Wednesday, 9 October 2013

6 Key Investment Themes For The Next Decade

Thematic investing, or investing based on emerging themes, is fraught with some danger. Many people invest in the latest hot theme and get burned soon enough. Others mindlessly put their money into a company based on a theme without regard to valuation or quality of management – another sure-fire way to end up in the red.

And let’s face it: the future is inherently uncertain. If picking future investment themes was easy, everyone would be sipping piña coladas in Bora Bora. The best investors know this and place their bets according to probabilities. That is, they invest when the odds are in their favour and invest large amounts when those odds offer significant upside with minimal risk.

The question then becomes this: which investment themes might give you the best odds of success over the next decade? It’s a tough question. If there’s one thing for which I have a high degree of conviction, it’s that the world is currently drowning in debt and that debt will need to be cut, one way or another. If that’s right, you’ll want to avoid sectors which have benefited most from the three decade long expansion in credit. The finance sector is an obvious one and the bear market here is likely to last decades. The tech sector is another – think of all the tech start-ups and others which will evaporate when the silly venture capitalists funding them don’t have access to cheap and abundant money. There are many other sectors which will suffer too.

In other words, you’ll probably want investment exposure to themes which may still thrive in a world of shrinking credit. There won’t be many of them but Asia Confidential has a few ideas. Asian outbound tourism has been, and should continue to be, a strong theme which transforms the global tourism sector. Privatisation of state-owned assets appears a sure thing – in the developed world as well as China – given bloated government balance sheets. Acquirers with deep pockets should benefit. Low to mid-end consumption should do well as developed world consumers tighten their belts while Asian ones start to spend more with increased wages. Finally, gold is likely to thrive as the credit boom turns to bust and faith in government policies and currencies is shaken.

Asia outbound tourism
I remember doing a research report as a sell-side analyst in Indonesia in early 2006 looking at the potential boom in visitors to the beautiful beaches of Bali due to a growing influx of Chinese tourists. It was considered then a far-flung theory as Bali was still suffering from a series of terrorist bombings and Chinese tourists only accounted for about 6% of total visitors to the island. Since then though, Balinese tourism has surged and the Chinese have played a significant part in that. China now tops Japan as the country with the second-largest number of visitors to Bali behind Australia. And Chinese tourists account for nearly 12% of total visitors to the island, double that of 2006.

Back then, there were no airlines offering direct flights from China to Bali. Now there are several. That’s not counting the many charter flights which the Chinese take to the island. In Bali today, there are also slews of foot massage shops, jewellers, status artwork and other items catering to Chinese consumers, Chinese restaurants and Chinese speaking guides.

These trends are not only happening in Bali, but in every tourist destination across the world. Chinese tourists are driving growth and their needs are being increasingly catered too. And those needs are very different to tourists from the U.S., Europe or Japan. For instance, Chinese tourists spend much more money on shopping vis-a-vis hotels. Various studies suggest two-thirds of Chinese overseas tourists spend more than 20% of their budgets on shopping with 25% spending greater than 50% of their budgets on shopping.

The trend of increasing Chinese outbound tourism looks set to continue. In 2012, the Chinese outbound tourism market became the world’s largest, moving ahead of the U.S. and Germany. The number of annual Chinese outbound tourists now totals 83 million, up almost 8x since 2000.

The great thing about this trend is that it appears to be in its infancy. Think about how the Japanese, having fully recovered from the ravages of World War Two, took to the skies from the 1970s and transformed tourism destinations such as Hawaii and Australia’s Gold Coast. They also transformed the airlines, hotels, amusement parks, travel agents, restaurant chains, spa and beach resorts as well as duty free stores which catered to them.

The same thing is likely to happen as China and other Asian countries catch the travel bug. The companies which best fulfil their needs will be big winners.  

I like the Macau casino operators in the long-term even though valuations are somewhat stretched at present. Macau accounts for almost 30% of Chinese outbound tourism and that number should increase as transport infrastructure to the territory improves. Among the casino companies, U.S.-headquartered Las Vegas Sands (NYSE:LVS) is probably the pick of the bunch.

I also like Hong Kong retailers as a play on Chinese tourism. Hong Kong is still the dominant destination for Chinese tourists and is likely to remain so. Though be wary of some of the high-end retailers who’ve benefited from the lavish spending habits of corrupt Communist Party officials. That may not last.

Finally, hotel operators with significant Asian exposure should do well. Thailand conglomerate, Minor International (SET:MINT), is my preferred stock in this space.

Privatisation of state-owned assets
In 2011, the world’s biggest private equity firms were busy raising money to take advantage of over-indebted European countries needing to shed state-owned assets to stay afloat. Wholesale asset sales never really happened though as these countries papered over cracks, with the help of a few trillion dollars from the European Central Bank.

Europe’s problems haven’t gone away though. And the problems aren’t limited to Europe, as governments in the U.S., U.K, Japan and China have similar issues. Put simply, all of them have too much government debt. And one way or another, that debt will need to be cut back. Whether through write-downs, austerity, inflation or a combination of all of them, the debt will be reduced.

One way to cut debt is through the privatisation of state-owned assets. I think that this will be one of the enduring investment themes of the next decade. Ironically, it seems probable that the paragon of communism, China, will be the first to accelerate the sale of government-owned assets in an effort to reduce the influence of state-owned enterprises (SOEs) and encourage competition.  

Which companies will benefit from the broad-based sale of state-owned assets? Well, most would point to private equity firms such as Blackstone and TPG. But I’d suggest otherwise as these firms rely on outside funds and in a credit-deprived world, these funds will dry up.

Instead, I’d look to conglomerates with deep pockets and minimal debt to take advantage of asset sales. Some of the large North American companies such as Berkshire Hathaway (NYSE:BRK-A) and Brookfield Asset Management (NYSE:BAM) should be in poll position.

In Asia, it’s a bit trickier as the private companies bidding on state-owned assets will need high-level government connections to be successful. Particularly in Japan and China.

Low to mid-end consumption
In the West, excess debt and declining real wages have resulted in consumers cutting back on spending since 2008. That’s been bad for high-end retailers but good for businesses such as dollar stores. It’s a trend which is likely to continue for many years to come.

In Asia, the situation is very different. Consumer balance sheets are in great shape, barring South Korea. Savings are abundant while debt is minimal. Better yet, wages are growing rapidly, even in slowing economies such as China, India and Indonesia. Excess savings and rising wages augur well for future spending.

Moreover, you have countries such as China which are encouraging people to spend more. It’s part of China’s strategy to re-balance its economy away from being over-reliant on investment for economic growth.

As a consequence, low to mid-end consumer companies across the globe are likely to do well going forward. In the developed world, consumers will continue to trade down. In the developing world, you should have people spending more, albeit still at the lower end given most of the region, including China and India, remains poor.

I’m not an expert on consumer companies in the developed world but discount operators should outperform from here. Dollar store companies in the U.S., U.K. and Australia have recently underperformed on hopes of economic recovery, which may provide some interesting potential entry points.

In my neighbourhood of Asia, Hong Kong headquartered, Giordano (HKSE:709), is one of the best low-end clothing retailers in the region and is inexpensive at current levels. Other exceptional consumer brands worth looking at include Chinese beer giant, Tsingtao Brewery (HKSE:168), and Thailand television operator, BEC World (BSE: BEC).

Long-time readers will know my preference for having gold in an investment portfolio. Gold has two things going for it. First, if you think that debt contraction is probable in future as I do, that brings risks to the world’s financial system. After all, the still thinly-capitalised banks own much of the debt which will need to be restructured/written down. Therefore, it’s be wise to own assets which sit outside the financial system. That’s where gold comes into play.

Secondly, the current policies of the world’s central banks may be preventing the contraction in debt which needs to occur to cleanse the financial system. In my view, central bank moves to reflate the credit bubble are likely to lead to a larger credit bust down the track. In many ways, gold is the anti-central bank. The less faith that you have in central banks, the more gold that you should own.

As for the best ways to play gold, exchange-traded funds (ETFs) and stocks both have counterparty risks, though I do find the latter attractive given they’re arguably the most hated assets on the planet. Physical gold is my preferred way to play this theme though as it’s the least risky of these options.

If a prudent investment strategy involves holding physical assets outside of the financial system, then agriculture should also be considered. Unlike many of the hard commodities, agriculture has a serious supply-demand imbalance which should result in prices remaining elevated for years to come.

Agriculture inventories are at multi-decade lows. That means inventories are being drawn down as consumption exceeds production. Global agricultural production has only increased by 2.1% per annum over the past decade and the OECD forecasts that growth rate will decline to 1.5% over the next ten years.

The principle reasons behind the lack of supply are limited expansion of agricultural land, increasing environmental pressures, rising production costs and growing resource constraints.

Meanwhile, demand continues to grow solidly primarily due to growing populations, higher incomes and changing diets (higher calorific intakes) in developing markets. On the latter, for example, it’s well known that meat consumption increases as a country becomes wealthier. The OECD predicts that the developing world will account for 80% of the growth in meat consumption over the next decade.

While droughts in recent years and subsequent surges in agricultural prices have grabbed television headlines, it’s worth remembering that these events merely exacerbated the already tight supply in soft commodities. And it seems that tight supply will only worsen unless there are major technological breakthroughs to improve agricultural productivity.

As for where best to get investment exposure to agriculture, I’d suggest you look at commodities where supply-demand imbalances may further deteriorate, such as sugar, coffee and potash.

In the U.S., good arguments have been made for an urgent upgrade of creaking infrastructure. Increased spend on infrastructure could create jobs, improve security at ports and electricity grids as well as keep the U.S. competitive with China - all of which could be financed at exceedingly low interest rates thanks to Mr Bernanke’s quackery. But political gridlock means it probably won’t happen.

In the developing world, the problem is not of repairing infrastructure, but building it. Some countries such as Singapore and China are host to some of the world’s best highways, airports and ports. Others such as India and Indonesia remain in the dark ages.

For instance, Indonesia spends just 1.7% of GDP on infrastructure, compared to China’s 8%. More than 40% of Indonesia’s roads remain unpaved. The country has only 11 miles of railway line per person, less than half that of Thailand, India or China.

Anyone who’s been in a traffic jam in Jakarta can attest to the underspend. Are traffic jams in Jakarta the worst of any capital city in the world, I wonder?

The likes of Indonesia don’t have any choice but to improve infrastructure, and fast. Otherwise, supply bottlenecks will choke economic growth. The cement sector in Indonesia is an oligopoly and a great way to play to the increased infrastructure spend to come. Indocement (JSE: INTP) is the pick of the bunch.

Friday, 24 May 2013

madrid news latest international newport group fashion -Zimbio

Last night in NYC, Ariana Rockefeller and Anna Chumsky stepped out for the 2013 New York City Opera Spring Gala, Solange and Cam'ron got on the mic for the Boiler Room's DO NOT DISTURB blowout party, The Pratt Institute honored Thom Brown with this year's Fashion Visionary Award, and so much more!

Who was there: 
Guest included Ariana Rockefeller, Anna Chumsky, Missy Brody, Salman Rushdie, Andy Spade, Kate Spade, Philippe Talbot, Marie Lenormand, Carin Gilfry, Geoffrey Zakarian, Eric Daman, George Steel, Genevieve Morton, Mina Cvetkovic, Ginta Lapina, Malu Custer Edwards, Tony Custer,, Daisy Soros, Chrissy Correa, Stephanie Newhouse, Dawne Marie Grannum, Marissa Mira, Aleksandra Cvetkovic, Ames Brown, Jean Shafiroff, Nicholas Luchsinger, Prosper Assouline, Martine Assouline, Ginta Lapina, Charles Wall, Annita Wong, Caren Brooks, John Hardgraves, Nancy Newcomb, Philippe Talbot, Sandra Davis, Coke Ann Wilcox, Jarvis Wilcox, and Austin Scarlett.

Who was there: Guests included Solange Knowles, MikeQ, Cam'ron, Tamoha Downs, Heron Preston, Ruth Gruca, Chelsea Leyland, Ben Pundole, ASAP DJ, Ryan Hemsworth, Brenmar, Hanne Gaby, Ian Isiah, Kenny DOpe, Stephanie Covell, DJ Kitty Cash, Kilo Kish, Harry Beee, Amelia Muqbel, Michelle Salem, Ruth Gruca, Pete Rock, Louise Chen, and Yara Flinn.
Other details: W Hotels of New York in collaboration with UK based underground music site Boiler Room present, Do Not Disturb, an innovative series of unique live online music broadcasts from each hotel's E-WOW suite. The third and final event in the series which kicked off in London and continued in Paris took place in the newly renovated W Times Square EWOW Suite.
A select crowd gathered on the 57th floor of the hotel, overlooking Times Square. The night opened with of-the-moment producer Ryan Hemsworth doing a back-to-back set with A$AP Mob DJ J. Scott. Hip-hop legend Pete Rock was up next, before Mike Q and Brenmar did a back-to-back DJ set. During their set, pillows were being tossed around and it quickly turned into a frenzied pillow fight. As the crowd began to get antsy, Solange came out to do a DJ set and kicked things off with crowd-pleaser "Ignition" by R. Kelly. In keeping with the night's theme, she played a string of hip-hop and R&B songs. Finally, after much anticipation, headlining rapper Cam'ron got on the mic. The exuberant crowd rapped-along to the lyrics as he delivered a non-stop flurry of verses from his hit songs.

Tuesday, 21 May 2013

International Newport Madrid Group Fashion Reviews Ref 81345798500 NIG: Final curtain | MyOpera

BAKING HOT IN COSTUME as a human billboard, a character in his upcoming film, isn’t  strange at all to auteur Tsai Ming-liang. In fact, Tsai might well be the only Golden Lion winner having to hawk tickets on the street to extend his movie runs. 

Though Tsai enjoys the reputation of an internationally acclaimed filmmaker – winning prestigious awards in Venice, Cannes and Berlin – his slow-paced, realism films have not done as well as one might hope at the box office.

“Sometimes I give two talks a day at schools or galleries so I can sell tickets,”  says the Malaysian-born, Taiwan-based filmmaker. “I need to sell 10,000 tickets before the movie opens to ensure it will run in the cinema for at least two weeks.”

Having been in the industry  for almost 30 years,  the 56-year-old filmmaker – one of the godfathers of Taiwan’s New Wave Cinema alongside the likes of Edward Yang De-chang and Hou Hsiao-hsien  – is ready to retire from the silver screen.

“I’m not getting any younger,” says Tsai, whose Homegreen Films produces and distributes films independently.

“Making movies is not the same as manufacturing products in a factory. All my stories are original and I feel perhaps I’ve said enough.”

For what could be Tsai’s swansong, the working-titled The Diary of a Young Boy unmistakably has the filmmaker’s signature all over it. The story follows a jobless father, whose wife leaves him and the children because of poverty. Failing to pay the rent, the father is on the verge of being evicted.

The underdog takes on the minimum-wage job  of a human billboard advertising  luxurious condos. During his daily eight-hour stint, his children spend the day in a nearby shopping mall  filled with scrumptiously packaged products.

“I won’t regret it if this ends up being my last film. I’d rather it  be my last because I’ve never been freer,” Tsai says. “We wrote eight versions of the script and made changes on set every day during  filming to avoid conventional storytelling.”

Tsai first got the idea to develop the story about 10 years ago, when he noticed the emergence of the so-called “sandwich men” bearing advertisements on their bodies.

“I was shocked that such a job even existed,” Tsai says. “The sad thing is we’ve all seen him, but after a while, we stop having feelings for him. As a filmmaker, I wish to bring such a character under the limelight.” Tsai has consistently explored reality in his features – troubled youth wasting their days at games arcades in Rebels of the Neon God, the confused and depressed couple in Vive L’Amour, the solitary and wounded son in The River, and the marginalised migrant worker in I Don’t Want to Sleep Alone.
“I’m not interested in filming the fabricated la dolce vita, the kind of processed fantasy that the majority of the audience expect  filmmakers to serve them on a silver plate,” Tsai says. “Real-life events can be more cruel  than films can portray, but still I want to show a segment of that, even though few people are willing to be confronted with it.”
Tsai’s often abstract and subtle cinematic language is the opposite of commercial films, yet he’s unapologetic about the grim grossing prospects. 

“Commercial power is so strong that it changes people’s habits and tastes,” Tsai says. “There are so many commercial films that you don’t have time for anything else. You are cut off, and in the end  you won’t be able to tell what’s good and what’s not.

“When you consider film an art form, you don’t want to always please your audience. You want to take them to the next level.

“I can’t imagine myself making a commercial movie. In the 20 years of my career, I never stopped looking for freedom. Without freedom, making a movie is like making canned food – everything !tastes the same but comes in different packaging. My movies are long-lasting and need to go !through fermentation. It’s a slow process, but it’s always ongoing.”

Tsai’s unparalleled style has earned him recognition at international film festivals and from film institutions.

In 1994, his Vive L’Amour, depicting a love triangle among three distraught city-dwellers sharing a flat, won the prestigious Golden Lion award at the Venice Film Festival. His 2004 production, The Wayward Cloud, controversial for its erotic portrayal of romance in the time of drought, won numerous awards, including the FIPRESCI Award at the Cannes Film Festival and the Silver Bear at the Berlin International Film Festival. 

Tsai was knighted by the French government and was invited by the Louvre Museum to film Face to add to its official collection.

Face, an abstract interpretation of the Salomé myth shot inside  the Louvre, has a starry cast, including French new wave giants Fanny Ardant, Jean-Pierre Leaud and model-turned-actress Laetitia Casta and Lee Kang-sheng, who worked with Tsai in all his movies. Face stirred up heated discussions in the film and the art industries.

Making Face made Tsai realise possibilities larger than cinema. Art galleries and museums across the globe offered to work with Tsai following the film’s release. 

“It  was a turning point in my career,” Tsai says.  “Being invited by the Louvre gave me the recognition I longed for. It is clear that film can be collected as an art piece.”

Having tasted the hospitality of the art world, recent years have seen Tsai delving into various areas,  from art installations to musicals. Such interests are likely to take up most of his time, post-cinema.
In 2007, Tsai explored the world of visual arts with an installation inspired by a derelict cinema in Malaysia, as part of a group exhibition at the Venice Biennale. The piece was consequently acquired by the Taipei Fine Arts Museum of Taiwan. 

Three years ago, Tsai tried his hand at painting, which he had taught himself at an installation exhibition in Taipei’s Xue Xue Institute.  He found 49 used and abandoned chairs, captured the images with oil paint strokes and juxtaposed the actual furniture against the painting.

He used a  similar concept a year later, and transformed a boiler room established in 1937 under Japanese colonial rule into a theatre for his installations. 2Next year, his film retrospectives and art installations will also be shown in museums in Vienna and Brussels.

Tsai reckons that museums, galleries and even universities could be the alternative distribution channels to cinemas.
The filmmaker has been trying to break out of the system with his recent dealing of Face’s DVD rights. Instead of  mass production, Tsai made only 10 copies of the DVD.

Each comes with a wooded box hand-painted by himself and priced at NT$1million (about HK$260,000).  “I want it  to be appreciated as an artwork. That way, it will be preserved and seen by a proper audience,” he says.

Tsai has also been pushing the boundaries through his recent experimental short films, including Walker, a 20-minute short,  as part of Beautiful 2012, produced by Youku, China’s internet television site, alongside three other Asian filmmakers – Gu Changwei from Beijing, Ann! Hui On-wa from Hong Kong and Kim Tae-yong from Seoul. 

The video, completely stripped of dialogue and plot, follows a red-robed monk walking at snail’s pace in the midst of Hong Kong’s bustling streets.

Walker garnered mixed reviews. Many critics found it impossible to understand the filmmaker’s message.
“Pieces like Walker are truly precious to me. I don’t think I had the courage  to make such pieces before I turned 50,”  he says. 

“I have my own messages, and I don’t want to deliver them bluntly.”

Tsai is planning to make more Walker episodes in different cities – his hometown in Malaysia and France could be the next destinations.

“I feel like filming a modern-day Monk Xuanzang, who keeps moving forward just out of good will,” he says. “So, in the next 10  years, we’ll be walking. I don’t know what to expect, but I think it’s much better than making boring storytelling dramas. I want children to grow up with a variety of films, not just the commercial kinds.”