Weekend Reads for Global Investors: Apple, Asia, and Ackman
It has been an eventful couple of weeks. S&P 500 is marching on to the tune of 2,000. Or should we make that iTunes? Apple reported second quarter results this week, and the iPhone was all the rage, especially in BRIC countries. Amazon launched its Amazon Fire phone to not much fanfare. But Xiaomi, a Chinese brand largely unknown outside of the country, got a lot of attention for the debut of its chic and yet affordable Mi4 handset Tuesday.
BRIC countries made headlines last week for launching the BRICs development bank, aptly named the New Development Bank. Should that old development bank take note? Although details are scant, many experts have weighed in with varying opinions from this marks the doom of the US dollar to more cynical views that this is not really going to shake up the world’s financial order any time soon.
In Asia, Indonesia’s election had an official winner Tuesday. All eyes are now on Joko Widodo, the former governor of Jakarta, to see how he will put the largest economy in ASEAN on the fast track. Expectations are probably running high, not unlike what happened in India recently. The Indian stock markets started its run-up before Prime Minister Modi won the election. The election fever has been cooling somewhat since the first budget of the new government was announced in July.
Now let’s take a closer look at these events.
Apple, Amazon Fire, and Xiaomi
- Global markets seem to be revolving around two themes these days: mobile internet and BRICS countries. Google (GOOG), the technology giant that made US$65 billion in the last 12 months, still does not miss a beat with revenue growing over 20% in the latest quarter. (Forbes)
- Analysts believe mobile search has been a strong driver behind Google’s growth. (Trefis)
- In case you have not noticed, Apple (AAPL) is three times as big as Google in terms of revenues and profits, with higher margins to boot. In the latest quarter, earnings grew by double digits on strong iPhone sales globally, especially in BRIC countries. (Wall Street Journal)
- The challenger to iPhone’s dominance (and Samsung’s), is probably not the just launched Amazon Fire phone. It seemed so obvious that a tech watcher at PC World wonders out loud: “The more I use Amazon’s Fire phone, the crazier it seems that Amazon is launching its first smartphone in 2014.” (PC World)
- Xiaomi, however, a company that has been widely touted as China’s Apple, seems more promising in that mission. (The Independent)
- Mi4, Xiaomi’s first premium phone, debuted Tuesday, and tech geeks seem to love it. (Endgadget)
- The company’s rise to fame itself has been legendary. It has no factories, no physical stores, and does not advertise. It sells smart phones at cost and hopes to profit from accessories and services. The key to its success is widely believed to be its smart social media marketing strategy. Business school professors also found its supply chain strategy to be a big contributor. (The Financial Times)
BRICS and the New Development Bank
- The launch of the BRICS development Bank wass met with very mixed emotions around the world, and raised a number of questions: What is the purpose of this BRICS bank? Why have these countries created it now? And, what implications does it have for the global development-finance landscape? (Washington Post)
- In the developed world, people wondered if the dominance of the US dollar has come to an end. (The Telegraph)
- Some blame it on the Western countries themselves. (RT)
- The “old” development bank actually did not see the New Development Bank as a competition, at least that is what President Kim said. (Reuters)
- In the BRICS countries, this is understandably met with much enthusiasm. (The Economic Times)
- Ultimately though, cooler heads will probably prove right. (Time)
— SCMP News (@SCMP_News) July 23, 2014
- Investors hold out high hopes for the now-confirmed winner of the Indonesian election. (Nikkei)
- Reality sets in after the new Indian government announced its first budget. (Business Standard)
- Martin Feldstein of Harvard identifies 10 policy areas on which Narendra Modi’s government will be judged. (Business Standard)
- “India and China: Clash of the Titans” (Financial Times)
- “Capital Market Reform in China: Gaining Momentum” (Franklin Templeton)
- “To Bond ETF or Not: An Excerpt from Rational Expectations by William Bernstein” (Abnormal Returns)
- Dividend yields by country. (Bespoke)
- “Lessons from a Successful IPO” (BetaBoston)
- An interview with author Larry Cunningham. Warren Buffet’s comment on his book: “Larry Cunningham has done a great job at collating our philosophy.” (The Motley Fool)
Ackman and Herbalife
- “Greenberg: Ackman and Herbalife — The Day After” (The Street)
Cartoon of the Week
Old cartoon, not any less fun. http://t.co/B3YYhp7ji6
— Larry Cao, CFA (@LarryCaoHK) July 24, 2014
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