[Framework] Guide to Industry 4.0

1. Industry 1.0 was based on the introduction of mechanical production equipment driven by water and steam power. Industry 2.0 was based on mass production achieved by division of labor and the use of electrical energy. Industry 3.0 was based on the use of electronics and IT to further automate production. Industry 4.0 was based on the use of cyber-physical systems. 

2. The Smart Factory is quickly becoming a real place, where the technology and capabilities developed under Industry 4.0 will be put to work. Connecting real machines with information technologies and the Internet will increase productivity, add unprecedented levels of flexibility to manufacturing, and leverage the benefits of new business models and value creation networks.

Chinese Companies Expanding Abroad and the Challenges

1. China has the world’s largest supply of foreign currency reserve and Beijing’s easing restrictions on outbound cash has helped facilitate overseas investment. The government has also eliminated the need for companies to have their out bound investments approved by the State Administration of Foreign Exchange (SAFE).

2. The Chinese government monitors the outflow of foreign reserves and closes the gates if they see too much money leaving the country. However, the government has chosen to leave the gates open despite a massive outflow of foreign reserves making it easier for companies to go abroad.

3. The beginning of Q1 2016 recorded Chinese companies raking up acquisitions approximately $68 billion and $100bn of announced M&A transactions worldwide.

4. This was accelerated by the Government's initiatives such as China’s One Belt One Road (OBOR) inspired by the Silk Road trade path from China to Europe and is expected to build a huge economic corridor taking in almost two-thirds of the world’s population and accounts for one-third of the world’s wealth.


5. This initiative in China’s ‘going global’ objective was forseen when domestic growth slows down and is a major plank for many Chinese companies taking to the international stage.

Top Chinese Companies Going Global and PR in a Foreign Country

1. China’s outbound M&A activity for the first nine months of 2016 totaled $174 billion, (From Dealogic data) surpassing that of the United States for the first time.

[Framework] 10 Recommendations for Risk Management Improvements and 6 Useful KRIs

1. 10 actions to help firms better manage their risks.

2. 6 KRIs serving as a good tool for firms to summarise issues for management, the board, the non-executive Directors, the clients and the regulators.

[Framework] Consultation Paper on Regulation of UAE's Life Insurance Industry

1. In November, a consultation paper concerning regulations for the UAE's life insurance industry, Circular No. (33) of 2016 (Life Regulations), was released by the UAE Insurance Authority (IA).

2. The objective is mainly toregulate the manner in which life insurance investment contracts have been sold and marketed in the UAE.

[Misconduct] FCA's Asset Management Review Uncovers 'Market Failure'

1. In November 2016, the Financial Conduct Authority (FCA) released a report and labeled the asset management sector as ‘a market failure in the economic sense’.

2.  Notably in the performance of actively managed funds and the charging structure used for such funds.

China's Debt Bubble - Part 2 - The Actual Situation

This post continues from part 1 discussing where the credit risks lies and how China's banks circumvent the system.

China's Debt Bubble - Part 1 - Debunking the Beliefs

SUMMARY OF CHINA'S DEBT BUBBLE
1. In November 2016, Fitch Ratings warned that China’s bad loans in the banking system might be 10 times the official estimates of 1.8% of total assets. 

2. The predictions of a Chinese banking crisis have been proven wrong multiple times and  the concerns should lie somewhere else in the system rather than in a systemic blow-up.

[Misconduct] Wells Fargo Employees Creating Fictitious Accounts

1. Imagine paying fees on a ghost account you didn't sign up for.

2. In September,  federal regulators reported that Wells Fargo  employees secretly created millions of unauthorised bank and credit card accounts without their customers knowing it since 2011. 

Will China Become The Next Japan?

While some draw parallels between China's slowed economic growth today and Japan in the late 1980, there are some differences.

Rebalancing China Explained in 6 Charts

1.  In september 2016, IMF published a working  paper titled "Rebalancing in China - Progress and Prospects" explaining  China's economic transition utilizing the "rebalancing" approach.

2. China is transitioning to a greener, more inclusive, more consumer and service based, and less credit-driven economy.  

3. Below are 6 charts explaining the key areas involved.

Overview and Thoughts on China's Economic Rebalancing

DEFINING  A REBALANCED CHINESE ECONOMY

1. China is rapidly reaching the point of diminishing economic and political returns from its investment-driven model, which is headed for change one way or another: either through a proactive rebalancing, with reforms and policy adjustments, or a forced rebalancing precipitated by rising stresses in and beyond the financial system. 

2. Rather than depending on the old growth engines of property development and exports, the emergence of new growth engines will lead the country through an extended period of rebalancing and ensure that growth is maintained. The structural transformation involves increased private consumption and a lower trade surplus.

3. China’s economic rebalancing can be viewed in terms of global trade balances and domestic dynamics. From a US-China rebalancing standpoint, China is intending to save less and spend more on consumption, while the US is spending less and saving more.

Eight Priority & Potential Markets Identified In the Insurance Industry

1. The Association of British Insurers (ABI) identified China and India as the top two priority markets for the UK insurance industry after leaving the EU.

2.In addition to China and India, Hong Kong (SAR), Indonesia, Japan, Malaysia, Singapore and South Korea have been identified as the eight markets with the highest potential for progress and growth.

Long-Term Growth in Asset Management Industry - Part 3 - Challenges, Strategies, Issues and Conclusion

Part 3 discuss challenges, strategies, issues and conclusions for long term investing.

Long-Term Growth in Asset Management Industry - Part 2 - Money Markets & retirement Plans

Part 2 discuss the fall in money market funds and retirement provisions.

Long-Term Growth in Asset Management Industry - Part 1 - The Industry and Distribution Network

Part 1 discusses development in the asset management industry, the European industry and the distribution network.

China's Economy & Financial Markets - Part 4 - RMB and Special Drawing Rights

Part 4 discuss the RMB's global role and the inclusion of RMB into the Special Drawing Rights (SDR) basket.

China's Economy & Financial Markets - Part 3 - Banking System, Shadow Banking, Stock Market Swings, and Policy Instability

Part 3 discuss risks in  Banking System, Shadow Banking, Stock Market Swings, and Policy Instability.

China's Economy & Financial Markets - Part 2 - Capital and Debt

ECONOMIC AND FINANCIAL RISKS
1. Capital account liberalization and the possibility of a surge of capital outflows, which could destabilize the financial system as well as the overall economy. 

2. There are concerns on China’s financial system, including the stability of the banking system, wild swings in the stock market, and a large shadow banking system.

3. China’s policy making are too in doubts concerning  the possibility of policy missteps in the process of the difficult and risky transition from a largely command-driven economy to a market-oriented.

China's Economy & Financial Markets - Part 1 - Overview

Pertinent points from U.S.-China Economic & Security Review Commission's Hearing on“China's 13th Five-Year Plan” - April 27, 2016 by Eswar S. Prasad