Apple Looks to Status-Hungry Vietnam for Growth: Southeast Asia – Bloomberg 07-16-14

Salient to Investors:

  • Tim Bajarin at Creative Strategies said one of Apple’s biggest moves is in Southeast Asia, given Android has passed Apple in smartphones and has made huge strides in tablets in 2014.
  • Gartner said Android smartphones comprised 78 percent of the global market in 2013 versus 66 percent in 2012, while iPhone was down to 16 percent from 19 percent the year before. Apple’s share of the global tablet market fell to 36 percent in 2013 from 53 percent in 2012 while Samsung’s rose to 19 percent from 7 percent the year before.
  • Lam Nguyen at International Data predicts Vietnam smartphone sales will increase 56 percent in 2014, and iPhones are a relatively affordable status symbol.
  • Matthew Crabbe at Mintel said increasingly, the battle for brand loyalty is shifting to Southeast Asia’s growing consumer economy, whereas China, though a big market, is also a competitive and maturing market.

Read the full article at http://www.bloomberg.com/news/2014-07-15/apple-looks-to-status-hungry-vietnam-for-growth-southeast-asia.html

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Irrational Exuberance Overtakes Asia – Bloomberg 12-12-13

Salient to Investors:

William Pesek is  writes:

The “Greenspan put” that flooded markets with cash whenever things got dicey has become the default position in Washington, while in Asia there is an even more dangerous escalation of this policy in papering over cracks in economies that desperately need tougher, structural reforms.

Indian stocks have hit record highs, everyone is talking about India turning the corner, despite nothing really changing from 3 months ago when the rupee was plunging to record lows, politicians fumbled at every turn, talk abounded it would become the first BRIC to have its credit rating cut to junk. India’s current-account deficit is still a danger, just temporarily disguised by a charismatic new central banker. India remains politically corrupt, and the odds are that the BJP is no more a force for change than it was in 2004.

In Japan, the Nikkei 225 Stock Average is up 47 percent despite not one of Abe’s restructuring pledges being fulfilled. Japan is just as heavily regulated, uncompetitive and devoid of innovation as it was the day before Abe came to office. All that is new is a stronger punch recipe. Japan has an overpriced, unproductive and shrinking workforce, not to mention an economic structure geared for success in the 1970s.

PBC Governor Zhou Xiaochuan is deluded in believing China that can grow close to 8 percent a year, no matter what Communist Party leaders do or don’t do. President Xi Jinping’s vague pledges to let markets play a bigger role in the economy has made him seem like a Chinese Margaret Thatcher. Yet as China ends a crackdown on fraud and clears the way for over 700 companies to sell shares, the coming boom in IPOs will benefit from a kind of reform halo effect.

The policies of central bankers in China, India and Japan is no replacement for real reforms, like curbing corruption, lowering trade barriers, creating jobs, encouraging entrepreneurship, building social safety nets, promoting sustainable development and reducing their own role in the economy. Monetary policy can cushion the process of fixing flaws in economies, but it is no substitute.

America’s Greenspanization unfolded at a time in the 1990s of relative stability in a very mature economy. Asia’s Greenspanization is happening far too early in the development cycle, and much too broadly. Evidence of governments letting central bankers do their jobs can be found in Indonesia, Malaysia, the Philippines, South Korea, Thailand and Vietnam.

Read the full article at http://www.bloomberg.com/news/2013-12-12/irrational-exuberance-overtakes-asia.html

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Buyout Opportunities Seen in Vietnam Imbalances: Southeast Asia – Bloomberg 11-06-13

Salient to Investors:

Avinash Satwalekar at Vietcombank Fund Mgmt, a joint venture of Franklin Templeton Investments said:

  • The time is right for buyout firms to invest in Vietnam as monetary and fiscal policy makers have created a very benign environment for investors and reforms take effect over the next 3 to 5 years.
  • Low valuations, constrained bank lending and an improved corporate landscape creates an opportunity to buy companies before the economy picks up and while the water is murky.
  • His favorite sectors are agriculture, retail, education and food and beverage.
  • Banks are asking for more collateral than some firms can afford and that is where private equity can step in.

Vietnam’s benchmark VN Index is at 12.7 reported earnings, the cheapest equities market in Southeast Asia.

Luke Pais at Ernst & Young said private equity people are still waiting but the number of deals has increased and people are spending more time looking at that market.

Preqin said the 5 transactions this year is the highest number in five years and for biggest amount since at least 2006.

Read the full article at  http://www.bloomberg.com/news/2013-11-06/buyout-opportunities-seen-in-vietnam-imbalances-southeast-asia.html

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Bubble, Bubble, Money and Trouble – Barron’s 06-01-13

Salient to Investors:

Marc Faber at the Gloom Boom & Doom Report says:

  • High-end assets from stocks to art to real estate are in a bubble caused by central bank money-printing. This money doesn’t increase economic activity and asset prices in concert, instead creates dangerous excesses in countries and asset classes. Money-printing fueled the stock-market bubble of 1999-2000, the housing bubble in 2008, and the commodities bubble.
  • Owns equities because easing money is flowing into the high-end asset market, including stocks, bonds, art, wine, jewelry, and luxury real estate.
  • The government bailed out S&L depositors in the late 1980s. Treasury and the Fed bailed out Mexico in the mid-1990s. The Fed-supervised bailout of Long-Term Capital Management in 1998 gave a green light to Wall Street to keep leveraging up. Neither Keynes or Friedman would have approved current policies.
  • In the fourth year of an economic expansion, near-zero interest rates will lead to a further misallocation of capital. The S&P 500 is a near a long-term top and could rally to 2000 in the next month or two before collapsing.
  • Money-printing leads to a widening wealth gap. In the Western  democracies, large numbers of people will at some point target the rich through wealth taxes or significantly higher tax rates. The rich have seen huge wealth accumulation in Asia in recent years but the middle class has seen diminishing purchasing power. Growing wealth inequality has always been corrected either peacefully, through taxation and wealth redistribution, or by revolution, as in Russia. European voters will turn against the arrogance of the bureaucracy.
  • China will not tolerate US interference long-term in their region.
  • 25% in equities – no US, some Asian shares and Singapore REITs.
  • Except for some high dividend stocks, Philippines, Indonesia, and Thailand markets are unattractive having quadrupled from post-crisis lows. Dislike Chinese equities unless conditions worsen and China prints money like crazy, when the currency will weaken and stocks will rise.
  • Japanese stocks made a generational low in 2012 and won’t go below that. Like Japanese REITs.
  • Vietnam exports are strong, and the people are hard-working. The beach between Danang and Hoi An will be a huge resort area in the future and is only an hour and 10 minutes by plane from Hong Kong, and two hours from Singapore. Likes stocks with yields of 5% to 7%.
  • Many rich Asian companies have been buying other Asian companies. Asia long-term economic outlook is good. Laos, Cambodia, and Myanmar are opening up, and Vietnam is reopening. Myanmar market is hot but like Vietnam near its peak in 2006-07, looks dangerous for investors.
  • The huge credit bubble in China won’t end well. The economy officially grew 7.7% in Q1 but in truth is growing 4% a year, at best. China reports export figures to Taiwan, South Korea, Hong Kong, and Singapore that are much larger than those countries report as imports.
  • Markets in Europe have made major lows so own European shares – and plan to buy more – and corporate bonds, and real estate. Money in European banks is no longer 100%.
  • Like Singapore REITs whose yields of 5% and 5.5% compare favorably with US REITs. If inflation picks up, REITs can raise their rents.
  • 25% in gold and add to positions every month. When the asset bubble bursts, financial assets will be particularly vulnerable.

Read the full article at http://online.barrons.com/article/SB50001424052748704509304578511561194530732.html?mod=BOL_twm_fs#articleTabs_article%3D0

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Cheesy Group Photos Symbolize Economic Paralysis – Bloomberg 09-03-12

Salient to Investors:

William Pesek predicts the  Asia-Pacific Economic Cooperation summit will end in disappointment. The paucity of accomplishments over the last two decades shows it to be too disparate economically, geographically and ideologically.

Brunei, Chile, Russia, the U.S. and Vietnam share a widening income gap

Read the full article at http://www.bloomberg.com/news/2012-09-03/cheesy-group-photos-symbolize-economic-paralysis.html