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Daily Bamboo Innovator Insight: Sun 30 Nov 2014 – Small Victories: Spotting Improbable Moments of Grace; STARTUP GOD PAUL GRAHAM: Mean People Fail

Life 

STARTUP GOD PAUL GRAHAM: Mean People Fail: BI, PaulGraham

Hidden gems in our midst: We need to look at things and people not only with our eyes, but with our heart. Star

This Man Was Supposed To Become Steve Jobs 2.0 — Here’s What Happened Instead: BI

Mohnish Pabrai’s Million-Dollar Advice For A 12-Year-Old Investor: Forbes

In Praise of Melancholy and How It Enriches Our Capacity for Creativity: BrainPickings

Anne Lamott on Grief, Grace, and Gratitude; On the grace of redefining ourselves and redefining okayness when life throws us its merciless curveballs. BrainPickings

Voltaire on How to Write Well and Stay True to Your Creative Vision: BrainPickings

Lost in Translation: An Illustrated Catalog of Beautiful Untranslatable Words from Around the World: BrainPickings

Books

Small Victories: Spotting Improbable Moments of Grace: Amazon

Investing Process

Stockpickers’ Blues: A leading market analyst finds that no particular style of stock selection is long successful in the current market. Barron’s

Greater China

Taiwan’s ruling Nationalist Party suffered a landslide defeat in local elections Saturday, prompting the resignation of the premier and leaving the party weakened before a presidential vote in two years. WSJ

TMT

How to Build an Empire, the Netflix Way; With “Marco Polo,” its lavish new series, the streaming service is placing one of its biggest bets yet on global expansion. NYTimes

Netflix CEO: Broadcast TV Will Die Within 16 Years; “It’s kind of like the horse, you know, the horse was good until we had the car”: BI

Lenovo’s $100 Billion Gambit; Yang Yuanqing built Lenovo into the world’s largest PC maker. His next target? Smartphones. Watch out Samsung, Apple. Barron’s

Uber needs rider goodwill to prevail in the many markets where it is facing significant regulatory resistance; Uber’s perceived lack of ethics is making it very difficult to rationalize advocating for them or to even ride with them: Stratechery

The Yellow Cab Bubble Pops: Taxi Medallion Prices Tumble 17% From Last Year’s Record Highs: ZeroHedge

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Daily Bamboo Innovator Insight: Sat 29 Nov 2014 – Canadian Natural Resources chairman sees oil touching US$30 a barrel; Korea start-up leaders launch a fund with personal money to give back; the five IT legends (Kakao, NHN, Nexon, NCSoft, Daum) were also friends in college

Life

Apple and the crisis of disruption; Clayton Christensen’s theory about what determines success or failure in high tech has to be rethought: Fortune

4 CEOs Who Are Making Frugal Innovation Work: HBR

Magnus Carlsen, an unlikely chess master; He moonlights as a model, naps on the job, skips homework – and snuffs out every rival: FT

Fee-Based Libraries Were Like Netflix for Books, 200 Years Ago: All-you-can-read lending services helped democratize reading. WSJ

Fishmongers Inspired This Practice That Boosts Employee Morale Around The World: BI

James Watson selling Nobel prize ‘because no-one wants to admit I exist’; World-famous biologist said he is selling the Nobel Prize medal he won in 1962 for discovering the structure of DNA because he has been ostracised and needs the money: Telegraph

DNA and the Randomness of Genetic Problems; The miraculously intricate process that transforms a few strands of DNA into a living creature is the product of blind biological forces. It can go wrong: WSJ

Isis fighters crave snacks and gadgets of the west they disdain; “They govern us in the name of religion, living the good life while everyone else suffers”: FT

How the Turkey Became the Thanksgiving Bird: WSJ

UK family businesses face succession crisis; Two-thirds of British family businesses could be sold off because there’s no one left to take over, a landmark survey report has found: Telegraph

Take a look at Yourself in the Leadership mirror: Forbes

Last of the traditional Dha sword makers in South East Asia: AsiaOne

Books

Superintelligence: Paths, Dangers, Strategies: Amazon

Exponential Organizations: Why new organizations are ten times better, faster, and cheaper than yours (and what to do about it): Amazon

Bending Adversity: Japan and the Art of Survival : Amazon

Van Goh’s Ever Yours: The Essential Letters;  [Van Gogh’s] descriptions of his own paintings are poetically evocative, and his long, detailed, emotional outpourings offer insight into his suffering, loneliness and dreams: Amazon

FT Best books of 2014: FT

Investing Process & Research

How to X-Ray Your Portfolio; Online Tools Can Help Investors Review and Analyze Their Stock and Fund Holdings: WSJ

As Indexes Soar, Active Stock Pickers Can’t Get Off the Ground: WSJ

The Trouble With Hot Stocks; Picking Heavily Traded Shares Is No Guarantee of Good Results: WSJ

Dash for Cash: Month-End Liquidity Needs and the Predictability of Stock Returns; return reversals are stronger in countries where the mutual fund ownership is large: SSRN, ValueWalk

Greater China

China Said to Order Companies to Check Risks in Commodity Trades: Bloomberg

Dairy industry in China is utterly stagnant: WantChinaTimes

China Plan for Deposit Insurance Raises Worries About Bank Failures; Plan Could Place More Deposits With Big Banks That Are Seen as Too Big to Fail: WSJ

Graphics: China’s Overworked Workers: Caixin

The Disintegration of Rural China: NYTimes

Wuhan – China’s entertainment mecca: BT

China Motorists Exceed 300 Million as Cities Struggle: Bloomberg

Nowhere to Pun Amid China Crackdown: WSJ

China’s Transition Marks a New Reality for Emerging Markets: PI

India

Mahindra & Mahindra and the Power of Chance; M&M showed that if an organisation has the stomach for calculated risks and a focus on product development, results will often follow: Forbes

Dipping Into India, Dunkin’ Donuts Changes Menu; Adapting to Local Tastes, Chain Downplays Doughnuts, Adds Veggie Burgers: WSJ

India Allows Supermarkets, Mobile-Phone Companies to Start Banks: Bloomberg

Japan & Korea

Keep Korean conglomerates creative: JoongAng

As Japanese Bankruptcies Soar, Goldman Warns “Further Yen Depreciation Could Be A Net Burden”: ZeroHedge

Korea start-up leaders launch a fund with personal money to give back; the five IT legends (Kakao, NHN, Nexon, NCSoft, Daum) were also friends in college: JoongAng

Park turns to nostalgia politics; Park appears to be tugging the older generation’s heart strings by doing things that prompt memories of her youth and her father, the late President Park Chung-hee: KoreaTimes

Staff fear the chop in Samsung Electronics annual reshuffle: Reuters

ASEAN

Oil Price Slump May Force Indonesian Govt to Evaluate Fuel Subsidy: JGlobe

Impeachment process begins for ousted Thai PM Yingluck: Reuters

Slow Pace of Vietnam’s Privatizations Worries Investors; Vietnam Airlines IPO Attracts No Interest From Foreign Investors: WSJ

Indonesia’s ‘Toothless Mandate’ for Biofuel Hurting Palm: Bloomberg

Macro

Standard Chartered hit with first S&P downgrade in 20 years: Reuters

ECB vice-president warns of bond-buying risks as investors search for yield in an environment of ultra-low interest rates: FT

Superstar investor David Einhorn is raising cash for the first time since 2012 following three straight years of lagging performance – and some customer redemptions from his $10 billion hedge fund, Greenlight Capital: Reuters

Hedge-fund managers are increasingly persuading investors to lock up their money for longer-in many cases more than double the typical one-year period-and dangling lower fees to close the deal: WSJ

TMT

Electricity-free air conditioning: A cool idea; New materials may change the way temperatures are regulated: Economist

Under Pressure From Uber, Taxi Medallion Prices are Plummeting; “I’m already at peace with the idea that I’m going to go bankrupt,” said Larry Ionescu, who owns 98 Chicago taxi medallions. NYTimes

Shopping on a Phone Is Still Uncommon but Growing Fast: NYTimes

Cashless Society? It’s Already Coming: NYTimes

Energy & Commodities

Here Are The Breakeven Oil Prices For Every Drilling Project In The World: BI

Canadian Natural Resources chairman sees oil touching US$30 a barrel; Alberta big oil to feel the squeeze as world’s cheapest oil gets cheaperL FP

Billions wiped off energy shares as investors rush for exit: Reuters

OPEC’s Twist of Faith for Oil Investors; Fallout From Oil’s Rout Extends Beyond Producers: WSJ

Oil Prices Are Plunging. Here’s Who Wins and Who Loses. NYTimes

Free Fall in Oil Price Underscores Shift Away From OPEC: NYTimes

Energy Quakes as OPEC Stands Pat; Oil Stocks and the Currencies of Major Oil-Producing Nations Tumble: WSJ

The Geopolitical Impact of Cheap Oil: Project Syndicate

Is oil price plunge good or bad for global economy? Most of them would require a price of above US$80 per barrel to manage their budgets and some would need oil to be priced above US$100. BT

Rio Tinto, BHP Chart Divergent Courses; Narrow Commodity Focus or ‘Cherry-Pick’ From Range of Projects?: WSJ

Consumer & Others

Microbreweries shake up European market; Number of start-ups rises as drinking habits change: FT

Pie Face collapse: high rents, ‘expensive and unfashionable’ food blamed: BRW

Good News For Girls: Disney’s ‘Frozen’ Ices Out Barbie To Become Top Toy: Forbes

Buyout Firms Said Vie for World’s Biggest Cigar Company: Bloomberg

Daily Bamboo Innovator Insight: Fri 28 Nov 2014 – China has ‘wasted’ $6.8tn in investment; Record China Downgrades Test PBOC as More Defaults Seen

Life 

Making a success of succession: Companies are generally not good at changing their chiefs: Economist

Every damn day: how Milan Direct founder Dean Ramler keeps the passion for his business alive: BRW

Ways to pick the smart students; Cambridge’s website states that the school wants students who think like Newton, not those who know Newton well: JoongAng

Charlie Munger and Niederhoffering the Investors: Sova

How Mark Cuban, Richard Branson, And Other Entrepreneurs Started Their First Ventures As Kids: BusinessInsider

The Best Advice I Wish I’d Had Sooner by Marillyn Hewson, Lockheed Martin, Chairman, President and CEO: LinkedIn

13 Bizarre Sleeping Habits Of Super Successful People; Leonardo da Vinci’s sleep schedule included 20-minute naps every four hours. This unconventional sleep cycle may have given the artist/inventor/scientist more awake time: BusinessInsider

The joy of discovery for plant hunters: FT

Do the Jesuits hold the answer for misfiring multinationals? The order’s structure has attracted business school plaudits: FT

Insights From The Most Successful Investors In History: Ritholtz

How the Civil War Created Thanksgiving: NYTimes

Staff motivation key to raising productivity, more so than innovation: CFOs: CNA

How Much Trickery Is Legal on Wall Street? A Jefferies trader convicted of defrauding investors out of $2 million says he was just doing what any salesman does.: BW

C.S. Lewis and the Crises of Belief; Despite tragedies, the scholar and ‘Chronicles of Narnia’ author came down on the side of faith. WSJ

When Debt Is Opportunity: An ex-con-turned-collector notes that it is common to work in a few stolen accounts with legitimate ones to sweeten the return: WSJ

Greater China

China has ‘wasted’ $6.8tn in investment, warn Beijing researchers: FT

Record China Downgrades Test PBOC as More Defaults Seen: Bloomberg

Going Online to Borrow Down Payments in China; Online borrowing for down payments may reach 20 billion yuan this year and could climb to 1.2 trillion yuan a year.: BW

In Hong Kong, Tycoons and Fishermen Determine Who Leads the City: Bloomberg

Higher education: A matter of honours; China is trying to reverse its brain drain: Economist

Inheritance law: A lack of will power; Inheritance law needs to catch up with economic and social change: Economist

Prudential Betting China Will Trim Down State-Owned Giants: Bloomberg

Ting Hsin may be forced to liquidate its assets as financial pressure mounts: ChinaPost

Jack Ma’s e-commerce empire looks west to Xinjiang: WantChinaTimes

Formosa Group chairman and co-founder Wang Yung-tsai dies, aged 93: WantChinaTimes

The Next Phase of China’s Financial Deepening: Project Syndicate

The Ambition Explosion: China’s future may be determined as much by its spiritual struggle as by its new capitalist ethos: NYTimes

Beijing shop bans…. Chinese customers; Clothing shop in Chinese capital has angered domestic customers by banning them from entering the store: Telegraph

Open Sesame: Alibaba and the 16 Tiger Cubs : Novus

India

Budget carriers in India: In short-haul for the long run; Prospering in India’s aviation market requires patience and discipline: Economist

An inside tale of how Narendra Modi won the Indian election in 2014: Economist

Car-Sharing Startups Hit the Road in India: BW

Pressure Grows for Rajan to Follow China Rate Cut as India Slows: Bloomberg

Japan & Korea

Electricity firms in Japan: Solar shambles; Japan has failed to learn from Germany’s renewable-energy mess: Economist

South Korean President goes overboard in use of ‘scary’ metaphors; a good leader is one who moves people’s hearts with gentle words and strong action, not one who scares them. AsiaOne

What Sony Can Learn From Samsung: Bloomberg

‘Creative Korea 2014’ showcases potential of creative economy: Maeil

Heir apparent at LG is made a V.P.: JoongAng

Nongshim, Korea’s largest maker of instant noodles, is seeking to export its flagship product Shin Ramyeon to over 100 countries next year by capitalizing on the growing popularity of “K-food” overseas. KoreaTimes

Leadership change in full swing at Samsung, Hanwha; The so-called big deal between Samsung and Hanwha Group is evidence of a leadership changeover from fathers to sons at the two chaebol. KoreaTimes

There is no telling how the latest transaction ― the largest since the Asian financial crisis ― will work out for both Samsung and Hanwha.: KoreaTimes

PayAll, an online payment service developed by BC Card, is drawing a growing number of users for its simplicity and convenience as it doesn’t require a public key or Active-X tool for e-transactions.: KoreaTimes

Mutual funds will be allowed to match Samsung’s market weight on (15% of KOSPI) but are not allowed to overweight, which is not great for Samsung’s stocks: Barron’s

ASEAN

Singapore Wealthy Stung as Crude Rout Sinks Bonds; Singapore’s wealthiest residents may be regretting bank rolling the island’s oil industry: Bloomberg

Singapore central bank says it might do more to contain household debt; MAS lays out risks for Singapore private debt: Reuters

Private home prices still high, despite falls: MAS: TODAY

Vietnam yields cautionary tale over Chinese investment: FT

Can man-of-the-people Widodo micromanage 240 million Indonesians? Reuters

In Thailand, Firms Add Apprentice Programs; Manufacturers Address Skilled-Labor Shortage; ‘We Can’t Wait,’ BMW Executive Says: WSJ

Bumi to have global restructuring after court protection: JPost

Misuse of inside info on the rise as companies try to raise capital in on the Stock Exchange of Thaland and the Market for Alternative Investment: SEC: Nation

President Joko Widodo wants his ministers and other officials to adopt a humble lifestyle, asking them to stop throwing massive wedding parties and not show off their wealth: JGlobe

Indonesia’s palm revolution runs off track for smallholders: Reuters

A New Vision for Singapore; Treating social values and morality as commodities is a dangerous game. WSJ

Macro

Low-calibre munitions: Fears of a currency war in Asia are overblown: Economist

Reinsurance revolution changes landscape of risk management: FT

The good, the bad and the ugly of emerging market debt: FT

In parched bond markets, sparks are dangerous: FT

An Inclusive Emerging Economy, With Africa in the Lead; Village based savings groups now reach about 10 million people in more than 60 countries, many in remote rural areas without any other financial services. NYTimes

America’s Best Small Companies 2014: Forbes

ECB’s negative interest rates under fire in Germany: TheStar

New Entrepreneurs Find Pain in Spain; Startups Face Cratered Consumer Market, Scarce Capital, Dense Bureaucracy and Culture Averse to Risk: WSJ

TMT

Apple’s $100 Billion Waste: Tim Cook’s Single Biggest Mistake As CEO: Forbes

Myanmar Digital Startup NEX Gets 2nd Round Funds From Blibros; Ye Myat Min dropped out of Singapore Management University to work in Singapore’s Web world.: Forbes

Trustbusting in the internet age: Should digital monopolies be broken up? European moves against Google are about protecting companies, not consumers: Economist

How Apple Becomes A $1 Trillion Company: BusinessInsider

Wikipedia founder to float charity mobile phone company The People’s Operator for £100m: Telegraph

Amazon: We are not trying to destroy Royal Mail: Telegraph

Willy Wonka-style elevator uses magnets to move sideways; German company ThyssenKrupp says its revolutionary new design means you will never wait more than 30 seconds for a lift: Telegraph

What Airbnb Gets About Culture that Uber Doesn’t: HBR

The Startups of Nazareth: BW

These Apps Mean You’ll Never Wait in Line for Coffee Again; Mobile order-ahead apps cost stores about $25,000 to implement but increase traffic by as much as 30 percent.: BW

Europe escalated its war against U.S. technology superpowers to rein in the growing influence : WSJ

Internet-connected device sector deals accelerating: Reuters

Healthcare

The price of failure: A startling new cost estimate for new medicines is met with scepticism: Economist

China Nepstar: A Bitter Pill For Investors: China’s largest drugstore chain afflicted by high costs and online competition. Prognosis: negative.: Barron’s

Energy & Commodities

Oil price slide leaves energy bond investors facing zero returns: FT

“There Will Be Blood”: Petrodollar Death Means A Liquidity And Oil-Exporting Crisis On Deck: ZeroHedge

Alberta Producers With World’s Cheapest Oil Face Cascading Woes: Bloomberg

Ready or not: oil exporters facing low prices; A mixture of ants and grasshoppers with some having learned the virtues of hard work: FT

Opec members flounder in a flood of cheap oil; The cartel’s weakness is welcome now, but a warning for the future: FT

Tumbling crude oil prices are casting a shadow over almost $US70 billion ($82.3 billion) of natural gas projects planned in Australia, threatening what’s billed as the second leg of the nation’s energy boom. TheAge

Terence Corcoran: How markets finally beat OPEC’s oil-price chokehold: FP

OPEC’s Weapon of Mass Inaction; It will likely be years before we see triple-digit oil again: WSJ

Consumer & Others

Low-cost airlines: Making Laker’s dream come true; Low-cost airlines have revolutionised short-haul flying. Now, after several failed attempts, they are poised to do the same on longer routes: Economist

SABMiller’s Coca-Colanisation of Africa: FT

How the once high-flying fast-food chain. Pie Face cooked its own goose: TheAge

Munchery hopes stone-cold logistics will help it win the war over the evening meal; Tri Tran is taking the middle road between delivering it raw and rushing it over to you hot: Forbes

Spanx for Your Face: BW

Roy Choi Wants to Reinvent Fast Food; The food truck pioneer is betting on a tofu-laced burger: BW

Daily Bamboo Innovator Insight: Thurs 27 Nov 2014 – Asia’s Aging Tech Leaders Struggle to Find Successors: Many Now-Global Firms Are Still Run Like Family Businesses, Making Handoffs Difficult

Life

What To Do When You Have Too Much To Do And Too Little Time: FastCo

What Maslow’s Hierarchy Won’t Tell You About Motivation: HBR

What Abraham Lincoln Can Teach You About Being a Better Investor: OldSchool

The New Habit Challenge: How To Trick Yourself Into Accomplishing Your Goals: FastCo

Steal Without Shame: The Legend of Bagger Vance was stolen from the Bhagavad-GIta; “I just changed Arjuna from a troubled warrior to a troubled golf champion—and changed Krishna from his charioteer to his caddie”: Steve Pressfield

When G.M. Was Google: The art of the corporate devotional. NewYorker

Back to the Future: When the CEO Returns: K@W

3 Subtle Differences Between Workaholics and High Performers: BusinessInsider, LinkedIn

Here’s An Exciting New Clue About Why Some People Stay Sharp As They Age: BusinessInsider

Billionaire Clive Palmer created ‘sham’ document to cover up dishonest use of funds, court told: BRW

Pilgrims and the Roots of the American Thanksgiving; English settlers of the 17th century were a diverse lot, and they became Americans despite themselves: WSJ

What Managers Really Need from Academics: HBR

A Chief Innovation Officer’s Actual Responsibilities: HBR

Too many ‘thought leaders’; These days everyone purports to be an expert – but are they really? “A real thought leader changes a paradigm or way we think about something at a fundamental level” : TheAge

Stephen Hawking: How He Speaks & Spells: The technology that helped resurrect the life of Stephen Hawking after the physicist was stricken by Lou Gehrig’s disease. EETimes

Gut check: how vultures dine on rotting flesh, and like it: Reuters

Investing Process

Spot spin-off candidates to profit from activist activities: FT

Greater China

China Gerui Advanced Materials, a Chinese specialty steelmaker, was sued by an investor for spending more than $230 million on antique porcelain and the share price decline that followed: Bloomberg

China Says West Hampering Anticorruption Efforts; China Says Western Prejudices Blocking Efforts to Retrieve Fugitives Involved in Corruption Cases: WSJ

Fonterra learns from a corporate health scare in China: FT

Why Boston’s $29 billion man avoids China: Bloomberg

Fonterra learns from a corporate health scare in China: FT

Buzz Over Hong Kong Startups Gets A Reality Check; All It Takes Is 1 Hong Kong Startup To Break Through: Forbes

Why Venture Capital Is Declining In High-Tech Taiwan: Forbes

Chinese VIPs Flee Vegas Baccarat Amid Crackdown at Home: Bloomberg

Beijing watches anxiously as Taiwan readies for local polls: AsiaOne

How China’s shadowy agency is working to absorb Taiwan: Reuters

In Taiwan, a Retirement Delayed 17 Years; Bruce Cheng of Delta Electronics, the world’s largest maker of electronics power supplies, and the current chairman Yancey Hai, discuss a management transition more than a decade in the making: WSJ

Banking tricks blunt China’s drive to increase lending: Reuters

India

Alibaba Looks to Invest More in India: WSJ

Snapdeal: Connecting the Dots between Demand and Supply in India; Snapdeal co-founder Kunal Bahl discusses the company’s unique business model. K@W

Japan & Korea

Korea needs activist investors: JoongAng

The saving of Hynix; The Hynix turnaround can provide a solution to the entire lethargic Korean manufacturing sector: JoongAng

The way ahead:  Samsung Group has decided to sell off four subsidiaries in the petrochemicals and defense industries to Hanwha Group to focus on its core areas of competitiveness: JoongAng

Samsung’s affiliate sales intensify speculation about succession; Affected Samsung employees wary about future: JoongAng

IKEA’s entry into Korea; The truth is that Korean consumers, especially at the higher end of the spectrum, have created a strange market where overpricing is actually an effective marketing strategy. KoreaTimes

Asia’s 13% Carry Return Lures Record Japan Funds Amid Yield Hunt: Bloomberg

IKEA’s entry into Korea; The truth is that Korean consumers, especially at the higher end of the spectrum, have created a strange market where overpricing is actually an effective marketing strategy. KoreaTimes

Tabelog.com’s customer-generated restaurant reviews prompt food fight: JapanTimes

Nearly 50% of Japanese firms suffering due to weaker yen, online poll suggests: JapanTimes

Samsung’s Heir Makes Mark With $8 Billion of Deals: Bloomberg

Woowa Brothers, a South Korean startup that operates the country’s most popular food-delivery mobile service, attracted $36m in funding; processed about 4 million food-delivery orders from 145,000 registered restaurants: WSJ

Samsung to Buy Back $2 Billion Worth of Shares, First Such Move in Seven Years: WSJ

Toyota Aims to Bring Crash-Prevention Technology to Mainstream; Camera, Radar Would Help Detect Objects Near Car; Automated Braking Also Offered: WSJ

ASEAN

Singapore tests its success; Demographic shifts pose fresh challenges: FT

Philippine Economy Expanding Like It’s 1950s on Consumption Boom: Bloomberg

Golkar Split, a Proxy Fight for Leadership: JakartaGlobe

Thailand’s elections could be delayed until 2016: BBC

Singapore Civil Servants Win or Lose Bonuses on State of Economy: Bloomberg

Jets Depart Saigon Belly Full as Samsung Spurs Cargo Boom: Bloomberg

Macro

A Bearish Hedge Fund Bets Against the Bulls and Still Profits: Bloomberg

Global Investors Plow Cash Into Asian Stocks as Year-End Nears: WSJ

How to Build an ‘African Model’ for Success in Manufacturing: K@W

Gatekeepers digging deeper into smart beta strategies: FT

‘Vulture’ hedge funds set to target unprotected government debt: FT

Many wealth managers and private banks have been failing to make clear when they are placing customer money into funds they run themselves, a review by the UK financial watchdog has found. FT

Disclosure of funds’ “active share” figure should become the norm to prevent investors being misled into buying overpriced funds whose performance closely mirrors that of a benchmark index: FT

Fed’s game of pretend must end soon; Rate rise delay will make deleveraging more painful: FT

TMT

Asia’s Aging Tech Leaders Struggle to Find Successors; Many Now-Global Firms Are Still Run Like Family Businesses, Making Handoffs Difficult: WSJ

How the smart went out of the Samsung phone: South Korea’s group has never persuaded consumers its brand is as desirable as Apple’s: FT

Unsold. Unwanted. Unloved. Samsung’s Galaxy S5 Gamble Failed; Samsung is going to suffer continued pain over this over-confidence: Forbes

Those Amazon Delivery Drones? Not So Fast: WSJ

Now, Anyone Can Buy a Drone. Heaven Help Us. NYTimes

Now, Anyone Can Buy a Drone. Heaven Help Us. NYTimes

Global Tech Companies Make Melbourne Their Australian Home: Forbes

Proto Labs is turning the manufacturing process on its head: Forbes

Is Uber Really Worth $40 Billion? Bloomberg

GoPro to roll out consumer drones; Company Plans to Start Selling Multirotor Helicopters With High-Definition Cameras Late Next Year: WSJ

Behind Google’s Europe woes, American accents: Reuters

Ultra-strong graphene’s weak spot could be key to fuel cells: Reuters

Energy & Commodities

For The World’s Largest Rig Operator, The “Recovery” Is Now Worse Than The Post-Lehman Crash; Seadrill collapsed 20% following a shocking overnight announcement that it had once again halted its dividend: ZeroHedge

Opec price wars, then and now: FT

Oil price fall starts to weigh on banks; Banks including Barclays and Wells Fargo are facing potentially heavy losses on an $850m loan made to two oil and gas companies, in a sign of how the dramatic slide in the price of oil is beginning to reverberate through the wider economy. FT

OPEC price war fears evokes ugly memories of 1986 oil bust for U.S. drillers: FP

Cheap energy is the new cheap labour; For companies wondering where to locate, the world has turned upside down: FT

OPEC price war fears evokes ugly memories of 1986 oil bust for U.S. drillers: FP

Cheap energy is the new cheap labour; For companies wondering where to locate, the world has turned upside down: FT

Jim Rogers Weighs In on Commodities: Barron’s

Heavy Metals Weigh On Banks; Asian lenders are closely eyeing loans to resource companies. Which banks are most at risk? Barron’s

19 US Shale Areas That Are Suddenly Endangered, “The Shale Revolution Doesn’t Work At $80”: ZeroHedge

Healthcare

FDA Requires Calorie Labels at Groceries, Pizzerias to fight obesity: Bloomberg

Failed Allergan Deal Strains Valeant’s Business Model: NYTimes

What If We’re Wrong About Depression? Some researchers say we need new ways of thinking about depression entirely – and that one day, therapy could start with a blood test. NYTimes

Mt Elizabeth Hospital sets fixed surgery prices: AsiaOne

Stem Cells Hold Promise for Skin Disease Treatment: WSJ

Consumer & Others

Sir Terry Leahy ‘shocked’ by events at Tesco; Sir Terry Leahy, who has been accused of leaving a ‘very sad legacy’: Guardian

BMW’s genius move is from Apple’s playbook; BMW is redesigning the way its dealerships operate, a process that will include more “genius” product specialists and fewer sales personnel: Fortune

Yakult Falls After Danone Said to Consider Selling 20% Stake: Bloomberg

Luggage maker Tumi travels toward moatworthy status in the luxury goods industry: Morningstar

Daily Bamboo Innovator Insight: Wed 26 Nov 2014 – Google HR Boss Says This Is The Secret To Happiness: An “attitude of gratitude” is the secret to happiness

Life

Google HR Boss Says This Is The Secret To Happiness: BusinessInsider, LinkedIn

Ndamukong Suh: “I want to understand [Buffett] as a person, not a stock tip or the next thing he’s getting involved in. I want to understand what made him successful.”: WSJ

Nations thrive by uniting professors and entrepreneurs; Business opportunities are lost when academics and entrepreneurs inhabit separate worlds: FT

How Marvel is opening up its universe to women and minorities; Marvel is addressing women and minorities more than ever before-in film, television, and print comics. Fortune

The Lives of Alexander Grothendieck, a Mathematical Visionary: NYTimes

How the Chicken Built America: NYTimes

Here’s How Legendary Industrialist Andrew Carnegie Defined Success: BusinessInsider

12 Surprising Things That Can Make You Successful: BusinessInsider

What yellow slime-yes, slime-can teach your organization: Explore, Remoeve hierarchies, Remember what you did wrong and tell someone: Quartz

Rethinking start-ups: The start-up spirit is important. But even more importantly, we need more successful entrepreneurs. JoongAng

How to Disagree with Your Boss: HBR

It Doesn’t Matter If Competitors Know Your Strategy: HBR

How to Give a Stellar Presentation: HBR

Fight fraud with six levels of authentication: BT

THE rise of Lockton Inc in the last 48 years to become the world’s largest privately-owned insurance broker is no mystery, says CEO John Lumelleau who attributes the glowing success to his people. BT

CEOs’ Test: Contending With Activist Investors; Executives Devise Strategies to Deal With Shareholders, Who Are More Assertive Since Financial Crisis: WSJ

Books

How to Lie with Statistics: Amazon

The Value Proposition: Sionna’s Common Sense Path to Investment Success: Amazon, CFA

Best Books for Investors: A Short Shelf: WSJ

Greater China

Microsoft to pay China $140 million for ‘tax evasion’: Reuters

Fake invoicing rampant to disguise black money, say analysts: Reuters

Be careful what you do in China, you may be surcharged for it: WantChinaTimes

Why Family Business Succession is China’s Biggest Threat: CampdenFB

Spreading Black Friday Fever to China’s Shoppers: WSJ

Why $4 Trillion of China Stocks Are Hostage to a Few IPOs: Bloomberg

The 51% Chinese Stock Rout That Analysts Never Saw Coming: Bloomberg

India

Bollywood’s Window Onto India: Bloomberg

Rajan Seeks More Power for India’s Banks Over Big Bad Defaulters: Bloomberg

Japan & Korea

South Korea targets 5G global supremacy: FT

Chung taking Hyundai Motor Group global: KoreaTimes

Samsung to Sell Chemical, Defense Units for $1.7 Billion to Hanwha; Samsung Techwin Drops Most in 14 Yrs on Sale Plan; Hanwha Surges: Bloomberg

ASEAN

How Thai junta should respond to three-finger protest: TODAY

Vietnam Expands Foreign Property Ownership to Boost Economy: Bloomberg

Remisiers feel the chill as investors shun local market: AsiaOne

Joko “Jokowi” Widodo’s appointment of Franky Sibarani, a businessman, as the new chief of the Investment Coordinating Board (BKPM), reiterates the President’s overriding concern with expediting the bureaucracy of investment licensing: JakartaPost

Indonesia Cannot Afford Food Nationalism: JakartaGlobe

Indonesian politics will always be shaped by the Golkar Party regardless of the regime or president. As Indonesia’s own Grand Old Party, Golkar is a survivor and has managed to adapt to whatever changes the country has faced. JakartaGlobe

Blue Bird’s Road Forks in Family Feud, IPO: JakartaGlobe

Leaders Gather to Embrace Indonesia’s Consumers: JakartaGlobe

Bankers Doubt Indonesia’s Liquidity Rules Will Have Desired Effect: JakartaGlobe

Jokowi Urged to ‘Show Teeth’ to Transform BKPM in Simplifying Investment: JakartaGlobe

Macro

SEC Encouraging Firms to ‘Tell Their Story’ in MD&A: CFO

Radical cures for unusual economic ills; The crisis left a grim legacy, and the answers are likely to be unorthodox: FT

Asia needs to deepen financial markets: Xinhua

Let’s Make a Deal: The Outlook for Merger Funds; How increased merger activity shapes the risks and opportunities for this niche group of mutual funds. Morningstar

How Macquarie Makes Money By Losing Money on Toll Roads: StreetsBlog

How pensions make investing too complex; Pricey consultants have convinced many pension funds to pile into private equity, real estate and hedge funds, which don’t necessarily promise higher returns or long-term investing. Fortune

Poison-pill loans against hostile takeovers turn against some boards: TheAge

UK Government appoints 50 ‘watchdogs’ to safeguard interests of small firms; The officially titled Small Business Champions will handle appeals against decisions by regulators: Telegraph

Modi to Abe Favor Oil Bears as Price Plunge Aids Asian Economies: Bloomberg

How The World’s Most Leveraged Hedge Fund Got Away With Insider Trading: ZeroHedge

TMT

The Slippery Slope of Silicon Valley; Uber, Facebook and Others Bedeviled by Moral Issues: NYTimes

One Simple Fact Explains How Enormous Amazon Could Become: BusinessInsider

Apple joins the one-company $700bn club: FT

Jon Oringer, Shutterstock: the big picture in Silicon Alley; Shutterstock shows how NYC is a natural home for tech start-ups: FT

SnapShop CEO says you can buy an item within 20 seconds: JoongAng

3D printers coming close to daily life as patents related to 3D printers held by foreign companies were expired successively: Maeil

Samsung seeks to hit back as Alipay and Apple Pay fare well: Maeil

Venture Money Pours into Robotics Startups: WSJ

Accounting SaaS Japan raises US$8.5 million in Series B round: e27

Xiaomi The Money! No. 1 smartphone maker in the world’s biggest market is not publicly listed, but here are 3 ways to dial into Xiaomi’s boom. Barron’s

The Sharing Company: Behind the hype of peer-to-peer economics is a quiet B2B revolution. Strategy@

Energy & Commodities

HSBC, Goldman Rigged Metals’ Prices for Years, Suit Says: Bloomberg

Expect iron ore prices to stay weak for longer, says ex-Rio boss Tom Albanese: TheAge

New mining projects at 10-year low: TheAge

World’s worst junk bond fueled by mining malaise: MineWeb

Consumer & Others

How Coca-Cola built a sugary empire, by outsourcing as much as possible: Fortune

Made in America, From Sheep to Shelf: Zady’s Feel-Good Sweater; Online Retailer Makes Imperial Sheep Ranch, Other Suppliers the Focus of Socially Conscious Marketing: WSJ

Daily Bamboo Innovator Insight: Tues 25 Nov 2014 – Why You Can’t Invest Like Warren Buffett – And Shouldn’t Try; A non-cheesy guide to gratefulness: What to read and watch

Investing Process

Why You Can’t Invest Like Warren Buffett – And Shouldn’t Try: Forbes

Beware initial euphoria over headline-grabbing deals: BT

Citi Analysts Thought Everyone Knew ‘Hold’ Meant ‘Sell’: Bloomberg

Once Lucky, Always Lucky? Institutional Trading in a Connected World: SSRN

Life

A non-cheesy guide to gratefulness: What to read and watch: TED

How Innovators Think, And What They Do About It; 88% of award-winning projects began with an employee asking, “What difference would people love?” Forbes

Winning teams are tough to find-and even tougher to build. The former captain of New Zealand’s mighty All Blacks rugby team, David Kirk, explains how to develop superlative   McKinaey

Behind the Talent of Artistic Child Prodigies; Why Can Some Children Draw Realistic Pictures at a Young Age Without Any Training? WSJ

The Secret to Resisting Temptation; People who excel at resisting temptation might have a secret strategy: They deliberately avoid situations in which their self-control might fail, says a study.: WSJ

The Unifying Leader; The collaborative leader is willing to step back from the war posture of politics and be vulnerable. The collaborative leader understands the paradox; you have to take off the armor to build strong bonds. NYTimes

Innovation that succeeds by exploiting the past creatively; Gambling that a rare flash of genius will generate a new, viable idea is expensive: FT

Here’s Why ADHD May Have Been An Evolutionary Advantage: BusinessInsider

How Steve Jobs Fouled Up Presentations For The Rest of Us: Forbes

9 Tips To Drive Down The Price Of Just About Anything: BusinessInsider

11 Tricks Steve Jobs, Jeff Bezos, And Other Famous Execs Use To Run Meetings: BusinessInsider

After 96 Loan Rejections, This Guy Built A $750 Million Marketplace For Business Loans: BusinessInsider

IKEA has created a desk that converts from sitting to standing via a simple button: Quartz

Companions in Misery: What can Schopenhauer, philosophy’s best known pessimist, tell us about New Yorkers? NYTimes

Climbing a Glass Building? Try a Gecko’s Sticky Pads: NYTimes

Brains of People with Chronic Fatigue Syndrome Offer Clues About Disorder: NYTimes

Daum Kakao chairman stresses role of startups; Kim suggested the idea of “social impact” as the most important factor to be successful for a start-up. KoreaTimes

Strategist uses Harry Potter magic to lift fortunes of Osaka theme park: JapanTimes

Four conversations to build your team leadership: Nation

Research: Insecure Managers Don’t Want Your Suggestions: HBR

Interpreter of Maladies; For 30 years, Fouad Ajami took Westerners into the heart of Arab civilization, unafraid to show his readers its afflictions and dreams. WSJ

The Beauty of ‘Infrastructure’; Brian Hayes, author of the updated ‘Infrastructure: A Guide to the Industrial Landscape,’ discusses his book documenting the buildings, systems and networks that make everything in our world work: WSJ

Greater China

China rate cut unlikely to halt slowdown, say analysts: FT

Outside Forces Drive China’s Big Flip-Flop: Bloomberg

China Stock Surge Before Rate Cut Raises Investors’ Worries: WSJ

One reminbi to one US dollar in 25 years: Jim Rogers: WantChinaTimes

The Future of Chinese Arts and Creative Industries: Forbes

When You Give Your Team a Goal, Make It a Range: HBR

China Considers Tobacco Advertising Limits, Public-Smoking Ban: WSJ

Currency Wars Reignite As Yuan Tumbles Most In 2 Months And Chinese Bond Market Freezes: ZeroHedge

India

Burger King eyes a big slice of the Indian market: Forbes

Buyers Balk as Stressed Assets Pile Up on Rule: Corporate India: Bloomberg

Japan & Korea

Kuroda Tells Japan Inc. to Stop Hoarding Cash as Costs to Rise: Bloomberg

S. Korean companies squeezed in ‘new nut cracker’ between China and Japan: Maeil

IKEA under probe for overcharging consumers in Korea: KoreaTimes

Park pitches ‘creative economy’ in North Jeolla: KoreaTimes

Korean conglomerates to face tougher regulations in appointing financial CEOs: KoreaTimes

Japan’s young fret as unexpected recession kicks in: JapanTimes

Abe Sales Tax Backfiring With More Debt Not Less: Bloomberg

ASEAN

Indonesia Corruption Watch Gives Attorney General a Long To-Do List: JakartaGlobe

Holding of properties from all over the world by Singapore property trusts means that the market has been able to grow beyond expectations. BT

Should Pemandu scale down and close shop; is it duplicating civil service role? Star

Rural Philippine Call Center Shows Promise of New Business Model: WSJ

World’s Longest Stock Gain Has Top Malaysia Fund Piling Cash: Bloomberg

S’pore must exploit IT advantage to stay ahead: PM: TODAY

Macro

Companies Still Sorting Through Revenue Recognition Rule, Survey Shows: ComplianceWeek

Fears Australian banks ill-prepared for housing-induced crisis: TheAge

BlackRock: Beware of Dividend Stocks; If interest rates rise even modestly in 2015, these defensive plays are likely to perform poorly. Barron’s

The World According to Goldman: Barron’s

The Unsettling Mystery of Productivity; Since 2010 U.S. productivity has grown at a miserable rate. And no one, not even the Fed, seems to understand why. WSJ

New Abnormal Means Relying on Central Banks for Growth: Bloomberg

Hedge Funds Lose Money for Everyone, Not Just the Rich: Bloomberg

Global ‘QE glut’ to brim through 2015 as funds swim with the tide: Reuters

TMT

How Google Glass Helped This Blind 13-Year-Old Dancer Get His Vision Back: BusinessInsider

How to make a fortune without ‘doing’ anything: The Uber, Airbnb story: Fortune

Is Spotify the music industry’s friend or its foe? NewYorker

Huawei aims to turbocharge design of self-driving vehicles: FT

Melbourne, Becoming A World Class Tech Hub: Forbes

A startup planned on the kitchen table is among America’s top 20 web properties: Forbes

Facebook ‘Newspaper’ Spells Trouble for Media: JakartaGlobe

It Won’t Be Easy Making Money Off of Cherry-Picking Shoppers; Successful Retailers Must Create a Better, Memorable Customer Experience: WSJ

Wake Up, Brick-and-Mortar Retailers: The Web Has Opened Shoppers’ Eyes to Selection, Ease, Transparency: WSJ

The End of the Impulse Shopper: The Web Has Made Consumers More Intentional, Smarter: WSJ

Amazon Offers Help Finding Local Handymen; Listing Service in 3 Cities Aims to Connect Customers With Service Providers: WSJ

Uber and a Fraught New Era for Tech; Consumer-Privacy Troubles Are Likely to Transform Silicon Valley: WSJ

Healthcare

Radiologists Are Reducing the Pain of Uncertainty: NYTimes

I Asked 20,000 Doctors About Fitbit And Apple’s HealthKit, And Here’s The Answer: Forbes

Bringing the Customer’s Voice into Medicine: HBR

U.S. Buys Up Ebola Gear, Leaving Little for Africa; Manufacturers Strain to Meet Demand Amid Rising Anxiety: WSJ

More Patients Opt to Replace Ankle Joints Instead of Fusion; Increased Range of Motion; Expect Repeat Surgery a Decade Later: WSJ

Surgical Tool Gets Strongest Warning; Morcellator Used in Hysterectomies Can Spread Undetected Cancer, FDA Says: WSJ

RealView Imaging’s 3D holographic display enables doctors to view a real-time 3D hologram of a patient’s anatomy “floating in the air” and interact with it either by stylus or with their hands: WSJ

Commodities & Energy

Global metals markets are becoming more difficult to regulate as manipulation takes more subtle forms and new trading platforms spring up: FT

Petrobras scam allegations weigh on Brazil as blacklist fears rise: FT

Black hole in mining sector profits leads to ‘vanishing’ returns; FTSE 100 miners are feeling the pain from a collapse in commodity prices as the Chinese economy hits the skids: Telegraph

OPEC Fault Lines Spur Hedge Funds to Trim Bullish Oil Bets: Bloomberg

BHP Billiton digs deep as tough times get tougher: TheAge

Consumer & Others

4 Reasons Nike’s Business Will Explode: BusinessInsider

The boss of Domino’s Pizza Enterprises says his company has “far from peaked”, after he capitalised on the company’s skyrocketing share price to sell $2.2 million worth of shares. TheAge

Bud Crowded Out by Craft Beer Craze: Faded Beer Brand Unhitches Clydesdales in Favor of Fresher Pitches to Young People: WSJ

Supermarket price war now claiming food producers as victims; Cost-cutting by the UK’s largest grocers has squeezed the margins of its suppliers, driving up corporate failure in the sector while it has declined elsewhere: Telegraph

Coca-Cola to release expensive low-sugar milk that will ‘rain money’: Telegraph

Pay per puff? Caffeine stick? E-cigarette boom sparks race for new patents: Reuters

Bamboo Innovator Weekly Insight – The Urgency for a Composite Measure to Detect Accounting Tunneling Fraud in Asia

 “Bamboo Innovators bend, not break, even in the most terrifying storm that would snap the mighty resisting oak tree. It survives, therefore it conquers.”
BAMBOO LETTER UPDATE | November 24, 2014
Bamboo Innovator Insight (Issue 60)§  The weekly insight is a teaser into the opportunities – and pitfalls! – in the Asian capital jungles.§  Get The Moat Report Asia – a monthly in-depth presentation report of around 30-40 pages covering the business model of the company, why it has a wide moat and why the moat may continue to widen, a special section on “Inside the Leader’s Mind” to understand their thinking process in building up the business, the context – why now (certain corporate or industry events or groundbreaking news), valuations (why it can compound 2-3x in the next 5 years), potential risks and how it is part of the systematic process in the Bamboo Innovator Index of 200+ companies out of 15,000+ in the Asia ex-Japan universe.§  Our paid Members 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.
Dear All,

The Urgency for a Composite Measure to Detect Accounting Tunneling Fraud in Asia

“This is a huge international scandal,” Wang Donglei, the newly-appointed chief executive of China’s largest lighting and energy-saving lamp manufacturer, roared at a conference call on last Monday 17 Nov about the accounting fraud committed by the firm’s founder and controlling owner. “These banks misled the company and investors with false information. They did illegal things. These are major banks listed in Hong Kong. The embezzlement is being investigated by Chinese police.”

Last Monday is also the opening day of the much-anticipated Shanghai-Hong Kong Stock-Connect “through-train” door, creating direct access for foreign investors to one of the largest stock markets in the world with a combined value of $5.6tr. By expanding beyond qualified foreign institutional investors and sucking in new investment into Shanghai-listed stocks, the Connect was supposed to lower borrowing costs for mainland companies.

Could the prevalence of accounting fraud put the Connect at risk? Through the cases that follow, value investors need to be aware of a particularly brazen form of accounting fraud in which controlling owners use intercorporate loans to siphon off or tunnel out cash. Similarly, in Australia, intercorporate loans helped to facilitate the building (and later collapse) of the Alan Bond empire when the accounting fraud unravel. Descriptive cases detailing chronological events can inform about the fraudulent accounting acts after they happened but are inadequate in staying ahead of the devil who will invariably develop more sophisticated methods to escape detection. Thus, value investors need to out-think the devil – by first going back in time eight years ago to Nov 7, 2006 to understand the importance of the “Eight-Ministry Joint Announcement” that managed to curb accounting tunneling fraud, albeit for a short-while – and importantly, how controlling owners adapted the rule to continue their expropriation acts. Importantly, we spell out the urgency and opportunity for top accounting researchers-practitioners and regulators to develop a composite measure to detect tunneling acts to alert and prevent “live” cases of corporate abuse instead of fighting fire with “forensic accounting” of “dead” companies in which the harm had been done. But first, let’s get back to the recent cases of accounting fraud and examine their hidden footnotes.

NVC Lighting (2222 HK) Stock Price Performance, 2010-2014

NVC

Wang alleged that Wu Changjiang, the founder and former CEO of NVC Lighting (2222 HK, MV $709m) whom he had ousted in August, had embezzled funds totalling RMB623m ($101.7m) on behalf of a company subsidiary. Employees of four leading Chinese banks – Bank of China (BOC), ICBC, China Construction Bank (CCB), Minsheng Bank – who “conspired in the crime of diverting and defrauding” the company’s funds were also under police investigation. NVC stock has been suspended since 11 Aug when Wu was expelled on 29 Aug from the company. NVC’s products are said to be used in the 2008 Beijing Olympics and 2010 Shanghai World Expo, and Wu is also a prominent entrepreneur featured by BBC, thus attracting reputable investors including private equity firm SAIF Partners, Goldman Sachs and French electrical systems giant Schneider Electric (SU EN, MV $46.7bn) when it was listed in May 2010 raising $196m in a deal underwritten by Goldman Sachs and HSBC. Schneider had invested HK$1.27bn ($163m) in Jul 2011 for a 9.1% stake in NVC.

In the week before the official launch of the Stock Connect, Wison Engineering Services (2236 HK, MV $450m) saw its share price plunged by nearly 60% in a day when its suspension for over a year was lifted on 12 Nov. Wison is a vast engineering-services empire controlled by its founder and billionaire Chairman Hua Bangsong, one of Chinese richest man. Wison builds refineries and chemical plants for domestic and international oil companies that include PetroChina and BASF. Wison was said to have obtained China’s highest certification to undertake petrochemical engineering work in 2007 when it bought a licensed, but near-bankrupt, quasi-government institute in Henan province. The 48-year old billionaire has not been seen since he was detained by Chinese investigators in Aug on bribery charges. Since the arrest, the company warned investors that it could post a “significant loss” for 2013 and might default on bank loans that total around $215m. Wison had earlier raised $195m in its IPO in Dec 2012. Similarly, when the billionaire chairman of Agile Property (3383 HK, MV $2bn) was taken into custody at end Oct by authorities, the disclosure was a shock to Western banks that had lent money to the company.

Wison Engineering Services (2236 HK) Stock Price Performance, 2012-2014

Wison

Underlying the accounting frauds at NVC, Wison etc is the use of intercorporate loans to “tunnel out” cash and assets from the firm. During 1996-2006, tens of billions in RMB were siphoned from hundreds of Chinese firms by controlling shareholders. Typically reported as part of “Other Receivables”, these intercorporate loans did not …

<Article snipped>

As we have discussed, intercorporate loans classified under “Other Receivables” have shifted to other accounts in disguised forms that include … Thus, even though the income statement, balance sheet and even operating cash flow may appear healthy, the cash and assets are already tunnelled out and propping acts are continuously fashioned to draw in external funds and cash inflow to carry on the accounting charade. The different legal systems between Hong Kong and China create additional opportunities for expropriation by companies that can shift assets across the border, because rulings by courts in Hong Kong are not enforceable in the mainland. And the Connect could potentially exacerbate the propping-tunneling problem. Thus, there is a sense of urgency to develop a composite measure that captures the true “Other Receivables” that has artificially inflated revenue and earnings.

The tunneling problem in China and Asia has stubborn roots. Until these root tensions are fully addressed, insider tunneling will pose an ongoing challenge to reform in China and the seemingly pretty-looking financial ratios and accounting numbers at the typical firms are potentially propped up to suck in capital for subsequent tunneling acts.

Warm regards,

KB

Managing Editor

The Moat Report Asia

www.moatreport.com

SMU: http://accountancy.smu.edu.sg/faculty/profile/108141/Kee%20Koon%20Boon

To read the exclusive article in full to find out more about the story of NVC and Wison and the accounting and economics of tunneling that can provide an important organizing framework for value investors to navigate the Asian capital jungles, please visit:

·        The Urgency for a Composite Measure to Detect Accounting Tunneling Fraud in Asia, Nov 24, 2014 (Moat Report Asia, BeyondProxy)

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