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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
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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