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Asian food delivery startups are gobbling each other up
Venture Capital
<p>Food delivery start-up Foodpanda has just made its ninth acquisition, picking up Singapore-Dine for an undisclosed sum. This is the latest in a string of mergers in this space</p> <p>According to the Straits Times the purchase adds Singapore eateries Tony Roma's, Subway, 4Fingers and California Pizza Kitchen to its list of about 500 restaurants.</p> <p>Food delivery platforms have been gaining popularity in Asia for some time, offering both convenience for consumers and cost savings for restaurants who want to avoid the painful overheads associated with food delivery.</p> <p>With nine acquisitions under its belt, Rocket Internet-backed Food Panda is certainly becoming an apex predator in the space. In Asia it now covers all of Southeast Asia, South Asia, Hong Kong and Taiwan.</p> <p>But its not the only one gobbling up competition in the region.</p> <p>Over the past 18-months we have seen Singapore's Food Runner swallow down Philippine start-up City Delivery and Hong Kong's Koziness Concepts - previously iDelivery - buy Dial-a-Dinner and Soho Delivery.</p> <p>Its not just food delivery sites angling for a top spot in the space, either. In India ride sharing app Ola has launched Ola Cafe while Zomato - the fast growing restaurant discovery site that recently bought US rival Urbanspoon - is expanding into food delivery too.</p> <p>Dubbed by TechCrunch as an "Uber for Food", India-based  Zomato has eight acquisitions to its name and it could soon show FoodPanda that its not the only big fish in sea.</p> <p>&nbsp;</p>
Emerging markets: will they crash or not?
Hedge Funds
<p>Passport Capital’s John Burbank is by no means a lightweight. He cut his teeth working under Julian Robertson at Tiger, his fund always performs in the top percentile, and the man actually looks like he can tear you apart with his bare hands.</p> <p>He recently had an interview with the FT where he said “we are on the precipice of a liquidation in emerging markets,” alluding to the deteriorating fortunes of the region, and adding that “this feels the way that the fourth quarter of 1997 felt.”</p> <p>And he’s not the only one. Burbank here sits with the majority view that emerging markets are currently on track for an epic blow up. The Brazilian real has been shorted to a whisker off its all-time low, the Malaysian ringgit is currently hovering near its Asia Crisis levels (though oil did contribute to this), emerging market ETFs have seen nothing but outflows, and the asset classes’ bonds have been treated like plague-ridden, leperous, venom-spitting bears.</p> <p>His fellow fund manager Mark Dow however, would like to differ.</p> <p>While in no way an emerging market bull, Dow outlined a few months back five reasons why the current situation won't translate into an epic crash (or recessions and an accompanying contagion, for that matter), namely:</p> <p> Most EM’s now have flexible currencies and larger reserves – two things sorely lacking when their most harrowing crises occurred.<br /> No more Original Sin – Original Sin, the label used for the currency mismatch when a sovereign borrows in dollars but collects in local currency, has practically been eradicated.<br /> Deeper local markets – most EM’s now have enough asset managers, pensions, etc. to absorb any tourist selloffs.<br /> Short dollars – in issuing debt, EM’s are now essentially short the greenback, but sans the short dollar gamma positions they had during the previous crises, making things more manageable for them.<br /> We’ve already seen a lot of outflows</p> <p>While current price action is definitely against him, Dow’s argument is actually quite compelling. The Bank of International Settlements does say that EM corporates are hoarding dollars but still, it doesn’t really negate what he’s saying either.</p> <p>Something has the Fed spooked from raising rates though, and everyone seems to be pointing their fingers at the emerging markets. What do you think?</p> <p>Are you on Burbank’s side? Or Dow’s?<br /> Photo: Wiki</p>
Hao Capital hedge fund gains 97.8% YTD
Hedge Funds
<p>With all the steep losses and fund closures since Black Monday, the words “hedge fund” and “China” don’t exactly paint a pretty picture when you piece the two together. Hao Capital’s hedge fund however, seems to be a little different.</p> <p>According to Reuters, Hao Capital posted an amazing 97.8% return for the year – a stellar performance by any measure and made even better by the fact that most China-centric funds are currently nursing losses.</p> <p>Run by Zhang Hao, an electronics engineer and ex-Prime Capital Management analyst, the fund made most of its gains by betting on appliance companies such as Haier Electronics Group and Gree Electric Appliances as well as by taking big bets against solar energy stocks. Another secret to its success? Zhang's reluctance in joining the A-share herd:<br /> “In May, the fund manager told investors he sidestepped some of the frenzied buying in Chinese A shares because he was worried about the emotional nature of individual investors who made up more than three-quarters of that trading volume.</p> <p>‘From a cultural perspective, these investors are less prone to logical thinking, and prefer stories of a company to its market value calculation,’ the manager wrote.”<br /> It wasn’t all rainbows and butterflies though. Zhang apparently took a nasty hit last month when his longs fell over 17%, thankfully however his shorts gained 7.63% at the same time and trimmed his losses down to 9.5%.</p> <p>Despite that blip, his fund is currently up 132.5% since its August 2014 inception, and has more than tripled its AUM to $212 million in the process.<br /> Photo: Dorli Photography</p>
Balancing risks and opportunities in the multi-speed world
Asset Management
<p>SUMMARY</p> <p> At the Cyclical Forum in September, PIMCO investment professionals from around the world gathered in Newport Beach to discuss and debate the state of the global economy and markets and identify the trends that we believe will have important investment implications over the next 12 months.<br /> While our baseline view for global economic prospects over the near term remains broadly unchanged since our previous Cyclical Forum in March, we see significant and in some cases widening divergences among the world’s major economies. Also, we see the balance of risks to the global economy tilted somewhat to the downside, in part because of diminishing returns of unconventional monetary policy and also the market volatility stemming from developments in China.<br /> Our cyclical outlook has key implications for investors. In broad terms, we see global fixed income markets as anchored by our New Neutral secular framework for interest rates. Our cyclical views inform portfolio strategies across regions and asset classes.</p> <p>The past several months have investors and policymakers reassessing global economic prospects amid elevated concerns over emerging market growth models and policy effectiveness. In the midst of these global uncertainties, PIMCO investment professionals gathered recently for our September Cyclical Forum.At our previous Cyclical Forum in March 2015, we concluded (as detailed in our post-forum essay) that the global economy was “Riding a Wave of Accommodation – Carefully.” Since then, while the “wave” of global monetary accommodation has if anything expanded in scale and in scope – and may well deepen further over our cyclical horizon – to date it has been insufficient to stave off a decline in commodity and equity prices or to discourage renewed fears of disinflation amid concerns that China will not be able to navigate the New Normal trajectory for growth and global financial integration they have set for themselves.Although the turbulence in global markets that followed the bursting of the Chinese equity bubble in June and the fallout from the devaluation of the Chinese yuan in August was the major financial event that has occurred since our March forum, our goal at the September forum – as at every forum – was to look ahead from initial conditions so as to formulate a baseline view for the global economy as well as to identify and assess the balance of risks to that baseline view. Our forum discussions benefited enormously from the active participation of and valuable contributions from PIMCO senior advisors Ben Bernanke, Mike Spence and Gene Sperling. Drawing on superb presentations from our Americas, European, and Asia-Pacific portfolio committees, as well as from our emerging market (EM) team, and following a very robust and wide-ranging internal discussion, we coalesced on a baseline view thatglobal economic prospects over the next 12 months remain broadly unchanged from where we saw them in March and are consistent with global GDP growth in the range of 2.5% to 3% and global inflation of 2% to 2.5%.</p> <p>While this is our baseline cyclical view, the averages it represents mask significant and in some cases widening divergences among the world’s major economies. As we shall discuss further below, our baseline view for GDP growth in the U.S., eurozone, U.K. and Japan over the next year is actually consistent with a modest increasein the pace of growth for this group of countries versus the past year. On the other side of the ledger, we concluded that prospects for growth in China are clearly deteriorating, though we note the market consensus view is converging toward PIMCO’s more bearish forec</p>
Jim Chanos says China is starting to look like the next Japan
Hedge Funds
<p>It looks like China is going to be able to avoid the dreaded "hard landing", but according to Jim Chanos, that is not necessarily a good thing. Hedge fund short king Chanos says that China's ongoing economic slowdown is starting to look more and more like the pattern we saw with Japan, a major boom in the 1980s followed by more than a decade of economic stagnation.</p> <p>As part of a panel discussion earlier this week, Chanos said that it seems China may be on a path very much like the one that led to Japan’s lost decade in the 1990s as the debt level grew more twice as fast as its economy.</p> <p>“We have an economy addicted to credit,” Chanos, founder of hedge fund Kynikos Associates, noted while participating in a panel discussion on China in New York Tuesday. While the country doesn’t appear to be facing an “imminent collapse,” it is on a trajectory similar to the one Japan was on before its asset-price collapse in 1991 “but on steroids,” he noted.<br /> He went on to point out that Chinese annual loan growth has slowed down to around 15% from over 30% in 2009, but even a 15% loan growth rate is more than double the growth in the gross domestic product. Total household and corporate debt was up to a worrisome 207% of GDP in June of this year, up from 125% at the end of 2008 when China began borrowing.</p> <p>For comparison purposes, Japan’s total debt mushroomed to 176% of GDP in 1990, when it was a mere 127% a decade earlier in 1980. Japan has seen weak economic growth for more than 20 years now despite various efforts by the government to get the economy jumpstarted.</p> <p>China, reported a 6.64% increase in GDP last month, a bit below the government’s target of 7 percent this year. Economists note that the Middle Kingdom has been growing at the slowest pace since 1990. Jim Chanos says that growth in nominal GDP is down to a mere 5% in China today, a huge decline from 15% in 2010, with the economy clearly deflating.</p> <p>“It takes time to sort out” the debt overhang, Chanos commented. The short king hedge fund manager has been saying February 2010 that the China’s real estate market will melt down, and that "China is Dubai times a thousand" and on a “treadmill to hell” because it currently depends almost solely on real estate for economic growth.</p> <p>This article was originally published by ValueWalk. <br /> Photo: Mark Johnson </p>
Aberdeen looks for redemption in China
Asset Management
<p>China and its emerging markets trading partners got roughed up pretty badly this summer. Aberdeen Asset Management is betting that the sector is hitting a trough -- and is essentially asking for investors to buy into their view.</p> <p>Aberdeen itself got hit by the market mayhem. In just the second quarter of this year, it has lost $30.5 billion in assets and its stock has tumbled 23% so far this year.  Total assets under management have fallen 7%. The firm has been bleeding assets for nine straight quarters, and a possible rate rise in the U.S. later this year could just make that worse. Competitors, such as Schroders and Henderson, are seeing outflows, boosted by their exposure to European assets, reports the Financial Times. About 30% of Aberdeen client assets are in emerging markets, and about 5% is in Chinese companies.</p> <p>“We’ve got to sit this out. All we can do is control what we can control, which is [to] look at the costs in the business [and] try and manage money well for our clients,” said Aberdeen CEO Martin Gilbert in late July.  “What we can’t do is manage market sentiment.”</p> <p>Aberdeen has pushed to counter asset outflows with acquisitions, most recently snapping up the London-based Advance Emerging Capital, reports BBC. In August the firm looked to the U.S. and bought U.S. hedge fund investor Arden Asset Management, boosting its hedge fund unit's assets from $2 billion to $11 billion. Aberdeen also purchased U.S. private equity firm Flag Capital Management in May. Late last year, the firm acquired Scottish Widows Investment Partnership (SWIP) in an attempt to diversify its business away from such an emerging market focus. But the firm hasn't seen much benefit from that move yet.</p> <p>At an all-day conference for media, the head of equities Devan Kaloo says there's a light at the end of this long and dark tunnel. "Perspective matters," he says. Yes, GDP in China has been slowing, but it has been for some time. Emerging market investors have a right to be skittish, especially as the U.S. looks to raise interest rates, says Kaloo. Investment outflows for emerging markets year-to-date have already surpassed the outflows for all of 2014. But Kaloo is confident that many of these issues are signalling the bottoming of the economic cycle that can only recover from here.</p> <p>Investors pulled 31.5 billion yuan of shares of Shanghai-listed stocks in July, as the market spiraled. The Shanghai Composite Index fell 40% from its high June 12. But last month investors bough 21.4 billion yuan worth of the market's listed stocks through a trading link with Hong Kong, reports The Wall Street Journal. Some sectors, such as insurance, healthcare, and technology, are thought to be ready to benefit from the transitions in the Chinese economy away from raw materials to boosting middle class needs.</p> <p>Kaloo says the news is unlikely to get much worse: withdrawals from emerging market stocks are nearing their peak, in his view; and China is trying to discipline its markets. And the currency has already gotten crushed by the strengthening dollar. If the Fed raises rates by 25 basis points, he doubts EM will get very hurt. The damage is done.</p> <p>There are some actively good signs. Set aside the SOEs -- the ginormous zombies of the economy -- and there's some good stuff happening in the private sector. Emerging market stocks are attractively valued, he says. And investors could benefi</p>
BlackRock: Market segments to consider while the Fed holds
Asset Management
<p>Investors have spent much of the last couple of months fixated on the Federal Reserve (Fed). In the end, last Thursday, the central bank did exactly what most had come to expect: nothing.</p> <p>After a day to deliberate how to interpret the Fed’s decision to hold off on raising interest rates, investors took the Fed’s hesitancy as a sign of global economic fragility. Stocks reversed course on Friday, giving up their gains for the week, and market volatility (as measured by the VIX index) quickly spiked back to above average levels after dropping below 20 early in the week, according to data accessible via Bloomberg.</p> <p>Amid renewed volatility and the Fed’s continued delay, are there any moves to consider? As I write in my new weekly commentary, “With the Fed Holding, an Opportunity to Make Moves,” after the recent selloff, two areas of the market may now be worth added exposure.<br /> Two Market Segments to Consider<br /> Rate sensitive parts of the market, such as U.S. utilities<br /> Were interest rates rising, one would expect these bond market proxy segments to suffer. However, with long-term rates clearly stuck, utilities look less vulnerable. This is particularly true when you consider that this sector, represented by the S&amp;P 500 Utilities Index, has dramatically underperformed the rest of the broader S&amp;P 500 market this year, according to Bloomberg data. So, it may be time to consider bringing exposure to U.S. utilities back up toward a market weight.<br /> Emerging market (EM) stocks<br /> A more contrarian play could be revisiting EMs. Last week’s soft economic data out of China led to another selloff in China’s equity market. Domestic Chinese stocks were down between 3 percent and 6 percent, although H-Shares, traded in Hong Kong, managed to end the week higher, as market data from Bloomberg show.</p> <p>However, other EMs fared better, according to the data. Markets posted solid gains in India, South Korea, Turkey and even Brazil. The turn in performance was also accompanied by a marginally positive week of flows into broad EM funds, according to market flow data.</p> <p>It’s too early to call a bottom in EM, and there could be more volatility ahead, but valuations now appear attractive. At the recent lows, EM equities were trading at less than 1.3 times book value, and the current price-to-book ratio is the lowest it has been since the end of the financial crisis. It also represents a 35 percent discount to developed markets, the largest discount in 12 years, according to my analysis using Bloomberg data. For investors with little or no exposure to this asset class, now may be a reasonable time to consider slowly establishing or reestablishing positions. The bottom line: With the Fed on hold, there may be an opportunity to make some contrarian moves.</p> <p>Russ Koesterich, CFA, is the Chief Investment Strategist for BlackRock.</p> <p>This article was originally published by Advisor Perspectives. <br /> Photo: Kurtis Garbutt</p>
Is this Chinese start-up disrupting the world's oldest profession?
Venture Capital
<p>A Beijing-based start-up called Zubowa - meaning "rent me" -  has raised a $1.5 million angel round for a platform that allows users to sell themselves for a day... or a night.</p> <p>Of course, many uses for this service are purely innocent: perhaps you need someone to teach you piano, another player on your soccer team, or just someone to play bridge with your grandma. But there are other - potentially murkier - services also being offered: dating.</p> <p>According to Tech in Asia, the app is not shy about it either. The description attached to the app even boasts: "there are a ton  of beautiful girls and handsome guys waiting for you."</p> <p>It doesn't take a massive leap of the imagination to see how a platform such as this opens itself for exploitation. It will also be interesting to see how this startup navigates clear regulatory and cultural pitfalls.</p> <p>In any case, online-to-offline services is a fast-growing sector in China right now. Given that China's unemployment rate is the rise - the National Bureau of Economic Research recently put it at 10.9% -  a platform like this could still gain traction.</p> <p>&nbsp;</p> <p>&nbsp;</p>
Aberdeen Asset Management receives ambiguous award
Asset Management
<p>As Chinese securities brokerages and fund managers sweat under the intense scrutiny of the local authorities for alleged stock manipulation, Aberdeen Asset Management must be wondering if it has just been handed a poisoned chalice.</p> <p>The U.K. money manager is the first overseas asset management firm to be granted a wholly foreign-owned enterprise (WFOE) license in China, allowing it to operate as a private domestic securities firm, reports AsianInvestor.</p> <p>The award by the finance ministry followed a meeting between UK chancellor of the exchequer George Osborne and China’s vice-minister Ma Kai on Monday.</p> <p>Previously, WOFEs could only advise and had to attach “Overseas” or “Investment Consulting” designations to their names. Alternatively, they could form joint-ventures with local firms, but a 49% limit on their stakes meant they ceded control of the investment process – a not inconsequential concession when trying to cope with the volatile A-share market.</p> <p>Aberdeen Investment Management (Shanghai) was set up on September 14 in the Shanghai Free Trade Zone. Subject to final approval by the China Securities Regulatory Commission it will be able to create and distribute its own products into the private market of wealthy individuals and also service institutional investors.</p> <p>Hugh Young, Aberdeen Asset Management’s veteran managing director in Asia, is the Shanghai entity’s legal representative. But, bosses at Citic and several other Chinese investment firms have been taken into police custody during the past couple of week, so perhaps it would safer for Young to stay in Singapore.<br /> Photo: Javier Kohen<br /> &nbsp;</p>
Goldman jumps on ETF bandwagon
Asset Management
<p>It's official. Everybody's doing it.</p> <p>Goldman Sachs Asset Management has launched its first exchange traded fund in attempt to grab assets in the growing strategy's space, reports the Financial Times. Retail and institutional investors alike are pouring money into ETFs, as a cheap and easy option for tracking a market. GSAM's first ETF launched with $50 million and tracks the Goldman "ActiveBeta" index, which weighs equities according to value, earnings, and volatility. The firm plans to launch similar products "in the coming months."<br /> “Our clients asked us to apply our investment expertise to exchange traded funds,” Michael Crinieri, GSAM’s global head of ETF strategies, said in a statement.<br /> Moody's has called this "smart beta"-ETF space "the next battleground for asset management dollars." The ratings agency says that it expects the biggest passive asset managers and the most innovative managers to be the winners.</p> <p>Earlier this month OppenheimerFunds acquired VTL Associates to break into the ETF space. Legg Mason bought QS Investors last year, and Franklin Templeton is also eyeing the space. The multi-boutique Legg Mason requested regulator approval for its first four ETFs earlier this month.</p> <p>According to ETFGI, ETFs posted net inflows of $219.7 billion globally during the first eight months of 2015, a 16% increase from the same period in 2014.<br /> Photo: WorldSeriesBoxing</p>