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China ends one-child policy for all families
Lifestyle, 4:01
<p>The Communist Party has lifted the one-child policy for all families in China. Now all families will be allowed to have two children.</p> <p>In 2013, Beijing softened the rule, allowing urban families to apply for the right to have a second child if both parents were only children and if their first child was a girl. Rural families have long enjoyed the "girl" exemption.</p> <p>The restrictions date back to 1979 when China was worried about overpopulation.</p> <p>The official government Xinhua news agency reported the announcement on Thursday at the conclusion of the plenum that meets every five years, saying the move was made to correct an imbalance in the population, the South China Morning Post reports. China has a shortage of women and its population is aging.<br /> Photo: Lori Scott</p>
Why inflation is lower than you think
Capital Markets
<p>Financial pundits routinely claim that inflation is much higher than the reported statistics. We hear, for example, that food prices have risen much faster than the roughly 1.5% increase in the consumer price index (CPI) over the past several years. Viewed over the longer term, however, inflation is far lower than reflected in the published data.</p> <p>The reason for this anomaly is that the CPI doesn’t reflect the rapid advances in technology and the new products and services that have benefited everyone.</p> <p>The implications are profound. For example, real GDP growth is greater than has been reported, and some claims of income inequality are misleading.</p> <p>This theme was the focus of two recent presentations I attended. On October 18, the economist Woody Brock hosted a private gathering of investment professionals from Australia and New Zealand, organized by the Portfolio Construction Forum, at his home in Gloucester, Massachusetts. On October 22, Rick Rieder, the CIO of fundamental fixed income at BlackRock, spoke at the CFA Institute Fixed-Income Conference in Boston.</p> <p>Let’s look at the distortions in the reported inflation statistics and the implications they have for policymakers.</p> <p>The problems with the CPI and PCE</p> <p>The CPI, which is administered by the Bureau of Labor and Statistics (BLS), and the personal consumption expenditure (PCE) index, which is the Fed’s preferred metric for measuring inflation, rely on tracking the prices of a basket of consumer goods. Those goods include food, clothing, energy and housing, which is the largest component of both indices.</p> <p>They differ in that the PCE maintains fixed weightings, whereas weightings in the CPI are adjusted over time. The CPI also incorporates “hedonic” adjustments; it assumes, for example, that if the price of beef increases rapidly, then consumers will adjust their tastes and purchase more chicken. As a result of the difference in weightings, over time the CPI reports lower inflation than the PCE.</p> <p>But the problem is that the hedonic adjustments do not fully reflect advances in technology.</p> <p>As Brock said, the published inflation data “seriously overstates inflation.”</p> <p>Technology advances are apparent in the quality of televisions, which has improved vastly over the past 50 years; compare the small black-and-white TV sets of the 1960s to today’s 60-inch high-definition flat-screen pictures. As Brock noted, the typical lifespan of light bulbs has increased from four months to nearly 20 years over the last couple of decades. Our chances of surviving a motor vehicle accident is five-times greater since the introduction of seatbelts and airbags.</p> <p>Read more at Advisor Perspectives.<br /> Photo: Lucas Stanley<br /> &nbsp;</p>
Simplicity wins for fintech
FinTech
<p>Easy access, clean design, mobile capabilities. Large companies are realizing that new innovations don't have to be revolutionary. Sometimes simple is best.</p> <p>At a recent awards night hosted by innovation consultant Market Gravity, large established companies from airlines to credit cards to soccer clubs competed for the best new services and products. With more than twice as many nominations as last year across more industries, Market Gravity judges awarded companies for best innovation, best new product, best new service, best new venture, and social impact. Among the nominees and winners were fintech developments, including those from credit cards and existing giants like MasterCard and Barclays.</p> <p>Sometimes genius comes in simplicity, says Iain Montgomery, senior consultant at Market Gravity. Many new innovation programs are building on existing ideas and filling tangible holes, rather than creating something completely new. Focus in fintech has become more about the user experience. Visa, for example, developed a mobile location confirmation for travelers. Customers can confirm a payment abroad through their phone, rather than have their credit card put on hold the second a suspiciously fraudulent transaction is made. "You think you know everything, but you don't," says Montgomery of companies. There are always these small, pesky problems to solve.</p> <p>Western Union, who was awarded best new service, created a "stage and pay" money transfer to make use easier for customers. Western Union teamed up with Walgreens in the U.S. to make access to Western Union through existing photo kiosks, cutting the need for separate technology.</p> <p>Bank of Montreal (BMO) was nominated for best new service for its savings builder account. The account is the first high interest savings account in Canada to add bonus interest when customers save $200 or more each month. Other nominees included more personalization and confirming identity through finger prints and facial recognition.</p> <p>Most creative award, in our opinion, goes to Pornhub for its "wankband." The promo is a "renewable source of energy, powered by Pornhub's quality content." Strap it to your forearm, create energy, and use it to charge anything with a USB.<br /> Photo: Hey Paul Studios</p>
Winning wines
Lifestyle, 4:01
<p>Luxify.com, the world's largest online luxury marketplace, has teamed up with Zachys Wine Auction for their final auction of the Fall 2015 Hong Kong season. The event will feature rare collections from over 1,000 lots, selected and sourced by industry experts. </p> <p>As a connoisseur of luxury items, Luxify is looking forward to reaching out to the growing local market of fine and rare wines and spirits. </p> <p>"Hong Kong is an exciting hub where people have a passion for what they drink. They take pride in collecting some of the most special and rarest editions," says Florian Martigny , co-founder of Luxify.com </p> <p>He adds that to settle into the bubbling market, he has “clinked forces with Zachys Wine Auction, an experienced veteran with a pulse of the region”. </p> <p>Highlights will feature 149 bottles of Domaine de la Roman e e-Conti, 36 cases of Bordeaux from the legendary 1982 vintage, almost all in original wood case and will finish with some of the rarest Scottish and Japanese Whiskies. </p> <p>The auction starts at 9:30am Hong Kong time on October 31 at the JW Marriott in Hong Kong  and is expected to rake in up to US$6.2 million.<br /> Photo: Todd Van Hoosear<br /> &nbsp;</p>
Oaktree wraps up funding for its first QDLP fund
Hedge Funds
<p>Oaktree may be expected to post weaker earnings on Friday, but it sure scored a big win on the funding circuit the other day.</p> <p>Shanghai Daily reports that the L.A.-based fund manager secured RMB1 billion ($157 million) for its first Qualified Domestic Limited Partner (QDLP) fund, making it one of, if not the, largest QDLP fund currently in action.</p> <p>Howard Marks, Oaktree’s distressed-asset virtuoso co-founder, had this to say:<br /> “The QDLP program demonstrates China’s continued efforts to open up global investment opportunities. The encouraging results demonstrate that investors identify with Oaktree’s investment philosophy and risk-focused approach.”<br /> Investors in the fund were Noah Holdings, CreditEase Wealth Management, and Harvest Capital Management. The fund, which will be managed offshore by Oaktree, is set to be invested using the firm’s bread and butter distressed-debt strategy.<br /> Photo: Charis Tsevis</p>
Hujiang.com raises $157 million from CMI, other firms
Venture Capital
<p>Investment firms are still hot for online education platforms, and Hujiang.com seems to be no exemption.</p> <p>Based in Shanghai, backed by Baidu, and filled with over 90 million registered users, the online school raised $157 million in its recent series D round according to China Money Network, and attracted investors as diverse as China's largest private investment fund, China Minsheng Investment (CMI), and the Hefei-based publisher, Waixin Media.</p> <p>How much CMI invested in the company was disclosed however, and how much the round valued it was not divulged as well. We do know though that Hujian.com is in the process of reorganization as it prepares to go public:<br /> “The company is in the process of corporate structure reorganization, and is planning an initial public offering inside China, according to announcements made at a press conference reported by Chinese media.”<br /> The Hina Group, in a press release entitled – and only containing the words – Hujiang.com Raised over RMB 1 Billion with Hina as Exclusive Financial Advisor, said that Hujiang.com raised over RMB 1 billion ($157 million) with Hina as its exclusive financial advisor.<br /> Photo: uberof202 ff</p>
Bernanke identifies greatest threat to global economy
Capital Markets
<p>Ben Bernanke knows a few things about financial crises. As US Fed chairman he had to cope with the 2008 credit crunch and subsequent economic meltdown. </p> <p>In a fireside chat with veteran journalist Andrew Neil hosted by The Spectator on October 27 he warned that although most indicators don’t suggest the world is approaching another recession, “emerging markets are the most meaningful financial risk at the moment.”</p> <p>A consensus is rapidly building that the dollar debt amassed by some emerging countries during six years of low interest rates is a disaster waiting to spread contagion throughout the financial system. A few weeks ago the IMF waved the same red flag and the credit rating agencies have expressed the same fear.</p> <p>So the chances are that if there is a crisis, then it is going to be caused by something else entirely.<br /> Photo: Insider Monkey<br /> &nbsp;</p>
Investor risk appetite soars in Asia
Asset Management
<p>While investors in the developed world rush for the exit, risk appetite among Asian investors surged to a new high in October, according to State Street’s latest Investor Confidence Index report (pdf).<br /> “The Global ICI decreased to 114.3, down 2.3 points from September’s revised reading of 116.6. The decline in sentiment was driven by a decrease in the North American ICI from 133.2 to 125.5 along with the European ICI falling 5.8 points to 89.9. By contrast, the Asia ICI rose by 13.2 points to 111.0.”<br /> The asset manager’s Ken Froot says that this is the first time the Asia ICI climbed above the 100-point threshold this year, an interesting data point given that Shanghai and Shenzhen were on full-on risk mode during the first eight months of the year.</p> <p>The main reason for the surge? Cheap money and SOE reforms, apparently:<br /> “[T]he increasingly accommodative stance taken by policy makers globally and hopes for state-owned enterprise reforms in China have had a large impact on Asian investors, boosting risk appetite by 13.2 points.”<br /> With the Fed back at square one and the fifth plenum supposedly focused on reforms, these guys must be having a ball now.<br /> Photo: GotCredit</p>
China’s property bubble still buoyant
Capital Markets
<p>Predictions of an imminent crash in real estate prices is a favorite among China-doomsayers. But it’s not going to happen yet, according to a report by Moody’s Investor Services  published on Thursday (subscription).</p> <p>Positive sales momentum for the country’s property sector will continue this quarter, fired by supportive monetary and regulatory polices implemented since the second half of last year.</p> <p>"These favorable policies -- including the increased availability of mortgages, as well as lower down payments and funding costs to buyers financing their second homes with bank mortgages -- will support overall sales over the next 12 months and help maintain healthy year-on-year growth into 4Q 2015," says Stephanie Lau, a Moody's assistant vice president.<br /> Photo: drnan tu<br /> &nbsp;</p>
Asia fund management myth-buster
Asset Management
<p>A recent AsianInvestor survey of the biggest institutional fund managers across Asia-Pacific dispelled several misconceptions:</p> <p>They are not home-bound and instead have a strong appetite for global market exposure; they are willing to explore alternatives rather than stick to traditional assets; and there is little sign that they are switching to passive investment strategies.</p> <p>So, Asian fund managers are dynamic, experimental and keen to take on the world. They’re also a social lot and keen to share.</p> <p>“Respondents are as happy to invest directly and to co-invest with general partners and peers as they are to take a fund-of-funds approach, and they are ready to outsource more to local partners,” notes AsianInvestor. (paywall)<br /> Photo: Mandala Travel<br /> &nbsp;</p>