Fed will continue to hold off any rate hike.
BOJ's recent action has caused a noticeable reaction on long dated treasuries.

When debt becomes so huge, even a less than substantial increase in borrowing rate can bring about significant interest repayments.  

productivity growth can no longer lead to jobs and higher income due to technology.
it may become more relevant again with higher acceleration of consumption demand.
consumption demand by itself will not help much, only acceleration of its growth will.
productivity growth is an old metric. and i suspect increasingly irrelevant.

Recently he also discussed the biggest worries in US now is the low productivity growth that will eventually lead to economic stagnation particularly in most developed OECD countries.  

i believe this stimulus disappointment was the best move by BOJ at this current juncture due to previous stimulus moves resulting in higher yen.
http://shiohmekiah.blogspot.com/2016/08/boj-buying-up-japanese-etfs-and.html
the problem with Japan is a mentality problem that won't go away easily.
but demographics are changing and the younger guard are bringing back some energy and new ideas and new changes.
it will take time though.

Just recently, PM Abe had announce another round, >28 trillions yen ($265b) of stimulus. However its effectiveness remains to be seen. Many suspect if this strategy is to fail, Japan may need more dramatic strategy ahead, such as "helicopter money"! 

surprisingly, I think the cheap devaluation of GBP and EUR (without spending upfront money, they may pay for it with legislation and restructuring of economic policies later on) has given them some help. we may see this positive aid in figures later this year granted confidence hasn't totally abandoned EU with the recent bank stocks collapses and being kicked out of STOXX and the recent terror attacks and the recent migration of more elites from Europe to US and other countries.
the problem with europe is long term and cannot be solved easily.
They will still do better as a trading bloc but it is not so simple; binding one size fits all legislation, binding currencies out of sync with the economies, tyranny of the majority votes in EU, conflicting interests.
they can do better with a looser structure but the EUR is important for them.

The recent Brexit does not bode well for the EU. About half of UK imports come from EU. In particular France and Germany are UK largest trading partners after the U.S. Brexit also further dampened the solidarity in EU.  Already cohesiveness is low because the core economies do not like the idea that they need to support the countries that cannot pay their bills, which includes Greece, Portugal, Spain, Ireland and Cyprus who defaulted resulted in the Euro Debt crisis after the GFC.

China has devalued this year too.
but comparatively, they are quite nice already. they didn't devalued too much.
even given their long transition pains from export to self sustainable economy.
they are already being nice to global community so far.

New type of mall activities - Pokemon

http://infopub.sgx.com/FileOpen/CL_NewRelease_PokemonSTAR_6Aug2016.ashx?App=Announcement&FileID=416030

#PokemonSTAR - Reward, Redeem, Recharge From 6 to 10 August 2016, CapitaLand will be running #PokemonSTAR, a first-of-its-kind O2O campaign that weaves together augmented reality with CapitaLand's physical properties in Singapore as well as its digital and social media platforms. Members of CAPITASTAR, CapitaLand's multi-mall, multi-store cashless rewards programme, will be rewarded with over 2 million STAR$® through #PokemonSTAR, a snap-and-reward Instagram activity that comes with a daily capture component and two bonus stages – the additional #PokemonSTAR of the Day Challenge and the #CatchEmAllAtCapitaLandMalls Grand Bonus.

http://mothership.sg/2016/08/ion-orchard-is-suddenly-a-pokestop-in-spore/

Barely a few hours after Pokémon Go launched in Singapore on Aug. 6, 2016, ION Orchard has become the first PokeStop here.
A PokeStop is a landmark or place of interest where players get to “catch” virtual Pokemon that are attracted by lures released at these locations.
Lures can be purchased by anyone, and in this case, ION Orchard most probably did.
Because from Aug. 6 to 21, ION Orchard will be releasing hundreds of Lures during designated hours as part of Pokemon Go @ ION Orchard, a marketing campaign to draw Pokemon players.

We’re more a gas company than an oil company - Shell

slowly but surely pivoting.

related:  http://shiohmekiah.blogspot.com/2016/03/singapore-government-committed-to.html


http://www.bloomberg.com/news/articles/2016-07-20/the-future-of-big-oil-at-shell-it-s-not-oil

At Australia’s Curtis Island, you can see Big Oil morphing into Big Gas. Just off the continent’s rugged northeastern coast lies a 667-acre liquefied natural gas (LNG) terminal owned by Royal Dutch Shell, an engineering feat of staggering complexity. Gas from more than 2,500 wells travels hundreds of miles by pipeline to the island, where it’s chilled and pumped into 10-story-high tanks before being loaded onto massive ships. “We’re more a gas company than an oil company,” says Ben van Beurden, Shell’s chief executive officer. “If you have to place bets, which we have to, I’d rather place them there.”
 A crucial element of Shell’s pivot toward gas was its $54 billion takeover of BG Group. The deal, which closed in February, gave the company Curtis Island, other massive LNG plants, and gas fields from the U.S. to Kazakhstan. It now has a 20 percent share of the global LNG market, scores of giant gas tankers prowling the seas, and double the production capacity of its closest competitor, ExxonMobil.
The price of LNG for delivery to Northeast Asia, home to the biggest importers, is down 30 percent in the past year.

In the 1970s it began drafting “Shell Scenarios,” detailed analyses of global politics and economics, and their implications for energy demand. It’s been less hesitant than competitors such as ExxonMobil—the only private oil company that’s larger—to acknowledge the need to cut carbon emissions and invest in greener energy as a hedge. This year it created a unit for renewables, and Van Beurden in June told investors that Shell “strongly supports” global agreements to limit climate change.

Chinese are buying from Japan via apps and amazon japan

amazing, the spillover from chinese demand for hongkong consumer goods seems to be overflowing into japan.

http://www.bloomberg.com/news/articles/2016-08-01/china-s-new-killer-app-a-princess-a-pea-and-a-way-around-japan

The app with the fairy tale name, called Wandou in Chinese, uses about 50 professional shoppers in Japan to procure everything from toilet-seat covers to toothpaste for consumers over in China. For Chen, it’s a way of getting safe and reliable everyday items without having to leave her home or the country, and shipping is free for orders over 300 yuan ($45).
Chinese have been flocking to Japan for electronics, luxury and consumer goods for years, perceiving them to be better and more luxurious than what they can buy at home. Five million Chinese tourists shelled out 1.4 trillion yen ($13.7 billion) there last year, a 154 percent increase from 2014, Japan’s tourism agency says.
Amazon Inc. recently added Chinese language to its Japanese website, lowered the cost of shipping to China and enabled shoppers in China to pay with local currency in response to demand for goods ranging from health and personal care products to cosmetics, Amazon Japan President Jasper Cheung said in a July 27 interview.
Wandou users can make purchases from among more than 3,000 items -- from Lion Corp. toothpaste and Kao Corp. sanitary pad to Calbee Inc.’s potato snacks -- stocked in a 20,000 square-foot warehouse near Tokyo’s Haneda airport. Orders are shipped to China through the company’s own logistics system.
“I want to use made-in-Japan products even if they cost me extra money since I’m scared of Chinese goods,” said Chen. “There are a lot of people like me. Whenever I get good stuff delivered from Japan and introduce them to my friends, they want to buy them right away.”

Iran produces oil India consumes oil

http://www.bloomberg.com/news/articles/2016-07-28/biggest-oil-market-embraces-iran-once-again-as-asia-imports-jump

At the biggest oil market in the world, crude from Iran is back in vogue.
The Persian Gulf state boosted exports to major oil consumers in Asia during the first half of this year, after international sanctions that restricted its supplies were eased in January. Japan’s purchases increased 28 percent, India bought 63 percent more, South Korea’s imports more than doubled while shipments into China gained 2.5 percent during the six months, government and shipping data compiled by Bloomberg show.
The increase in cargoes to Asia shows Iran is having some success in meeting its pledge to prioritize regaining market share it lost in the region due to the sanctions over its nuclear program. The nation, which was OPEC’s second-biggest producer before the international measure choked off its supplies, defied skeptics with a 25 percent surge in production so far in 2016 and aims to reach an eight-year high for daily output of 4 million barrels by the end of the year.

India, forecast by the IEA to be the second-biggest oil consumer, boosted purchases from Iran to about 338,000 barrels a day during January to June from almost 207,000 barrels in the same period a year earlier, according to shipping data obtained by Bloomberg. Shipments to South Korea, the fourth-largest user in the region, jumped 123 percent to about 265,000 barrels a day, data from Korea National Oil Corp. show. Top Asian consumer China bought 603,000 barrels daily. 

This is the top

Leverage for the Long Run

https://pensionpartners.com/leverage-for-the-long-run/

wow. just wow.

Table 6: Unleveraged Buy and Hold versus Unleveraged Moving Average Timing(October 1928 – October 2015)

When the stock market is in an uptrend (above its Moving Average), conditions favor leverage as volatility declines and there are more positive streaks in performance. When the stock market is in a downtrend (below its Moving Average), the opposite is true as volatility tends to rise. 

We found that being exposed to equities with leverage in an uptrend and rotating into risk-free Treasury bills in a downtrend can lead to significant outperformance over time. For investors and traders seeking a destination with higher returns who are willing to take more risk at the right time, systematic leverage for the long run is one way of moving there, on average.

Lesser quantity of investable assets resulting in higher equities prices?

http://finance.yahoo.com/news/blackrocks-fink-us-stock-market-110922005.html

Larry Fink says:

• More outflows from mutual funds
• Recent rally caused by short covering
• Huge inflows in fixed-income meaning risk off
• Cash on sidelines
• Supply squeeze of investable assets (we saw some of this in REITs, HY bonds)

"I don't think we have enough evidence to justify these levels in the equity market at this moment," Fink said Thursday on CNBC's " Squawk Box ."  

 He said the recent rally has been supported by institutional investors covering shorts, or bets that stocks would fall, and not individual investors feeling bullish. "Since Brexit , we've seen ETF flows almost at record levels ... $18 billion of inflows," Fink said.  

"However, in the mutual fund area, we're continuing to see outflows." What that tells you is retail investors are pulling out, he said. "You're seeing institutions who were short going into Brexit ... all now rushing in to recalibrate their portfolios."  

 Besides the stock mutual fund outflows, Fink said he's been seeing huge inflows in fixed-income products. "So you're seeing a risk-off trade, as we call it, around the world."  

 "I would not be surprised — I'm not predicting it — if somebody told me the 10-year Treasury is at 75 basis points, I would not be surprised ," Fink said. There's also $55 trillion in cash on the sidelines, he estimated. "You're seeing a massive reservoir of cash building up." Fink said extraordinary central bank asset purchases has been inflating stocks prices. "I don't think we should be at new [stock] highs," he said. "All the stock repurchases, you're seeing this reduction in investable assets."

Markets: are we there yet? - 2016

Recently, it looks as though we are coming to a crucial point in the markets. 

Both US Stocks (S&P 500) and Bonds (global government bonds) are at All Time Highs.

Normally, when you are worried, you divests your stocks into bonds, so risk off.

when you are greedy, you sell your bonds and buy more stocks, so risk on.

However, developed markets government bonds yields are at all time low while US stocks are at all time highs. This is compounded by the persistent devaluation of developed markets currencies (less Japan) by the actions of central banks. On the other hand, you have all time lows in commodities with agricultural lows, energy coming off an all time low and gold and silver seemingly resuming their climb from more than a decade ago after the recent 4-5 years bear.

Summing up, we know that generally that

for bonds,

• when bond yields go down, bond prices goes up
• when interest rates go up, bond yields go up and bond prices go down
• in 1998, 10 yr singapore govt bond yield can be 5.69%
• negative yields can result in capital losses
• bond cycles are seemingly reaching the end of the decreasing yield cycle
• half of the developed world govt bond yields are negative

for currencies,

• most european currencies and CNY are dropping vs USD while yen is increasing
• some emerging markets currencies are gaining vs USD (some are commodity producers)
• reallocation of currencies from fiat to gold and silver

for stocks,

• yields are now in stocks? (there's renewed buying in the top yields markets, from income funds?)
• sector rotation in US equities from financials to real estate.
• US S&P 500 just broke out to all time highs (notice the divergence from emerging markets)

Note of caution: in trending markets, they can trend for a long long time.

Gold a most winning investment in 2016 so far

More than 100% year to date.

The more widely accepted currency (crypto doesn't count) other than Japanese Yen that is least subjected to central bank manipulations and negative interest rates.

I treated it as a speculative asset bubble and maybe that is a correction I should make.

"Some regard it as a metal, we regard it as a currency and it remains our largest currency allocation."
- Druckenmiller

Japanese Yen - poor chaps just can't do anything to lower it!

Singapore pushing the envelope insistently for FinTech

Can't fault the Singapore government for effort.

photos from: http://www.sporela.com/index.php/latest-singapore-business-news/3314-inaugural-singapore-fintech-festival-to-be-held-in-nov2016

source: http://www.channelnewsasia.com/news/business/singapore/singapore-s-first/2691168.html

Deputy Prime Minister and MAS Chairman Tharman Shanmugaratnam launched the Festival at a roadshow in New York City on Wednesday. The US city is the first in a series of global outreach initiatives Singapore's central bank is conducting to draw the attention of the global FinTech community to the possibilities for innovation and collaboration on offer here, the press release said.
In his speech, Mr Tharman affirmed Singapore's stake in the advancing FinTech sector.
He said: "What we are trying to do is to push the envelope. We are trying to find new ways of doing the financial business, every area of business, in a way that makes more sense to the customer, a borrower, a lender, a middle-class saver, someone who’s making payments, someone who’s receiving payments."
He added that with digitisation taking place across global industries, it is more timely than ever for banks to engage proactively with technology.
"We are at the cusp of a new wave in finance that is I think very promising. There's no assurance it’s going to succeed, but it shows great promise - promise of delivering better value to the customer. That’s really what we’re trying to achieve in FinTech," said Mr Tharman.