Accounting Fraud in Asia: Survival in the Asian Capital Jungle – Who Knows What When + Remembering Accounting Superhero Abraham Briloff

 “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 | December 29, 2014
Bamboo Innovator Insight (Issue 63)§  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 Friends,Survival in the Asian Capital Jungle: Who Knows What When – Remembering Accounting Superhero Abraham Briloff

BriloffDecember is an unrelenting month – December last year took away from the world an accounting superhero, Professor Abraham Briloff. Right up until about a month before his death on Dec 12 at age 96, Abe was unrelenting in alerting Barron’s about some accounting fraud he had uncovered that was hidden in corporate America’s financial statements – a lifelong endeavor he persisted for 45 years since his enlightening “Dirty Pooling” article on July 15, 1968. When financial crisis strikes, Abe’s words become the Generally Accepted Accounting Principles. Even though Abe was legally blind, he could see clearly the accounting issues, having memorized pages of the company’s financials that had been read to him by his daughter Leonore or his grad students at City University of New York’s Baruch College. When asked about his thought process, the grandmaster said, “It begins with some sensitivity as to where the problem might be. Somehow, there’s a serendipity where I know that there’s an issue out there.” Abe elaborates his Process in a Barron’s interview:

“The numbers reverberate in my mind, and then I turn to Leonore and say, ‘Get for me the data in these areas,’ or ‘Read such-and-such to me from whatever document you might find.’ He records his thoughts on tape, on one of the several recorders that he keeps on the desk in his study, and then he reflects further. When he goes to bed, the numbers still dance in his mind, and he keeps a tape recorder beside his bed. It is as if he can see the numbers, much as Beethoven could hear the melodies even though deaf. As new numbers come in, he incorporates them into his thinking, to confirm or reject his original hypothesis. “Something hits. You say, ‘Why is it there?’ Or something that should be there, isn’t there,” he says. He performs the most critical calculations in his head.”

Abe’s heroic commitment to exposing accounting frauds has been a source of inspiration for us when crafting out Accounting Fraud in Asia, an official course in the Singapore Management University (SMU) degree curriculum that will be launched in January 2015. The course, which is focused on the capital markets perspective, is the first of its kind to be taught in universities in Singapore/Asia and worldwide and is open to all university students worldwide on global exchange programs with SMU. The course is conducted in an interactive session over 15 weeks. We shall focus on developing an interdisciplinary critical thinking and accounting Perspective with a real-world emphasis in the group and individual project writings, presentation and participation. Perspective has two definitions: (1) Context: A sense of the larger picture of the world, not just what is immediately in front of us; (2) Framing: An individual’s unique way of looking at the world, a way that interprets its events. With Perspective, we can discover leverage we didn’t know we had.

We have also started a simple website called “Asian Extractor: Unearthing Accounting Fraud in the Asian Capital Jungle” ( Asian insiders Extract and expropriate wealth in artful accounting tunneling methods as opposed to western-style accruals-based earnings management. We attempt to Extract them out in the Asian capital jungle; akin to the Lotus who extracts mud out of her hollow stem and the stem grows up with determination, enabling the Lotus flower to blossom above the muddy water, rising above the defilement and remaining unstained and pure.

AsianExtractor will be a visible global platform for the students to showcase their talent and analysis and to contribute their findings and add value to the global business and investment community, just like Abe and his students. We hope the website will develop into a thought leadership platform on accounting fraud in Asia with analyses and opinions from the students and expert guest speakers in the course as well as from global experts. We are an admirer of the Institute of Design at Stanford in terms of its unique curriculum design as our benchmark and we strive to make improvements over time with your valuable feedback and comments. If you would like to contribute an article to this thought leadership platform on accounting fraud in Asia, please drop us an email at: or

The weblink is the presentation materials for Week 1 (Jan 5-9, 2015) – Survival in the Asian Capital Jungle: Who Knows What When. From Week 2 (Jan 12-16, 2015) onwards, the presentation materials will stand in for the Bamboo Innovator Weekly Insight and be made available for our Moat Report Asia subscribers only.

Survival in the Asian Capital Jungle

Here’s wishing everyone a Blessed New Year 2015 ahead.

Warm regards,


The Moat Report Asia

A new monthly issue of The Moat Report Asia is now available!

Access the in-depth idea presentation:

Bamboo Innovator Weekly Insight – Phrase of the Year: “The Obstacle is the Way” – Reflections from the Study Mission to Myanmar and Implications for Value Investors in Asia in 2015

 “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 | December 22, 2014
Bamboo Innovator Insight (Issue 62)§  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 Friends,Phrase of the Year: “The Obstacle is the Way” – Reflections from the Study Mission to Myanmar and Implications for Value Investors in Asia in 2015

“The impediment to action advances action. What stands in the way becomes the way.”

– Marcus Aurelius, last of the “Five Good Emperors”, in Meditations

“Most people would think that it has been one straight line to get to where we are today,” the dynamic founder of Myanmar’s #1 systems integrator said thoughtfully to our group. “Because of the banking crisis in Myanmar in 2003, we find ourselves in a situation whereby a substantial part of our revenue and operating cashflow disappear as our banking clients stopped their IT projects”.

The 2003 banking crisis in Myanmar saw the collapse of more than a dozen deposit-taking companies. Their owners had used depositors’ funds to build up their own diversified business interests. Depositors went unpaid and a panic ensued, resulting in a bank run – and an underdeveloped banking system with low trust amongst many depositors who remained wary of putting their hard-earned money in banks till today.

This leading technopreneur remarked evocatively: “Just imagine, overnight, you find yourself with more than half of your revenue gone. What would you do? We did not give up and we expanded our software and solution offerings to other industries that include retail and business enterprises. We emerged stronger from the crisis and our sales and firm value have since soared multiple-folds.”

This is one of the many positive uplifting entrepreneurial stories that we have carefully collected during our official study mission trip to Myanmar from 7 to 16 Dec. During the trip, our group are privileged to have the invaluable opportunity to learn the art of business strategy from visiting the leading companies in Myanmar where we had visited the factories and facilities of diverse industries, including having up-close-and-personal interactions with outstanding business leaders and top government officials.

Let’s face it, most of us are oftentimes paralyzed by the many obstacles that lie ahead of us. As we watch in awe as some seem to turn those very obstacles, weaknesses and misfortune into strength for themselves, we start to think: How do they do that? What’s the secret? Do they have a method and a framework for understanding, appreciating, and acting upon the obstacles life throws at them?


If so, this critical insight will have tremendous implications for value investors in Asia and emerging markets which are rocked by a meltdown in local currencies which hit a 14-year low against the US dollar last week and a potential prolonged economic and credit hangover that will carry forward into 2015. Emerging markets have collectively borrowed $5.7 trillion in US dollars, a massive credit risk weighing down on the emerging markets index which has tumbled 17% since Sep 3, pulled down by falling oil prices and debt concerns from Russia. It has been estimated that over $500bn of petrodollars a year are recycled back into the financial markets and their evaporation as a result of the plunge in oil prices has exacerbated the parched liquidity conditions in the credit markets. In an ominous parallel, the emerging market index fell almost 60% between Jul 1997 and Sep 1998, when oil prices tanked and emerging-market currencies began a freefall amid a Russian debt default. The shared component in the emerging market misery is economic recovery in the western developed markets that include a stronger US dollar and a new gold rush in the Silicon Valley.

As we ponder the entrepreneurial fundamentals of selected Asian innovators pitting against the fickle emerging market sentiments, we are reminded of Intel’s Andy Grove wisdom that “Bad companies are destroyed by crisis. Good companies survive them. Great companies are improved by them.” Myanmar’s #1 systems integrator was established in 1997, during the 1997/98 Asian Financial Crisis, as are half the companies in the Fortune 500 that were started during depressions or economic crises: FedEx (oil crisis of 1973), Charles Schwab (market crash of 1974-75), Microsoft (recession in 1973-75), Costco (recession in the late 1970s), Hewlett-Packard (Great Depression 1935), UPS and General Motors (panic of 1907), Fortune magazine (90 days after the market crash of 1929), P&G (panic of 1837), Coors (depression of 1873), LinkedIn (2002, post dot-com bubble) and so on.

During the study mission to Myanmar and over the decade plus in the Asian capital jungles, we find that selected Asian innovators are able to steal good fortune from misfortune because they had the ability to see obstacles for what they were, the ingenuity to tackle them, and the will to endure a world mostly beyond their comprehension and control.  They were busy existing in the present, dealing with the situation at hand, dealing with things as they happen. Importantly, they saw in each and every one of these obstacles as an opportunity to practice some virtue: patience, courage, grit, humility, resourcefulness, and creativity. Like oxygen to a fire, obstacles became fuel for the blaze that was their ambition. Every impediment only served to make the inferno within them burn with greater ferocity. Thus, The Obstacle Is The Way is undoubtedly the Phrase of the Year for these entrepreneurs and innovators. It is also the title to the profound book by Ryan Holliday who had apprenticed under Robert Greene, author of the 48 Laws of Power and Mastery which we recommended in our earlier articles and in the Value Investing Seminar 2014 in Trani, Italy.


Inspired by the book and by our experience in the study mission to Myanmar, we crystallized our insights into a framework about the 4Cs: (A) Continuity – Pursuing the dream, (B) Command and Control vs Freedom to act and adapt to the local market conditions, (C) Community and Connection: Uniting the people and being good partners, and (D) Culture of kindness, trust and cooperation to foster innovation and cultivate resilient growth.

We hope that this framework will also prove as a guide for value investing in Asia in 2015 in identifying and evaluating the type of unique business models which can grow resiliently and scale up in the turbulent and uncertain times ahead.

(A) Continuity – Pursuing the dream

<Article snipped>


To prevent ourselves from becoming overwhelmed by the world around us and by the growing uncertainty in the investing environment, we can navigate the terrain with the phrase “The Obstacle is the Way”. We are inspired by the stories of John D Rockefeller and Thomas Edison in living up to the phrase:

Rockefeller: In his early working career, Rockefeller was caught in the Panic of 1857, a massive national financial crisis that saw businesses failed and the price of grain plummeted across the country, resulting in a recession that lasted for several years. Instead of lamenting his misfortune at this economic upheaval, Rockefeller eagerly observed the events that unfold as an opportunity to learn, watching what others did wrong. Rockefeller went on to seize advantage from obstacle after obstacle in his life, during the Civil War, the panics of 1873, 1907 and 1929.

Edison: In 1914, the factory of the legendary inventor was engulfed in fire and the cruel fire destroyed his life’s work. Instead of crying in sadness or yelling in anger, Edison told his 24-year-old son, “Go get your mother and all her friends. They will never see a fire like this again.” At the scene of the blaze, Edison was quoted in the New York Times as saying, “Although I am over 67 years old, I’ll start all over again tomorrow.” Edison stuck to his word and immediately began rebuilding the next morning, without firing any of his employees. Edison had lost $23m in today’s dollar in the fire, and this is not including years of priceless records and prototypes. After just three weeks, with a sizeable loan from his friend Henry Ford, Edison got part of the plant up and running again. His employees worked double shifts and set to work producing more than ever. Edison and his team went on to make almost $10 million four years later, in 1918.

The phrase “The Obstacle is the Way” serves to illuminate the mindset and driving force of selected wide-moat compounders who are able to create value in difficult times – and will be an incredible advantage for us in our own fight against Obstacles.

We like to wish our readers a Merry Christmas and a Blessed New Year 2015! Our monthly Moat Report will be out on in the week on 5 Jan. Thank you for your support all this while!

Warm regards,


The Moat Report Asia

PS1: We will be introducing Accounting Fraud in Asia as an official course in the Singapore Management University (SMU) degree curriculum that will be launched in January 2015. The course is the first of its kind to be taught in universities in Singapore/Asia and worldwide and is open to all university students worldwide on global exchange programs with SMU. We are proud to have our inaugural Teaching Assistants for the course: YEO Shan Rui, President of the SMU SMIF (Student Managed Investment Fund) and Sebastian SEOW Wei Han. Shan Rui has also contributed his first piece: Vincent Tan – The history and IPO of 7-Eleven Malaysia. We have loaded some articles on to generate some discussion for the students in the course:

SEC Fines Baker Tilly Hong Kong for Missing Red Flags in China

Discussion Questions:

(1) Are companies audited by Baker Tilly HK more prone to accounting fraud? What are the firm characteristics e.g. state-owned companies vs privately-owned enterprises? Are they from certain industries? Are they structured as offshore holding companies? Generate the list of Baker Tilly audit clients and do some analysis..

(2) Do different audit firms have different policy in their audit of related-party transactions of Asian/ Chinese companies?

(3) Why has US SEC struggled for years to obtain information for dozens of accounting fraud investigations at China-based companies?

SEC Cautions Companies on Consolidation Analyses Using VIE (Variable Interest Entity)

Discussion Questions:

(1) Chinese ecommerce giant Alibaba uses the VIE structure. Given the “success” of Alibaba’s IPO, are VIEs necessarily bad i.e. are companies with VIE structure more prone to accounting fraud? What kind of companies tend to use the VIE structure? Generate a list of companies with VIE structure in different exchanges in US and Asia and do some analysis…

(2) How can the management abuse their application of “shared power” in consolidating VIE? What is the accounting policy take on discretionary changes in the exercise of this power?

We hope the website will develop into a thought leadership platform on accounting fraud in Asia with analyses and opinions from participants and expert guest speakers in the course as well as from global experts. We are an admirer of the Institute of Design at Stanford in terms of its unique curriculum design as our benchmark and we strive to make improvements over time with your valuable feedback and comments. If you would like to contribute an article to this thought leadership platform on accounting fraud in Asia, please drop us an email at: or

PS2: Below is the short address made on 15 Dec by KB in the dinner event hosted and organized by Inter Group that marks the success and closure of Singapore Management University’s first official study mission trip to Myanmar. The special dinner event provides an extended platform for SMU student delegates to interact with business leaders.

Good Evening Mr Nick Nyi Nyi Htun, Jadyn, and the InterGroup team, our honorable host,

Distinguished Guests, Ladies and Gentleman,

During Singapore Management University’s official Study Mission trip, our students are privileged to have the invaluable opportunity to learn the art of business strategy from visiting the leading companies in Myanmar.

What really matters more than anything is character. The character of the people determines the quality of the institution. Strong institutions are about systems and people as much as new regulations and laws. We are grateful that our students are able to have up-close-and-personal interactions with outstanding business leaders of Myanmar. They represent the future of Myanmar with their strong sense of national pride and collective commitment that has inspired confidence in spite of – or because of! – the daunting challenges ahead.

Our delegate are most fascinated by the resiliency of the Myanmar people who are like the Bamboo which bend, not break, even in a storm that would snap the mighty resisting oak tree. It survives, therefore it conquers. And the Bamboo also represents the value of uprightness and the art of springing back after adversity: In winter the heavy snow bends and covers the bamboo, the bamboo patiently waits for the snow to melt down and then snaps back up tall again, brushing aside all the snow. And in the end, the bamboo stands tall, evergreen and beautiful.

Noteworthy is the invisible intricate underground root structure that makes the ground around a bamboo forest very stable – and make possible the flexibility and adaptability of the bamboo innovator to bend, not break, with the wind. To translate potential into sustainable growth requires the building of these intricate root-like institutional and market capacity and capabilities to manage the winds of opportunity – and potential risks – blowing in Myanmar.

Three of our SMU students – Alvina Ow Swee Ting, Ringo Tan Chuan Hong and Charles Chen Siyang – will represent our SMU delegate to present the findings and reflections from our study mission under the central theme of Sustaining Transformation in Myanmar. We hope that the findings and framework will be useful and practical in helping the global business community understand more about Myanmar.

This framework is about the 4Cs: (1) Continuity – Pursuing the dream, (2) Command and Control vs Freedom to act and adapt to the local market conditions, and (3) Community and Connection: Uniting the people and being good partners. We will reveal the fourth C at the end of their presentation. Following which, our SMU delegate will like to sing a few songs with meaningful lyrics to express our heartfelt thanks and blessings to the people of Myanmar. Let us now give a warm applause to Alvina, Ringo and Charles who will share with us their findings and personal reflections.


The fourth C is Culture. The Culture of kindness, trust and cooperation to foster innovation and cultivate resilient growth. Kindness is like water nourishing the powerful roots of bamboo. Bamboos are found most abundantly along the waterways, among the rice paddies. A true test of kindness, which is harder than empathy towards failures, is joy at other people’s success as a result of doing the right things – a rare virtue that Buddhists call mudita. Kindness is also an inner revolution; as are reform and innovation. We are able to put less in our possession and more in people. The boundaries between us and others begin to merge, so that we feel engaged and committed as part of a whole in which it is possible to share resources, emotions and innovations.

With this four Cs completing the framework, we like to invite Professor Low Aik-Meng, who’s the founding pioneer of our University and the founding Dean of Students, to lead the students to come on stage to present a university gift to our honorable host and for us to begin our singing to the people of Myanmar to say a big thank you. The songs are “If We Hold On Together” and “This is Home”.

PS3: Below is an article that we shared with one of the entrepreneurs in Myanmar whom we believe has the potential to rise to become the wealthiest in the nation, much like Philippines’ Henry Sy of SM Investments (SM PM, MV $14.2bn) and SM Prime (SMPH PM, MV $10.9bn), and John Gokongwei of Universal Robina Corp (URC PM, MV $9.5bn) and JG Summit (JGS PM, MV $10.3bn).

3 December 2010

Bamboo Innovators in South Africa and Lessons for Asia

By KB Kee

“A business built on a deeper purpose may not dominate the economic landscape but it is a long-distance runner in it, outliving flashier outfits built on profit maximization”, ruminated South African Bamboo innovator Raymond Ackerman, who built Pick n’ Pay from four small stores in 1966 to a retail empire with sales of S$10 billion and listed on the Johannesburg Stock Exchange with a market capitalization of over S$4 billion. Ackerman was also rated by Financial Times as among the World’s Top 100 Most Respected Businessmen.

Ackerman recalled the ripple of disbelief among his classmates when his lecturer, Professor WH Hutt, later heralded as one of the “Economists of the Century” by the Wall Street Journal, opened their lesson with these words: “Most of you are here to make money, but you won’t. Not unless you have a moral mission”.

This view became the cornerstone of the Pick n’ Pay philosophy in how Ackerman builds and grows his business based on the principles of “consumer sovereignty” in the turbulent and complex environment of South Africa, as he tackled iniquitous cartels and break price monopolies to bring food and other goods at lower prices to the society. For instance, in the 1960s, whenever Ackerman tried to sell bread below the regulated price, he was warned that he would be fined ten rand for every cut-price loaf of bread he sold. He fought back by harnessing public outrage and the government had no choice but to allow retailers like Pick n’ Pay to sell bread at lower prices.

The late retail giant Sam Walton, whom the world’s greatest investor Warren Buffett felt was the greatest CEO of all time, was initially a discount retailer with no food department. Sam was searching for the best hypermarket format so as to make better things ever more affordable to people of lesser means  and he was inspired after touring Pick n’ Pay’s hypermarkets in South Africa. Sam replicated the idea in America and worldwide with a capable team and scalable infrastructure, resulting in Wal-Mart’s astounding multibagger success to over S$200 billion in market capitalization from its initial listing size in 1970 of S$40 million.

It is striking how these exceptional Bamboo Innovators in South Africa are able to integrate their business with a deep-seated desire to serve humanity in some meaningful way by bringing what belongs to the privileged for the masses to enjoy.

South Africa is the first country to bring the cellphone to the masses through prepaid billing. Cellphones were sold based on contracts all along and owing to the apartheid legacy, black people were not on the systems that checked bank accounts and creditworthiness, and hence could not sign up for mobile phone contracts.

Alan Knott-Craig, the former CEO of telecom operator Vodacom, had a “reckless” idea in prepaid billing, and launched the prepaid system in November 1996. Today, at least 90 percent of South African customers, or nearly 45 million users, are prepaid customers. The technology Vodacom developed was adopted worldwide and now serves more than 2 billion users internationally. Vodacom opened up the market to millions of people who would otherwise have been excluded.

Naspers CEO Koos Bekker brought pay TV to South Africa in 1984, the first country outside of America to have such entertainment, connecting millions to “where magic lives”, their famous slogan. Naspers is an international media conglomerate with a market capitalization of S$30 billion. Its pay TV platform, with flagship entertainment and sporting channels M-Net and SuperSport, has a subscriber base of 4 million homes in 48 African countries.

Amongst its international media businesses, Naspers has a 35 percent stake in HK-listed Tencent, the dominant instant messaging QQ platform in China for over 600 million users. Naspers reaped more than 60-fold returns from their 2001 investment as Tencent’s market capitalization surged to over S$60 billion presently since its listing size of S$1 billion in 2005. Naspers also has a 28 percent stake in, which in turn has around a 2.4 percent interest in Facebook and stakes in internet properties with tremendous marquee value such as Zynga and Groupon.

Ackerman also cautioned against the biggest temptation facing all entrepreneurs: Never treat your business as a personal piggy bank. “Many entrepreneurs, starry-eyed at the sight of cash flowing in, will rush out to buy themselves matching BMWs, with only a vague sense of the actual expenses that go into their business. Some even rationalizes that it is the owner’s right, after all the stress and strain of getting the business off the ground and keeping it afloat! The business should never be a vehicle to fund your lifestyle, but a healthy entity able to pay you a salary, no matter how meagre, with profits ploughed back into the business”, Ackerman said emphatically.

He added: “You have to exercise enormous self-discipline, particularly if it is a cash-rich business, because the temptations are very real to see this as your personal honeypot. But it is the kiss of death for anyone with a long-term view to building a strong business. It is also thoroughly demotivating for employees. Whether you are working for a large or small business, there’s nothing worse than watching owners siphon off the profits. Your business is a third party, separate from you, and the profits belong to the business. Do this, and you will have created a clear moral universe for your employees to work within, with a far healthier business as a result.”

All of these extraordinary Bamboo Innovators have something in common – they witnessed first-hand the problems that beset the masses and wanted to build a business to provide useful products and services. And they are not contented to stop at $10m, $100m, or even $1 billion, like most businesspeople who rush to buy fancy property and cars for themselves. These South African Bamboo Innovators want to build and scale their businesses so that they can give more. Only when we have the desire to give, then can we want to persevere in building something meaningful. This urge to build in order to give is the magnetic north to scale a Bamboo Innovator and they work obsessively to realise this vision.

Bamboo Innovators are alert to existing paradigms of how things ought to function and behave in the marketplace. It is this alertness that leads to their discovery through their strong conviction and belief that they can do it significantly better – and also the real reason why they build their business with a long-term view, rather than to use the business as a vehicle for personal enrichment.

Just like how Sam Walton “discovers” the anomaly of retailers overcharging the customers and how customers are underserved – and seeks to correct things by being a champion of the customer with Wal-Mart’s “Everyday Low Prices” by passing along cost savings back to the customers.

The vision Ackerman has for his country is inspiring and uplifting and an ideal worth fighting for: “Even in our darkest hour, I never lost my faith that South Africa would one day emerge from its long apartheid night into a dawn filled with vibrant promise.”

A new monthly issue of The Moat Report Asia is now available!

Access the in-depth idea presentation:

Bamboo Innovator Daily Insight: 7 Dec (Sun) – The Difference Between Losing and Being Beaten


The Difference Between Losing and Being Beaten: FarnamStreet

The cult of Lego: why are people so in love with the colourful bricks? Lego almost went bankrupt ten years ago, but now its building blocks are more popular than ever: Telegraph

Andrew Stanton: The clues to a great story: FarnamStreet

What Could Be Lost as Einstein’s Papers Go Online: WSJ

Hearing Every Voice in the Room: How IBM Brings Ideas Forward From Its Teams: NYTimes

Humans aren’t influenced by culture—we create it; “The Domestication of Language,” presents an intriguing new theory of cultural evolution. Quartz

How do you sell God in the 21st century? More heaven, less hell: Guardian

A Dozen Things I’ve Learned From Bill Ackman about Value and Activist Investing: 25iq

Meet the first lady of graphene, turning harmful gases into the wonder stuff; Catharina Paukner is building a supersized graphene factory in Cambridge that can turn methane from landfill – or even cows – into modern-day black gold: Telegraph

Investing Process

This Canadian investing bigwig wants to find the next BlackBerry — but that’s no easy task: FP

Greater China

Why Beijing’s Troubles Could Get a Lot Worse; Bank rate cuts and anticorruption campaign are unlikely to stave off woes: Barron’s

Citigroup Panicked Over Fraud at Chinese Ports: Mercuria: Bloomberg

Japan & Korea

Incheon Free Eco Zone Gambles On Casino To Lure Rich Chinese: Forbes


The division of Timken, a family-controlled company, into separate companies making bearings and steel has brought anxiety to its Ohio hometown. NYTimes

Free Investing Is the New Free Checking: CFA

Fee Compression Forces RIAs and Family Offices to Adapt: II

How David came on board with corporate Goliaths; Major multinational firms are trying to secure their future by investing in minnow firms that threaten to turn their worlds upside down: Telegraph

Time to Hop Aboard the Wabtec Express; The maker of locomotives is growing strongly in the U.S. and abroad. Industry’s safety focus is the company’s sweet spot. Barron’s

Australian Banks Seen Needing $25 Billion in Capital: Bloomberg

BIS raises ‘hot money’ concerns about emerging market company debt: Reuters


Amazon own label underscores strength of online grocery shopping: Reuters

Going From Smart to Smarter; Jewelers Enter the Wearable Technology Market: NYTimes

Disney to Introduce New Apps Focused on Learning; Disney is making a new push into an area that it has at times found tricky: making money by trying to make children smarter. NYTimes

Internet monopolies: Everybody wants to rule the world; Online businesses can grow very large very fast—it is what makes them exciting. Does it also make them unusual threats to competition? Economist

Not As Loony As It Sounds; Google’s “impossible” plan to beam Internet from solar-powered balloons is actually working. Here’s how. Slate

Six Drivers Of The $700B Mobile Internet: TechCrunch

Banking on biometrics: How you’ll soon be able to pay with your finger, access an ATM with your eyes: FP

Video Reinvents the Web as the Majors Scramble to Cash In; Video viewing offers the promise of new online income. However, advertisers still are cautious. Barron’s

Investor worries about another dot-com-style stock crash miss the point. The bubble is in the private market. Barron’s

If GoPro gets into consumer drones, the industry could finally have the innovation champion it needs: WaPo

Consumer & Others

There Aren’t Plenty of Fish in the Sea: That’s why consumers should soon prefer farmed seafood, not wild-caught. Slate

Supermarkets face years more pain, warns B&Q boss; Sir Ian Cheshire, the outgoing chief executive of Kingfisher, said the grocers face “much bigger problems” before a recovery is in sight: Telegraph

Daily Bamboo Innovator Insight: Sat 6 Dec 2014 – The One Question Larry Page Always Asks Himself To Make Sure Google Stays Successful; How failure propped up David Chang’s culinary empire Momofuku


The One Question Larry Page Always Asks Himself To Make Sure Google Stays Successful: BI

How failure propped up David Chang’s culinary empire: Forbes

Lessons From Modern Art On How To Sell Your Ideas: Slideshare

Why Fear Kills Productivity; It’s in any company’s self-interest to create a culture that minimizes fear: NYTimes

How To Be A Better Public Speaker Based On Your Personality Type: BI

31 Traits All Great Leaders Share: BI

‘Serial’: inside a podcast phenomenon; A weekly podcast investigating a real-life murder has become an unexpected hit, while raising questions about ethics and the nature of entertainment today: FT

How waning fame and fated investments left these boyband stars bankrupt; Bungled tax bills and unlucky investments – not simply out-of-control spending – leave so many pop stars penniless: Telegraph

Corporate restructuring: Five common pitfalls: Forbes

How to Ask for Feedback That Will Actually Help You: HBR

6 principles that made Nelson Mandela a renowned leader: Fortune

The secret is delayed gratification: ‘Frozen’ may have become a blockbuster, thanks to psychological themes such as dealing with overpowering emotions. Star

Silver, Silk Roads and yuan internationalisation: Star

The Vital Role of Research in Preserving the American Dream: WSJ

Peter Cundill – Part one: Introduction: ValueWalk

Better forecasting for large capital projects; Project proposals often overestimate benefits and underestimate costs. Here’s why-and what you can do about it. McKinsey

20 Great Engineers of the Early 20th Century: EETimes


What If?: Serious Scientific Answers to Absurd Hypothetical Questions: Amazon

All the Light We Cannot See: A Novel : Amazon

Calculated Risks: How to Know When Numbers Deceive You: Amazon

Risk Savvy: How to Make Good Decisions: Amazon

Investing Process & Research

‘Juicing’ Stock Returns-and Getting Squeezed: WSJ

Juicing the Dividend Yield: Mutual Funds and the Demand for Dividends: SSRN

Concentrated Portfolios: The Agony and the Ecstasy: ValueWalk, Chase (PDF)

Nehal Chopra’s Secret to Finding Alpha: A-Plus CEOs: II

Greater China

Kaisa Group (1638) dived 13 percent yesterday following admission that Shenzhen regulators had stopped the sale of more than 2,000 flats it has built in the Special Economic Zone. Standard

Disney magic fills Shanghai: Standard

The way of doing business is changing in China: WantChinaTimes

China Regulator Urges Caution on Stocks as Trading Hits Record: Bloomberg

Hainan Air Elbows Its Way Into China’s Skies; Feisty Carrier Gets Creative in Attempt to Chip Away at State-Owned Airlines’ Dominance: WSJ

China ‘Bad Bank’ Sees Bad Loans Peaking in 2015; China Orient Asset Management Expects Nonperforming Loans to Peak Middle or End 2015: WSJ

Xi’s speeches in The Governance Of China reveal what makes China’s elite tick: TODAY


Toxic Pool Creeping Over India Kills Thousands of Kids Day by Day: Bloomberg

Japan & Korea

A slowly strengthening Japan hits 86 IPOs in 2014; over half in tech: e27

K-Pop Discord Spotlights Artists’ Lament; South Korean pop music Idols are increasingly pushing back against management over having little say in their careers as revenue declines plague the industry. WSJ

Struggling Sony to cut pay in a rare move for a big Japanese company even as PM Abe calls for higher wages: Reuters


Thailand’s Wind Energy Pioneer Turns Fugitive To Evade Arrest: Forbes

Asean community by 2015? Currently it’s like sweating before sitting for final exams: Star

Billionaire Widjaja Family plans to reduce its controlling stake in Indonesia’s largest derivatives exchange over the next three years after recovering losses from the bourse: Bloomberg


The Return of Africa’s Strongmen; Despite two decades of elections and growth, democracy has stalled, militaries are resurgent, and autocrats are in control. WSJ

Another Look at Auditor Nightmares; The PCAOB will take a second crack at a proposal to require an auditor to reveal the thinking behind troublesome audit opinions. CFO

Energy & Commodities

The ‘accidental CEO’ Mark Papa says even he underestimated the shale revolution, which will continue despite lower prices. WSJ

Hazelnuts Stir Trouble in the Land of Sweets; Prices Double for Prized Chocolate Ingredient After Frost in Turkey: WSJ

Sir Ian Wood, the Aberdeen-based billionaire and energy industry veteran, has given warning that tumbling oil prices will have a “horrible effect” on North Sea prospects. FT

US oil reserves at highest since 1975 in the latest sign of how the shale revolution has transformed the country’s energy supply outlook: FT

Tense year end for distressed energy debt; Junk investors who tapped into the shale boom see their profits unravel: FT

The oil world’s have-nots feel pain of monopoly’s production decision: ChinaPost

Cargill too central to global agribusiness to falter; In an exclusive interview Cargill’s new CEO, David MacLennan, outlines his plans to make the world’s biggest agribusiness bigger: Forbes

Power Savings of Smart Meters Prove Slow to Materialize: NYTimes

Low iron ore price turning up heat on Australian miners: Reuters

More than $150 billion of oil projects face the axe in 2015: Reuters

Rude reality of lower crude; THE drop in crude oil prices has not turned out to be a benefit many thought it will be: Star

Small Oil Drillers Feel Brunt of Crude’s Decline; Some Stocks Have Lost Half Their Market Value or More in the Past Month: WSJ

Why the world missed the oil price crash: WaPo

Why Elon Musk’s Batteries Scare the Hell Out of the Electric Company: Bloomberg

Energy Bond Crash Contagion Suggests Oil Will Stay Lower For Longer: ZeroHedge


Accountants Increasingly Use Data Analysis to Catch Fraud; When Using Math to Catch Crooks, You Can’t Jump to Conclusions: WSJ1, WSJ2

Xiaomi’s 100-Hardware-Companies Strategy: TechNode

Why Amazon and IBM should change; Both companies should change according to their circumstances: Forbes

Kohl’s Points to Mobile Rewards Program as Key Competitive Advantage: WSJ

Cracks in Silicon Valley’s Billion-Dollar Startup Club; While Uber’s Valuation Soars, Two Tech IPOs Run Into Reality: WSJ

Amazon own label underscores strength of online grocery shopping: Reuters

Consumer & Others

Teen Retailers Becoming Out of Fashion; Delia’s, Deb Face Bankruptcy Protection as More Shopping Moves Online from Malls: WSJ

Rapper Jay Z buys champagne brand he helped popularize in music video: JapanTimes

Daily Bamboo Innovator Insight: Fri 5 Dec 2014 – Casino-Like Fuel Hedges Seen Hurting Airlines as Crude Plummets; Shale Producers Say Bring It, in Oil Price Showdown – explorers can drill new wells profitably in some areas even if crude falls to $25 a barrel; Era of Lower Oil Masks Challenges for Southeast Asian Titans


Clayton Christensen: Tesla Is Not Disruptive and Other Corrections: BW

Milk, hold the coffee: how Box Corporate’s Martin Halphen honed his $40m delivery business: BRW

This Innovative Meeting Hack Helped A Chicago Pizza Business Grow Into An Empire: BI

The Surprising Power of an Electric Eel’s Shock: NYTimes

A Depression-Fighting Strategy That Could Go Viral: NYTimes

How Billable Hours Changed the Legal Profession: BW

Here’s How Silicon Valley CEOs Make The Most Of Their Weekends: BI

Wall Street regains its old way with words; The wheelers and dealers of the financial world twist and turn the English language to their advantage: FT


Anta’s Fall Shows Fragile Support for China Companies: Bloomberg

Hong Kong Fund Probed for Stock Manipulation, NHK Says: Bloomberg

The world is Xi’s oyster: A confident Chinese leader sets out his foreign-policy store. It is not wholly comforting: Economist

China’s Tax Authority Targets Income of Foreigners, Wealthy Chinese: WSJ

China’s levered stock market: FT

China Plans Wealth-Product Rules to Cut Shadow Banking Risks: Bloomberg

China Plans Wealth-Product Rules to Cut Shadow Banking Risks: Reuters

Japan & Korea

Samsung’s new mantra is slim; After smartphone squeeze, reshuffles and layoffs are new normal: JoongAng

SoftBank aims to be goose that lays golden eggs; Run of spectacular investments raises Japanese group’s stature: FT

Japan Pension Fund Head Calls for $389 Billion Stock Revamp: Bloomberg


Era of Lower Oil Masks Challenges for Southeast Asian Titans: Bloomberg


‘Toronto has less influence now’: How Canadian corporate power is making a big shift westward: FP

Australian Small Stocks Lose by Most on Record on Economy: Bloomberg

Emerging Markets and State-Owned Enterprises: WisdomTree

Energy & Commodities

Casino-Like Fuel Hedges Seen Hurting Airlines as Crude Plummets: Bloomberg

Shale Producers Say Bring It, in Oil Price Showdown: Bloomberg

India shows link between crude oil and gold: Reuters

The Rise and Fall of OPEC: BW

Will Cheap Oil Lead to Big Mergers? Price Collapses Often Serve as the Trigger for Consolidation in Energy: WSJ


Amazon’s Many Businesses: Here’s a Map to Keep It All Straight: BW

ESPN Is The Biggest Reason Cable TV Isn’t Going To Die Anytime Soon: BI

The Problem With The Internet Of Things: TechCrunch


Cancer’s Super-Survivors: How the Promise of Immunotherapy Is Transforming Oncology: WSJ

Consumer & Others

With Market Saturated, Starbucks Looks to High End: NYTimes

Daily Bamboo Innovator Insight: Thurs 4 Dec 2014 – Anta Denies Report Chairman Disappears – Shares Plunged and Then Halted; Police probes China shadow bank collapse – Failure highlights risks lurking in fringes of financial system


Test-tube government: Governments are borrowing ideas about innovation from the private sector: Economist

6 Highly Influential People Share Their Favorite Books: BI

Apple Co-Founder Says The Famous Garage Where He Started Apple With Steve Jobs Is ‘A Myth’: BI

Was Gutenberg really the original tech disrupter?: FT

A hostage negotiator’s business tips; From mediating the release of captives to training executives: FT

If You Want Your Brand To Succeed, Make It Aspirational, Not Inspirational: FastCo

Magna Carta: The Rule of Law’s foundation: Star

Secrets of the world’s top whisky: Japanese water and Spanish casks: Reuters

How to Avoid Bad Investments in Good Ideas: Strategy&

The Newest B-School Brag: Alumni Startups; Harvard, Columbia Track Venture-Capital Money as Another Measure of Graduates’ Success: WSJ

How to be a top entrepreneur: No matter what obstacles they face, they always rise by Bryan Zekulich is EY’s entrepreneur of the year leader for Oceania. TheAge

Miami’s billion-dollar art fair becomes platform for selling everything: Reuters

CEO Succession: Is A Handpicked Successor Warranted? ValueWalk, Stanford

Leon Cooperman: Value Investing in Practice: ValueWalk. PDF

For Tim David’s Next Trick, ‘Magic Words’ That Get People to Do What You Want: Amazon, NYTimes

Learn from the losers; Kickended is important. It reminds us that the world is biased in systematic ways: TimHarford


Performing Under Pressure: The Science of Doing Your Best When It Matters Most: Amazon

How to Fly a Horse: The Secret History of Creation, Invention, and Discovery: Amazon

33 Artists in 3 Acts; the story of the artists themselves—how they move through the world, command credibility, and create iconic works: Amazon

The Road to Character: The Humble Journey to an Excellent Life: Amazon

Collaborative Intelligence: Four Influential Strategies for Thinking with People Who Think Differently: Amazon

The Eureka Factor: Aha Moments, Creative Insight, and the Brain: Amazon

Bold: How to Go Big, Create Wealth and Impact the World: Amazon

The Leadership Handbook: 26 Critical Lessons Every Leader Needs: Amazon

15 Of The Best Business Books Coming Out In 2015: BI

Family Business Governance: Maximizing Family and Business Potential (Family Business Leadership): Amazon

Family Business Succession: The Final Test of Greatness (Family Business Leadership): Amazon

Succession: Mastering the Make-or-Break Process of Leadership Transition: Amazon

Magic Words: The Science and Secrets Behind Seven Words That Motivate, Engage, and Influence: Amazon

Key to Growth: A License to Kill; One of the best ways to boost your company’s capacity to execute new growth strategies is by killing legacy projects. CFO

Investing Process

The Art of Variant Perception from Michael Steinhardt: FirstAdopter

Take your pick: The key to stockmarket success is avoiding the worst sectors: Economist


Anta Denies Report Chairman Disappears; Shares Plunged and Then Halted: Bloomberg

Police probes China shadow bank collapse; Failure highlights risks lurking in fringes of financial system: FT

Best Buy sells rump of Chinese business: FT

China to take Taiwan by 2050, says India’s air force chief: WantChinaTimes

Adidas and Nike open stores in China aimed solely at women: WantChinaTimes

Xiaomi’s Lei Jun Is Forbes Asia’s 2014 Businessman Of The Year: Forbes

Cash-strapped Chinese companies have found a way to keep bondholders happy. Sell stock at a discount to shareholders and use proceeds to repay debt: Bloomberg

China Wants What’s in Your Phone as Chips Replace Oil: Bloomberg

Xi’s Cultural Revolution Is Doomed to Fail: Bloomberg

With No Revenues And Scandal, Chinese ‘MOMO’ Plans IPO: ValueWalk


Motorbikes in India: Coming out for a Hero; One of the world’s biggest motorcycle makers wants to become even bigger: Economist

Corporate debt in India: Power cut; Hamstrung banks are a barrier to faster economic growth in India: Economist

United Breweries Founder Vijay Mallya Seeks to Avoid Willful Defaulter Tag: WSJ

End of the road for Delhi’s old cars as India battles smog: AsiaOne

Japan & Korea

Green Cross Corp. President Cho Soon-tae will receive the highest award given to entrepreneurs during the 51st Trade Day ceremony: KoreaTimes

Japan’s Economic Dilemma: Comfortable Decline or Painful Revival? WSJ


Thai junta bolsters royalist credentials amid crackdown on dissent and succession uncertainty: FT

Forbes Indonesia 50 Richest: Forbes

When Even $7 Trillion Isn’t Enough; Southeast Asia plans to spend an estimated $7 trillion over the next 15 years upgrading infrastructure. There’s a real risk the money may go to waste. Bloomberg

China Car Dealers Ask BMW to Hit Brakes on Sales Targets as Market Stalls: WSJ


Private equity: Last hurrah; When buy-out funds throw good money after bad: Economist

The transformation of cities: A suburban world; The emerging world is becoming suburban. Its leaders should welcome that, but avoid the West’s mistakes: Economist

Putin threatens crackdown on currency speculators: FT

An active headache for fund managers: FT

World’s Richest Families Warned of Impact-Investing Hype: Bloomberg

Private-equity firms are starting to feel the effects of a U.S. regulatory crackdown on banks that finance debt-fueled corporate takeovers. WSJ

SEC on Lookout for Web-Based Pyramid Schemes; Regulators Say Direct-Sales Industry Is Being Exploited: WSJ

James Montier: “Stocks Are Hideously Expensive” In “The First Central Bank Sponsored Bubble”: FUW

Family Offices, Like Pension Funds, Develop Appetite for Direct Investing? ValueWalk

For Brazilians, Pawnshops Are the Antidote to Soaring Interest Rates: NYTimes

Junk Bonds: Go Active, or Don’t Go at All; With a few exceptions, it’s a terrible mistake to own a passive fund that tracks an illiquid market: Morningstar


Online-advertising fraud: Dial “B” for bot; A dark corner of the digital-advertising business needs cleaning up: Economist

After Years Of Losses Apple Is Starting To Destroy The Market For Android: BI

Barry Diller Says Tinder Succeeded Because IAC Left Its Founders Alone: TechCrunch

Taser aspires to be the Dropbox for cops; Rick Smith’s company is now looking at body cams and digital video storage in defence: Forbes

Hershey turns Kisses and Hugs into hard data: Fortune

Intel-Led Industry Doubles Debt as Growth Options Dwindle: Bloomberg


More Cost of Health Care Shifts to Consumers; High-Deductible Insurance Plans Prompt Some to Delay Treatment: WSJ

Henry Schein: Your dentist’s biggest supplier: Fortune

Ginseng prices kept high by hoarding on part of big pharmas: WantChinaTimes

Energy & Commodities

Saudi Arabia Sees Oil Prices Stabilizing Around $60 a Barrel; OPEC’s Biggest Oil Producer Isn’t Likely to Push for Production Cuts as a Result: WSJ

Shale oil: In a bind; Will falling oil prices curb America’s shale boom? Economist

The new economics of oil: Sheikhs v shale; The economics of oil have changed. Some businesses will go bust, but the market will be healthier: Economist

Flow of Opec petrodollars set to dry up; Collapse in oil price could suck $316bn from global investment: FT

Extreme oil bears bet on $40 crude: FT

Asian oil refiners get limited benefit from crude slide: Russell: Reuters

There Are 300,000 Iraqi Barrels Signaling Oil Glut Will Deepen: Bloomberg

OPEC Inaction Fuels Political Risks for Companies: WSJ

Sub-$50 Oil Surfaces in North Dakota Amid Regional Discounts: Bloomberg

Will Amazon Succeed in Selling Local Services? K@W

Want to Create the Next Great Software Product? Don’t Try to Innovate: K@W

Do You Feel IoT Device Fatigue Yet?: EETimes

Consumer & Others

McDonald’s Menu Problem: It’s Supersized; With 121 Menu Options, Kitchen Service Slows; McWrap as a ‘Showstopper’; the complexity has slowed the average speed of drive-through service: WSJ

Cheaper beans set to dominate as Asians thirst for instant coffee: Reuters

Luxottica signs deal with Intel to develop hi-tech glasses: Reuters

Daily Bamboo Innovator Insight: Wed 3 Dec 2014 – Why Determination Matters More Than Smarts in Getting Ahead

Investing Process

Lumena New Materials, a Chinese laxatives company that has come under attack from short sellers, has said the negative research has caused it difficulties to maintain the support of its banks, creditors and suppliers: FT, Emerson, Glaucus


Why Determination Matters More Than Smarts in Getting Ahead: FastCo

The scary word that determines success; It makes you feel rejected, worthless and small – if you let it. Fortune

台北捷运十多年没涨车资: Sina

‘If we’re not failing half the time, something’s wrong’: how Fitzroy’s Bellroy built a global wallet brand: BRW

From one supplier to 20: how Elle Roseby is turning Supre around: BRW

Learn from the losers; Kickended is important. It reminds us that the world is biased in systematic ways: Tim Harford

12 habits of highly productive writers: Quartz

How to Tell if Your Company Has a Creative Culture: HBR

A Better Way to Manage Corporate Alliances: HBR

Understanding “New Power”: New power gains its force from people’s growing capacity—and desire—to go far beyond passive consumption of ideas and goods. HBR

The Thankful Gig Entrepreneur: Forbes

If You Can’t Instill Hope, You’ll Fail Miserably As A Leader: Forbes

Steven Pressfield’s Legend of Bagger Vance-Bhagavad Gita: It’s not stealing if you put a new and inventive spin on it.: StevePressfield

Stop Wasting Everyone’s Time; Meetings and Emails Kill Hours, but You Can Identify the Worst Offenders: WSJ

The Myth of the Successful Money Manager: VisualCapitalist


The Myths of Creativity: The Truth About How Innovative Companies and People Generate Great Ideas: Amazon


China Orders Stricter Checks on Local Debt as Sales Surge: Bloomberg

Investors Shun China Stock Link on Ownership Concern, Group Says: Bloomberg

China Loan Data Understates Exposure to Property Risks, S&P Says: Bloomberg

The Anticorruption Campaign And Rising Suicides In China’s Officialdom: Forbes

When the PBoC launches its deposit insurance scheme, $9 trillion in deposits and $6 trillion in shadow banking investments will suddenly stop being guaranteed by the government: Quartz

Stock regulator boss tied to graft; From 2009 to 2012, Li had responsibility for examining proposed listings for the Nasdaq-style ChiNext board of the Shenzhen Stock Exchange: Standard

Taiwan stirs a political earthquake for China: FT

How China’s “Rare Earth” Weapon Went From Boom To Bust: io9

The Troubles With Building ‘China’s GE’; After Creating World’s Biggest Press Forge, State-Run Sinomach Lacks Customers; Long Lunch Breaks: WSJ

China sending artists to countryside to “form correct view of art”: AsiaOne

Is This the End of China’s Economic Miracle? NewsWeek


Rakesh Jhunjhunwala: Nifty could reach 1,25,000 by 2030; “We have the vegetables, ghee, vessels, the masala and gas. We only need someone to cook it. Modi is making dots, which will become a circle.”: Forbes

Japan & Korea

Global luxury cosmetics brands copy AmorePacific’s cushion cosmetics: Maeil

Korean Toy Maker Transforms Into Content Creator: WSJ

Honda CEO Rethinks Car Maker’s Priorities; Takanobu Ito Plays Down Ambitious Sales Target After Series of Quality Problems: WSJ


Indonesia Seen Leading SE Asian Online Shopping Boom: JGlobe

One of Thailand’s richest men, energy tycoon Nopporn Suppipat, is the latest high-profile figure to fall foul of an ever-widening corruption probe. CNA

Indonesia Central Bankers Feel Inflation Pain in Their Paychecks: Bloomberg

Thailand Unravels: Gen. Prayuth takes Bangkok down a strange dead end. WSJ

Singapore’s Current Reality: Singapore’s consulate-general to Hong Kong responds to Chee Soon Juan’s Nov. 28 WSJ article.: WSJ


Australian Landlords Take Record Debt as Rent Yields Fall: Bloomberg


Junk Bonds: Go Active, or Don’t Go at All; With a few exceptions, it’s a terrible mistake to own a passive fund that tracks an illiquid market: Morningstar

Swedish government on brink of collapse: FT

How QE can jam the financial plumbing; Central bank asset purchases absorb ‘good’ collateral like Treasury bonds: FT

Option pricing shows yen’s loss of safe-haven status: Reuters

Hedge Funds Urged to Beat Benchmarks Before Charging Fees: Bloomberg

Activist Explores a New Frontier: Property: WSJ

U.S. Watchdog Sees Risk of Repeated Liquidity Crunches; Office of Financial Research Cites Less Liquidity as One Increasing Risk to U.S. Financial System: WSJ


Start-ups warned to be wary of accelerators: BRW

Vultures circle as struggling Network Ten runs short of options: TheAge

IT companies shifting toward B2B: Businesses have more growth potential than consumer market: JoongAng

The Internet Of Things Is Reaching Escape Velocity: TechCrunch

In Amazon Vs. Alibaba, Bezos Turns His Sellers Into Soldiers: Forbes

Amazon’s Bezos to Be ‘Bold’ Despite Failures: JGlobe

Hawking warns on rise of the machines: FT

Founded in Southern California in 2002, Sonos is a quiet success story amid the recent hype about the “connected home” and “internet of things” – but it faces growing competition from lower cost rivals. FT

Looking Beyond Big Data in 2015: WSJ

Energy & Commodities

Oil Investors May Be Running Off a Cliff They Can’t See: Bloomberg

Hedge Funds Raised Bullish Brent Bets Before OPEC Slump: Bloomberg

Junk Bonds Funding Shale Boom Face $8.5 Billion of Losses: Bloomberg

Falling Oil Prices Could Lead to Massive Junk Bond Defaults: WSJ

Falling oil prices hit Russia much harder than Western sanctions: WaPo

Shale oil billionaire Harold Hamm, who has lost $12-billion in 3 months, urges investors to stay calm: FP

Oil crash carnage is the big question in Bank of Canada’s decision today: FP

BlackRock’s Vecht Says Oil Rout Leaves Portfolios Outdated: Bloomberg

Resource focus makes Canada tougher place to invest: Mawer: Reuters

Farmers Foil Investors That Bet on Corn, Soybean Price Drop; Crops Are Hoarded Until Prices Rise High Enough to Sell: WSJ

Who’s Afraid of Cheap Oil? The Saudis know they cannot kill U.S. shale output, even if the news media don’t.: WSJ

A halving in the price of iron ore this year has been fuelled in part by Chinese speculators who built up huge short positions on the Dalian exchange, in the process giving China the pricing power it has long craved: Reuters


Ginseng prices kept high by hoarding on part of big pharmas: WantChinaTimes

Biogen Thrills Street as Alzheimer Results Shine; Surprise news for an experimental drug is boosting confidence in the biotech giant’s growth story.: Barron’s

Consumer & Others

Some businesses have found ways to cope with the dreaded “Brazil cost” and one of the more successful is the Melissa brand of “jelly shoes”. FT

Asian “deathcare services” firm sees nirvana; Nirvana Asia, a southeast Asian undertaker, opened the books on its $300m IPO in HK: FT

Daily Bamboo Innovator Insight: Tues 2 Dec 2014 – Cirque du Soleil’s Next Act: Rebalancing the Business As Growth Prospects Slow; ‘The Rarity Was Gone’


Nobel Peace Prize Albert Schweitzer: “I don’t know what your destiny will be, but one thing I do know: The only ones among you who will be really happy are those who have sought and found how to serve”

Why Everything You Think About Aging May Be Wrong; As We Get Older, Friendships, Creativity and Satisfaction With Life Can Flourish: WSJ

Cirque du Soleil’s Next Act: Rebalancing the Business; As Growth Prospects Slow, Company Seeks to Beef Up Non-Circus Business; ‘The Rarity Was Gone’: WSJ

Evergreen Lessons From Buffett And Munger: IrrelevantInvestor

TV Stars From Italy Flock to Low-Cost Albania as Ad Market Sinks: Bloomberg

18 Tricks To Dramatically Increase Your Productivity: BI

Take it from a software engineer: learning code can be a nightmare: Quartz

Searching for Burmese Jade, and Finding Misery: NYTimes

Learning Our Roots, Inside and Out: ‘The Invisible History of the Human Race’ Provides Transparency on Our Genetic Heritage: NYTimes

Why Our Memory Fails Us; Just because you think you recall something doesn’t mean you do. NYTimes

‘Leadership goes far beyond just being a boss’: AsiaOne

Sleep Deprivation Is Killing You and Your Career: Forbes

How to Train Your Voice to Be More Charismatic; Scientists Analyze Public Leaders’ Voices to Discover the Basis for Charisma: WSJ

Annual Thai festival honours descendants of monkey god: AsiaOne

Greater China

Hong Kong IPOs Become Losing Bets for Investors: WSJ

Interest in China’s civil service declines with continuing anti-corruption efforts; “In the past, people liked to work as civil servants because they thought they could get a lot of ‘invisible welfare’ through their posts”: AsiaOne

Macau’s junket model breaks down as gamblers walk away: Reuters

China’s Ban On Puns Comes Straight Out Of ’1984′: BI

The new Silk Road: Stretching the threads; Impoverished south-west China seeks to become an economic hub: Economist

Why China keeps throwing trillions in investments down the drain: Fortune

Hong Kong Gold Sales Fall as China Tackles Corruption: WSJ

Mini Electric Cars Give a Jolt to China’s Market for Green Autos: WSJ


‘Government Must Improve Cold Chain Infrastructure’: Danfoss CEO; Niels B Christiansen, chief of energy services firm Danfoss, says India trails the world when it comes to food safety and preservation. And that needs to change: Forbes

India Aims to Shed Its ‘Fragile’ Label; Investors Bet That New Prime Minister Will Jump-Start Economy: WSJ

Gold Hidden in Underwear Shows How India Curbs Distort Rupee: Bloomberg

Japan & Korea

Samsung modest reshuffle disappoints: FT

Inside Takata, tantrums but little sense of crisis over air bags: JapanTimes

Softbank’s Pepper robot debuts as coffee machine salesman at Bic Camera: JapanTimes

Samsung Electronics exits fibre optics amid sharper focus on reviving smartphones: Reuters


The Securities and Exchange Commission has a five-year plan to make the Thai capital market a regional leader by introducing new rules allowing Asean companies to raise funds in this country’s market. Nation


Hedge Funds Shut as Managers Struggle in Year of Two Percent Returns: Bloomberg

Capital controls feared as Russian rouble collapses; Russia intervenes as crumbling ruble echoes 1998 debt crisis: Telegraph

Saudi regulator suspends Deloitte from auditing listed firms due to a case involving an unidentified firm: Reuters

As Indonesia expands oil storage, fewer opportunities for graft: AsiaOne

MOL Global shares tumble on Vietnam accounting glitch, profit slump: Reuters


To Gain the Upper Hand, Amazon Disrupts Itself: NYTimes

Naspers Offers Tencent and Change: WSJ

Tim Cook has created as much value as Steve Jobs: Quartz

Working the Land and the Data: Technology offers some family-owned farms an opportunity to thrive and compete with giant agribusinesses. NYTimes

The King Of Online Gambling (Is 34): Forbes

One in 10 iPhone owners ‘very likely’ to buy an Apple Watch: Fortune

DreamWorks’ Nightmare Shows No Sign of Ending: Barron’s

C.H. Robinson to buy for $365 million: Reuters

Wanda Holds Talks to Buy Lions Gate, MGM in Hollywood Push: Bloomberg


The Virus Detectives: Sifting Through Genes in Search of Answers on Ebola; Inside the world’s most powerful factory for analyzing genes from people and viruses: NYTimes

A Smart Watch To Manage Epileptic Seizures: Forbes

Energy & Commodities

Banks’ $650bn bet on oil backfires as Brent prices slump; Lenders sitting on billions in losses after rise in risky debt to oil and gas companies raises prospect of impairments: Telegraph

Lubrizol’s Bolt-On Energy Deal A Priority For Berkshire’s Warren Buffett: Forbes

Yergin and El-Erian Analyze the Oil Rout: Barron’s

Malaysia Crudely Treated By Oil Slump: Barron’s

Malaysian tycoons see their O&G investment value cut by almost half: Star

As crude tumbles, oil drillers seek to temporarily idle more rigs: Reuters

Beware the Vulnerable Oil Debt That Lurks in Your Junk-Bond ETFs: Bloomberg

Bamboo Innovator Weekly Insight – Even a Billionaire Makes “Mistake” – and Quickly Rectifies It!

 “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 | December 1, 2014
Bamboo Innovator Insight (Issue 61)

§  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 Friends,

Can You Guess This Asian Wide-Moat Company?

Even a Billionaire Makes Mistake – and Quickly Rectifies It!

In March 2013, a secretive Southeast Asian billionaire made a “mistake” – he pulled out of a $750m investment to acquire a 30% stake in a leading Asian-listed company whose share price later shot up 240%. He managed to paint a deal to acquire a 15% stake instead in February 2014 in the company whose share price subsequently doubled.

We are a long-time admirer of this low-profile Bamboo Innovator who picked up his knowledge in the business when working as an apprentice to support the family while his mom did laundry and his sister sold Teochew “soon kweh”, a traditional street food. The tycoon started his business in 1955 and his entrepreneurial talents and capital allocation skills is impressive in transforming his private family business from a product supplier to service provider by continuously integrating modern technology into the business model and he sets an exemplary example for Asian entrepreneurs.

This billionaire’s listed investment and family business is a beneficiary of the sharp fall in crude prices to below $70 per barrel in recent months from an oversupply situation which has resulted in a positive tailwind in lower raw material costs to boost profit margins for the industry that the company is operating in. Saudi Arabia’s decision to refuse to cut output on Nov 27 signals its intent to keep oil prices lower for longer to get rid of its shale rivals in a who-blinks-first brinksmanship.

Our latest monthly Moat Report Asia for December examines another North-Asian entrepreneur Mr. C who started a similar business in 1951, four years earlier than the Singapore tycoon. This Asian-listed company has since grown to become the #1 company in its home market with domestic market share leadership of 30% and 50% in the consumer product and industrial product respectively under its own brand. The intangible asset in the trust and support that Mr. C’s family business enjoys in the community amongst its customers and long-term business partners has resulted in the listed company to generate free cashflow for 19 consecutive years since 1995, even during the 1997/98 Asian Financial Crisis and 2007/09 Global Financial Crisis.

Strikingly, Mr. C’s listed family business has the highest reward/risk ratio in the industry that is riding the tailwind of sustainable low feedstock costs. Its EV/EBITDA of 8.9x is substantially lower than its Indian rivals 24.7-33.9x and US peers 13.4-18.1x. It has the lowest Price/book value at 1.76x, substantially lower than its Indian rivals 10.9-15.5x and US peers 6.3-13.1x. Its short-term downside is protected by its healthy balance sheet with net cash (~13% of its market value) and an attractive dividend yield of 5.3%.

Mr. C was so passionate towards his work that he was still working just a day before he was hospitalized when he fell sick and passed away suddenly in 2006. However, this has also resulted in succession issues as the founder has not named any successor at that time and there was some internal family conflict. Mr C’s second son took over the leadership helm. The company received takeover offers from both its giant US rival and domestic industrial customer when Mr. C passed away but the controlling family rejected the offers.

Since the company managed to resolve its internal family conflicts in a saga that lasted nearly three years by mid 2009, profits are up 83% in four years between FY10 and FY13 and long-term growth initiatives are executed, including introducing service innovation, launching innovative new products and making bolt-on acquisition in US. Yet, the company has lagged behind significantly in share price performance both in the longer-term (last 5 years) and recently in the past 3 months to a year as compared to its peers. With the renewed focus in service innovation in its domestic market and strong growth momentum in its overseas development strategy in China and Vietnam, the company could potentially double its profits in 3-5 years, sparking a potential doubling in share price.

Underlying the company’s unmatched wide-moat distribution franchise that resulted in its domestic market share leadership is the corporate culture that takes pride in service excellence for its customers. The culture is fostered by the founder Mr. C who was passionate about delivering the best product and service because he understood keenly the frustrations, struggles and challenges of the customer, a role he started out when Taiwan was under Japanese rule. Mr. C had delivered one unit of the product to a customer by long-distance taxi after receiving a call from the customer when the day has closed, as a demonstration of customer service. This spirit of service excellence has been carried on throughout the years and is rare – and therefore valuable – in an Asian company.


When asked what is his guiding philosophy all these years in conducting business and life, Mr C’s second son commented: “It is important to bear compassion in mind and to do good deeds, which are beneficial to everyone.”

Who is Mr. C and his listed family business?

Warm regards,


Managing Editor

The Moat Report Asia


PS: We will be traveling away from 7 Dec till 16 Dec on the SMU Accounting Study Mission to Myanmar, which is an official course in the university curriculum. We have carefully researched and arrived at a list of outstanding companies for our visits. Our group of students will learn business strategies from leaders of successful companies and institutions. We will resume our Weekly on 22 Dec. And we will be back in 2015 with unique value-added content from Accounting Frauds in Asia, an official course in the SMU curriculum that we will be teaching in Jan 2015.

A new monthly issue of The Moat Report Asia is now available!

Access the in-depth idea presentation:

Daily Bamboo Innovator Insight: Mon 1 Dec 2014 – Murata makes it big in small components: The Murata Manufacturing chief discusses a post-smartphone future


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