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Morning Bamboo Insight: 02/07/2014

Daily Bamboo Insight

Macro

1. ECB Must Embrace Role as Zombie Killer; Low Interest Rates Encourage Banks to Paper Over Unrecognized Losses, Says the Bank for International Settlements

http://online.wsj.com/articles/ecb-must-embrace-role-as-zombie-killer-1404204219?mod=Markets_newsreel_2

2. In a recent paper titled “Banks As Secret Keepers,” four economists argue that banks are necessarily opaque institutions, concealing their portfolios and concentrating on hard-to-value assets

http://online.wsj.com/articles/heard-on-the-street-bank-secrets-can-do-investors-a-service-1404142241

3. With Markets at Peaks, Some Say Air Feels Thin; Global Junk-Bond Sales Hit a High in the First Half, but Some Investors Are Wary: ‘This Is a Time for Caution’

http://online.wsj.com/articles/with-debt-yields-low-firms-dash-for-cash-1404158180

http://online.wsj.com/articles/with-markets-at-peaks-some-say-air-feels-thin-1404167926

4. Where in the World is the Kuwait Investment Authority? On the trail of the world’s oldest-and most elusive-sovereign wealth fund.

http://ai-cio.com/print.aspx?id=2147489062

Asia Pacific

1. Steer Clear of China’s Aluminum Crush

http://online.wsj.com/articles/heard-on-the-street-steer-clear-of-chinas-aluminum-crush-1404205417?tesla=y&mg=reno64-wsj&url=http://online.wsj.com/article/SB10001424052702304344504580002491074538712.html

2. India’s Auditor Suggests Canceling Reliance Jio’s Licenses; Government Report Cites Irregularities in How the Company Acquired the Licenses

http://online.wsj.com/articles/india-auditor-suggests-revoking-some-reliance-jio-licenses-1404143573

3. Thailand’s Divided Military; Gen. Prem Tinsulanonda’s arch-royalist faction may control the top posts, but most soldiers support former Prime Minister Thaksin

http://online.wsj.com/articles/thailands-divided-military-1404148174

4. Kathmandu founder Jan Cameron’s retail empire collapses again; Cameron’s private company DSG, which operates more than 140 Crazy Clarks and Sams Warehouse discount variety stores, has gone into receivership

http://www.brw.com.au/p/entrepreneurs/kathmandu_founder_jan_cameron_retail_1kxvqwwnSFwwta84vYXvMO

5. Modi pitches India’s frugal space prowess at rocket launch

http://www.reuters.com/article/2014/06/30/us-india-space-idUSKBN0F51ES20140630?feedType=nl&feedName=usmorningdigest

6. Macau gambling revenue sees first decline in over 4 years

http://www.thestar.com.my/Business/Business-News/2014/07/01/Macau-gambling-revenue-sees-first-decline-in-over-4-years/

7. Australia’s dependence on China commodity appetite increases

http://www.thestar.com.my/Business/Business-News/2014/06/30/Australia-dependence-on-China-commodity-appetite-increases/

8. China general’s ousting tightens Xi’s grip on military; “One of the things that Deng commanded was, ‘We either get the PLA out of business, or you get out of the PLA’,” he said of the order to businessman officers

http://www.channelnewsasia.com/news/asiapacific/china-general-s-ousting/1226340.html#

9. 600,000 Chinese Die Each Year From Working Too Hard

http://www.zerohedge.com/news/2014-06-30/600000-chinese-die-each-year-working-too-hard

10. What Psy’s ‘Hangover’ Doesn’t Say About Korea’s Drinking Culture

http://blogs.wsj.com/korearealtime/2014/07/01/what-psys-hangover-doesnt-say-about-koreas-drinking-culture/

Life

1. World Cup: Jurgen Klinsmann’s Yoda; Menotti’s central belief is that the key to victory isn’t defensive organization or keeping hold of the ball, but trying to score as many goals inside 90 minutes as humanly possible

http://online.wsj.com/articles/world-cup-jurgen-klinsmanns-yoda-1404165139

2. The Evolution of Trust; The evolution to more frugal, deinstitutionalized living that has created the sharing economy may also lead to less involvement of government in everyday life

http://www.nytimes.com/2014/07/01/opinion/david-brooks-the-evolution-of-trust.html?emc=edit_th_20140701&nl=todaysheadlines&nlid=36114517&_r=0

TMT

1. Tencent’s Online Shopping Doesn’t Come Cheap; Company Spends $736 Million for 20% of 58.com

http://online.wsj.com/articles/heard-on-the-street-tencents-online-shopping-doesnt-come-cheap-1404128933

2. When Big Data Isn’t an Option; Companies that only have access to “little data” can still use that information to improve their business

http://www.strategy-business.com/article/00250?gko=6a94d&cid=20140701enews&utm_campaign=20140701enews

3. The Incredible Shrinking Tech Spending Projections

http://bits.blogs.nytimes.com/2014/07/01/the-incredible-shrinking-tech-spending-projections/?ref=technology

4. With Software Eating Hardware, Silicon Valley Enters “Hard” Times

http://techcrunch.com/2014/06/30/with-software-eating-hardware-silicon-valley-enters-hard-times/

Health

1. New Weapon in Fight Against ‘Superbugs’; A soil sample from a national park in eastern Canada has produced a compound that appears to reverse antibiotic resistance in dangerous bacteria

http://online.wsj.com/articles/new-weapon-in-fight-against-superbugs-1404175658?mod=WSJ_hpp_MIDDLENexttoWhatsNewsFifth

Consumer

1. Grocery manufacturers are struggling to adapt to the online world and need to invest in smarter packaging, presentation and supply chains to reap the long term benefits

http://www.reuters.com/article/2014/07/01/us-food-digital-idUSKBN0F636N20140701?feedType=nl&feedName=usmorningdigest

2. “When Esprit went public in 1998 they said ‘we want to buy your business and fold it into Esprit’; “When multinational companies buy small privately-owned entrepreneurial businesses they often lose their soul”

http://www.theage.com.au/small-business/startup/red-earth-ring-any-bells-its-back-20140624-3aq84.html?eid=email:nnn-13omn620-ret_newsl-membereng:nnn-04/11/2013-small_business-dom-business-nnn-age-u&campaign_code=13IBU007&promote_channel=edmail&mbnr=NDEzOTI1Mg

3. Nestlé U.S. Chief Looks for Brands to Fix or Toss; Number of Product Variations Is Slashed, Lean Cuisine Gets a Makeover

http://online.wsj.com/articles/nestle-u-s-chief-looks-for-brands-to-fix-or-toss-1404172061

Investing Process

1. Banks as Secret Keepers

Tri Vi Danag 

Columbia Business School – Finance and Economics

Gary B. Gorton 

Yale School of Management; National Bureau of Economic Research (NBER)

Bengt R. Holmström 

Massachusetts Institute of Technology (MIT) – Department of Economics; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)

Guillermo L. Ordoñez 

University of Pennsylvania – Department of Economics; National Bureau of Economic Research (NBER)
June 2014
NBER Working Paper No. w20255

Abstract:      
Banks are optimally opaque institutions. They produce debt for use as a transaction medium (bank money), which requires that information about the backing assets – loans – not be revealed, so that bank money does not fluctuate in value, reducing the efficiency of trade. This need for opacity conflicts with the production of information about investment projects, needed for allocative efficiency. Intermediaries exist to hide such information, so banks select portfolios of information-insensitive assets. For the economy as a whole, firms endogenously separate into bank finance and capital market/stock market finance depending on the cost of producing information about their projects.

 

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About bambooinnovator
KB Kee is the Managing Editor of the Moat Report Asia (www.moatreport.com), a research service focused exclusively on highlighting undervalued wide-moat businesses in Asia; subscribers from North America, Europe, the Oceania and Asia include professional value investors with over $20 billion in asset under management in equities, some of the world’s biggest secretive global hedge fund giants, and savvy private individual investors who are lifelong learners in the art of value investing. KB has been rooted in the principles of value investing for over a decade as an analyst in Asian capital markets. He was head of research and fund manager at a Singapore-based value investment firm. As a member of the investment committee, he helped the firm’s Asia-focused equity funds significantly outperform the benchmark index. He was previously the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. KB has trained CEOs, entrepreneurs, CFOs, management executives in business strategy, value investing, macroeconomic and industry trends, and detecting accounting frauds in Singapore, HK and China. KB was a faculty (accounting) at SMU teaching accounting courses. KB is currently the Chief Investment Officer at an ASX-listed investment holdings company since September 2015, helping to manage the listed Asian equities investments in the Hidden Champions Fund. Disclaimer: This article is for discussion purposes only and does not constitute an offer, recommendation or solicitation to buy or sell any investments, securities, futures or options. All articles in the website reflect the personal opinions of the writer.

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