REPOST: Millennials Are Great at Saving Money but Reluctant to Invest It

Growing into adulthood during the global financial crisis is one of the many reasons many millennials are still hesitant to invest their money in the stock market. This and many other factors are explained in the following article from Entrepreneur:

A millennial is anyone born between the early 1980s and 2000, give or take a few years. The group before them is known as Generation X. And recently, a small slice in-between (1977-1983) was defined as xennials. Millennials are the largest group in history — bigger even than baby boomers. The group includes more women, and is more racially and ethnically diverse than any group before, according to the U.S. Census Bureau (which counts millennials as 1982-2000). This gives millennials a lot of financial power, but they aren’t wielding it yet.

But one place millennials shine financially is savings. Three-quarters of millennials have savings, and they started earlier than previous generations. But when it comes to investing that money in a way that could create greater returns, the opportunity is getting lost. Nearly 80 percent of millennials are not investing, especially women. There are several best practices to get this generation on track.

But first, what’s holding millennials back? Many people cite that this group has struggled with fewer jobs and higher debt. Moreover, they’ve been victims to some unfavorable imagery, such as when Time magazine called them the “me me me” generation. Some of this misunderstanding is also due to their position as digital natives, using technology that confuses older generations with an ease and frequency.

There’s one last thing that we’re forgetting. Think about how many films and TV shows depict the trading floor as it was in the 1990s boom era or the 2000 crisis with people in suits answering phones, throwing stacks of paper into the air and staring at large computer monitors. The recession was part of their formative years. Is it any wonder that many young people associate investing with their parents and other products of the ’90s? Until we update the image of the financial markets, millennials may continue to associate stocks with other ’90s icons such as the Game Boy (1989) and Tamagotchi digital pet (1997).

Read more HERE.

Trillion-dollar asset club: Top countries with the largest banks in the world

Banks have played a vital and irreplaceable role in the history of economies around the world and the entire institution that they represent continuous to thrive and grow today. With a combined assets of $25.81 trillion, the world’s top ten largest banks are found scattered across the globe, mostly within the superpowers from Asia, North America, and Europe. Based on the 2017 Forbes Global 2000 and data from the annual S&P Global Intelligence rankings, these are the top countries with the largest banks in terms of assets:

  1. China
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Many analysts aren’t surprised that Chinese banks once again dominated the rankings this year. The Industrial and Commercial Bank of China together with China Construction Bank took the first and the second spot, with a $3.47 trillion and $3.02 trillion of total assets, respectively. The Agricultural Bank of China with a $2.82 trillion-asset took the third place for being the largest not just in Asia but globally, followed by Bank of China with a total of $2.60 trillion as of recent data.

  1. United States
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U.S. banks are slowly gaining major ground with JPMorgan Chase leading the way with a $2.49 trillion-asset based on the recent global rankings, joining the group of the world’s top banking companies of the same influential financial caliber. As the world’s largest economy (based on nominal GDP), it does not come as a surprise that it also boasts of some of the largest deposits.

  1. United Kingdom and France
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Many European banks endured a tough 2016 after surviving several depreciations in its major currencies, the euro and pound, decreasing the relative size of the top countries’ assets piles. Nonetheless, HSBC in UK and BNP Paribas in France still hold a combined asset of over $4.5 trillion. The two are included in the nine European banks that made it to the cut of corporations with more than $1 trillion assets.

REPOST: Euro Gains on Strong Manufacturing Data; Oil Falls: Markets Wrap

Confidence in Europe’s sustainable growth has increased on the back of a surprise gain in a gauge of euro-region manufacturing. Know more from Bloomberg:

The euro was one of the standout gainers in an otherwise listless day in markets, as strong European data boosted confidence in the region’s growth. Gold and yen benefited as comments from President Donald Trump provoked another bout of investor caution.

The surprise gain in a gauge of euro-region manufacturing did little to spur the Stoxx Euro 600 Index, however, which retreated led by WPP Plc after the world’s largest advertising company cut its revenue forecast. Trump’s threats to end the flagship North American trade agreement and shut down the government over funding for his Mexican wall drove futures on the S&P index lower. Oil turned back toward $47 a barrel after U.S. gasoline stockpiles rose.

Surging demand for ‘Made in the Euro Area’ goods is feeding an economy that is creating jobs and finally also seeing price growth accelerate, providing some succor for the European Central Bank before the start of a central bankers’ meeting in Jackson Hole tomorrow. But on the other side of the Atlantic, Trump’s latest comments once again raised concerns about the administration’s ability to deliver fiscal stimulus, while heightening unease about the future of global trade.

“The Nafta hot air may be as much an excuse to take a step back after Wall Street’s surge yesterday, as it is a legitimate concern about the president not appreciating nuances of inter-dependence embedded in trade deals,” said Vishnu Varathan, head of economics and strategy at Mizuho Bank Ltd. in Singapore. “The ‘she loves me, she loves me not’ thought process could lead to on-off markets.”

Continue reading HERE.

What you need to know about the sugar industry

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History tells us of many accounts of how civilizations flourished through the introduction and development of resources that not only improved humanity’s way of life, transformed small towns to progressive cities, but also connected continents and cultures across the globe. One of these significant activities is the free exchange of goods and commodities in the form of trading.

Sugar is one perfect example of a valued commodity that has been present for many millennia and it has since travelled around the globe from its birthplace in Asia and Africa to its new homes in the Western worlds – but what made this particular product special?

Aside from human’s natural appetite for sweet food and drinks as well as its fermentation and preservation properties, there are many reasons why it survived the test of time and why it runs one of the most in-demand industries today.

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The United States holds the record for one of the largest sugar consumers and producers in the world and because of this, the sugar industry enjoys trade protection since 1789. Furthermore, through this trade deal, the US Congress enacted the very first tariff against sugar produced from other countries.

The U.S. government have also helped provide not only trade support but also protection for the domestic sugar industry through the so-called “Farm Bill” in 1990 – and this facilitated the establishment of the structure for the current U.S. sugar program.

The new sugar policies mandates several guidelines: One, under the U.S. sugar policy based on the 2008 Farm Bill, companies producing more sugar than their allotment permits (85%) will be forbidden to sell it and instead store the excess at their own expense. Under the same bill and related policies set by the U.S., the amount of sugar specifically allocated for import under Tariff-Rate Quotas must meet the country’s obligation of 22,000 tons of refined sugar and 1,117,195 tons of raw sugar set by the World Trade Organization.

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Globally, Brazil leads the world as the top sugar producer. For marketing year 2017/18, production reached 180 million tons, with Brazil, China, the European Union, India, and Thailand dominating the market. Sugar is among the world’s most traded agricultural commodities, along with coffee, grains, cocoa, and cotton. Hence, it is also an important part of most investors’ portfolio, whether in sugar company stocks or through sugar futures.

REPOST: China economy to grow 6.6 percent in 2017, topping government target despite policy curbs: Reuters poll

Of all major economies, China remains to be the most resilient. The GDP for 2017 is expected to grow robustly in spite of tighter financial conditions. The full story on Reuters:


FILE PHOTO: A Chinese national flag is seen at a port in Beihai, Guangxi province, China June 17, 2017.

China’s economic growth is expected to top the government target to reach 6.6 percent in 2017, tempering initial worries of a sharper slowdown as Beijing walks a policy tightrope with its quest to crackdown on financial risks and limit damage to the economy.

An upturn in global demand for Chinese goods could cushion the impact on growth from curbs on property and debt risks, which have seen a modest tightening in monetary conditions, economists said.

The government has targeted annual growth of around 6.5 percent this year, down from the 6.7 percent pace clocked in 2016 – the slowest in 26 years – as authorities stepped up their campaign to wean the economy off its reliance on years of cheap credit.

Growth in the world’s second-biggest economy is projected to continue cooling to 6.3 percent in 2018, the Reuters poll of 65 economists showed.

The forecasts for this year and in 2018 were both more optimistic than the polling results three months prior, as a slew of official data in recent months eased worries about a sharper downturn in China’s economy.

“We raised our forecast because the economy has fared much better than expected in the first half of the year,” said Betty Wang, a Hong-Kong based senior economist with ANZ Research.

China’s economy grew a surprisingly solid 6.9 percent in the first quarter, buoyed by a gravity-defying property boom and higher government infrastructure spending which helped boost industrial output by the most in over two years.

However, the impact of a cooling property sector on economic growth is starting to show up, as fixed asset investment growth in May slowed more than expected.


Tightening Regulations

The Chinese government has sought to tame soaring property prices by slapping a flurry of restrictive measures, stoking fears of a market collapse as real estate is a major contributor to economic growth.

A regulatory crackdown on unscrupulous lending and a modest shift to tighter monetary condition have fueled funding costs, as authorities seek to contain a dangerous build-up in debt that has ballooned to 277 percent of gross domestic product.

Yet, policymakers have been treading captiously in tapping the brakes ahead of a key party meeting in the autumn at which there will be a change in the top leadership.

The People’s Bank of China (PBOC) held back from matching a U.S. interest rate hike in June despite capital outflow pressures, and has injected liquidity into the market to avoid a credit crunch.

While growth in the second quarter is expected to have eased slightly according to the poll, solid exports in recent months have helped the economy weather tighter financial conditions.

Data on Thursday showed China’s exports rose a stronger-than-expected 11.3 percent in June from a year earlier.

“There are actually overshooting risks in the second half even as growth is set to be slower,” said ANZ’s Wang.

On a quarterly basis, China’s economy is expected to slow to 6.8 percent growth in the second quarter, 6.6 percent in the third and 6.5 percent in fourth quarter, the poll showed.

Still, analysts remain cautious about the longer-term economic prospects of the Asian giant. Property curbs and higher borrowing costs could gain more traction over the coming quarters.

“You don’t feel the pain initially,” said Julian Evans-Pritchard, China economist at Capital Economics.

“Companies can make do with less credit for now, but then lending starts to slow, as monetary conditions are still tighter, and that will eventually start to hurt,” he said, adding that the transmission time could take up to nine months.

Analysts believe the PBOC will keep benchmark lending rates unchanged at 4.35 percent through at least the fourth quarter of 2018, the Reuters poll showed.

They have pushed back their expectations on a cut in the amount of cash that banks are required hold as reserves, or the reserve requirement ratio (RRR).

The central bank is expected to cut the RRR by 50 basis points (bps) in the first quarter of 2018 to 16.5 percent, versus the April poll’s prediction for the 50 bps cut to be made in the fourth quarter of this year.

Analysts also expect annual inflation to be more muted at 1.8 percent in 2017, down from the actual 2 percent rate in 2016, probably reflecting a drag from low food inflation.

How the middle class is driving a new economic order

History will tell us that any emergence of a stronger middle class and their increased consumption of product and services are signs of a nation’s growth. For instance, the dramatic rise observed in Asian countries like China, India, and Indonesia has brought about the news of an unprecedented economic progress that could, in the long run, promote a corresponding development in both the political and social sectors.

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The Asian economy is set to be the leading trade superpower in the world by 2025. This is because of the expected growth from intra-regional commerce, a boost from its present inter-regional trade.  As a result, the rise of Asia’s middle class will promote the advent of an economic expansion, giving opportunities for both the international and domestic businesses within and outside the region.

For instance, China’s popularity and strength in the world’s market demand won’t just focus on the products they are known for like mobile phones or home appliances. Economists suggest that there will remain a significant demand for other goods and services, all thanks to the growing purchasing power of middles class consumers from the developing world.

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Many believe that the emergence of a growing middle class consumer is a timely response to the declining export demand caused by the global economic crisis. With Asia’s economic contribution shifting towards domestic demand that targets household consumption, it will become less vulnerable to external stocks.

The great news is, the economic benefits that come with it won’t just be limited within Asian countries. In the long run, the imports to the continent’s regions will increase and a corresponding decline in the imbalance in the global trade is expected to promote a more sustainable economic growth around the world.

REPOST: How Asia Is Adapting To The Alternative Finance Revolution

Building capital for a business venture isn’t always easy, especially when such venture will cater to a niche market. In rapidly developing Asia, entrepreneurs have begun seeking non-traditional options to finance their startups, adapting the same trend that made the West the economic powerhouse that it is now. As a result, there is currently an alternative financing revolution happening in the region. Here are more insights from Forbes:


As alternative financial products gather momentum, China’s state-controlled banks are losing share of the nation’s 44.8 trillion yuan in household deposits. The same can be said for many major Asian banks. Photographer: Brent Lewin/Bloomberg

In more ways than one, alternative finance has made borrowing simple, swift and suitable. Over the last few years, alternative finance providers have grown in number and garnered significant acknowledgement and traction from stakeholders such as regulators, venture capitalists, banks, enterprises and investors. They provide financing outside the parameters of traditional lenders, most commonly banks. Breaking it down even further, alternative finance includes domains such as crowdfunding, peer-to-peer financing, and invoice financing.


The rise of alternative lending

The sudden rise of alternative finance can be attributed to two reasons. First, the inability of traditional financial institutions to cater to certain segments of the market which need access to secure financial services. And second, because fintech firms have recognized these gaps, successfully experimented and developed solutions to fix these gaps with minimal red tape. Based on data from The World Bank, more than 200 million micro, small and medium-sized enterprises (MSMEs) in emerging economies lack adequate financing, due to lack of collateral, credit history and business informality.  Until recently, alternative finance platforms have witnessed staggering success and even reached a stage of maturity in the Western markets, particularly in the U.K and U.S.


In recent times even the East has also joined the ranks and given the alternative finance industry a major boost. Countries such as China, Singapore, Hong Kong, and most recently Indonesia, Malaysia, the Philippines, and India have displayed a tremendously positive response to several platforms providing alternative forms of finance to enterprises and individuals. Rightly so, as Asia is home to a population of 4.4 billion and 5 key financial centers of the world. Aside from a considerably large consumer base and a relatively stable political system, most of the Asian economies emerged from the 2008/09 financial crisis in better shape than its western counterparts. The tightening of credit across several banks across the region has played a pivotal role in the growth of alternative finance in these markets.


A special mention must be made of the Asian regulators which are actively encouraging and supporting the growth of alternative finance in their respective countries. Singapore’s regulator has set aside $225 million to develop and support fintech projects locally. It has also eased the rules for financiers to increase the level of unsecured lending. The Monetary Authority of Singapore has even housed an innovation lab called Looking Glass within its building. Hong Kong Monetary Authority has created a system which brings banks, financial technology platforms and the regulator itself to collectively brainstorm and experiment on developing innovative solutions. In the same manner, China has become the largest P2P market regionally thanks to its government which encouraged the growth online finance to cater to the underserved market instead of solely relying on local banks. Japan has taken a step further to collaborate at an international level by partnering with the Financial Conduct Authority to encourage a cooperation between financial technology platforms in Japan and in the U.K to be able to operate in both countries.


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An overview on Double Tax Agreements (DTAs)

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Different nations around the world follow specific taxation laws that must be carefully observed by their citizens; else, they will face legal consequences. Managing and understanding taxes can be challenging enough but imagine if you’re moving to another country. What are the things that you, as a non-citizen, should know when it comes to paying taxes?


More specifically, if an individual decides to move to another country either for work or to start a business, are they required to answer to their home country’s taxman and again pay taxes in the country in which their income or profit was made? Perhaps everyone can agree that this is inequitable and unfair. This is where double tax agreements (DTAs) come in.


Many countries including the United States make bilateral double taxation agreements with each other. In fact, the U.S. cover income tax treaties with an impressive number of foreign nations. This agreement ensures that alien residents and non-citizens either enjoy tax reduction rates or be exempted from U.S. income taxes on specified items of income they gained within the U.S.


Under this agreement, there are instances in which taxes should be paid in the country of residence but will be exempt in the country in which the gain was made. Other cases however require the opposite, and taxpayers can receive a foreign tax credit in the country where they currently reside as a form of compensation and a proof that tax has already been paid. However, this is only possible if an individual legally declares a non-resident status.


It should be noted that U.S. tax treaties include a “saving clause” to prevent individuals from the partner country who are legal citizens or residents of the U.S. from using this agreement to reduce their U.S. tax liabilities.

Facts and figures: Horseracing costs and potential million-dollar profit

For most people, horse racing is an ultimate game of luck—but that’s not entirely true. Anyone in the horseracing business will agree that luck is just a part of the larger equation in balancing risks and returns in this kind of venture.


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So how much does it cost to own and sustain a thoroughbred horse?


An average of $45,000 a year should be spent not only to train but to maintain a racehorse, at least in popular horseracing regions like Southern California. Here’s a quick breakdown:


  • The biggest expense will be in your horse trainer’s daily rate. For instance, experienced trainers have quoted a $95-$120 salary range. This amount will cover vitamins, supplies, feeding and bedding costs, groomers, exercise riders, and pay the necessary taxes depending on which state you live in.


  • On top of your trainer’s day fee, you’ll also have to consider veterinarian bills that can range from two hundred to a thousand dollars. In addition, a healthy horse also needs new shoes put on every four to five weeks and expect a monthly cost of $100-$200.



  • Lastly, horse owners should also take transportation fees into account and shoulder other expenses for licenses, taxes and insurance. All can vary by state


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Racehorse ownership is relatively expensive so the question that needs to be addressed now is: is it all worth it? Well, horseracing success stories are rare but they happen. For instance, the 2017 Kentucky Derby Purse reached an approximately $2M dollars. Normally, a winning horse takes 60% of the purse for a first place, second place is 20%, and the third spot gives you 12%.

REPOST: Value Investing: Why You’re Doing It Wrong

As Warren Buffet puts it, value investing’s central contention is summed up in the maxim, “Price is what you pay. Value is what you get.” Know more by reading this article on Investopedia:

Tuesday, May 9 marks the 123rd birthday of the late Benjamin Graham, who is commonly known as the “father of value investing.” How would he feel if he could survey the value investing landscape today?

He might be pleased to hear that his disciple Warren Buffett, who has hailed Graham’s 1949 book “The Intelligent Investor” as “the best book about investing ever written,” shepherded Berkshire Hathaway Inc. (BRK-A, BRK-B) to a 1,972,595% return from 1964 to 2016 (compared to the S&P 500’s 12,717%).

But Graham would also have plenty of cause for concern: according to a recent paper by U-Wen Kok, Jason Ribando and Richard Sloan, value investing is in a bad way

“Formulaic Value Investing”

In 1934 Graham and David Dodd wrote that thinking about book value – a firm’s net assets – as being the same as intrinsic value is “almost worthless as a practical matter.” To be sure, book value is one of value investors’ favorite metrics; Buffett lists Berkshires’ return in terms of book value (884,319% since 1964) right alongside its share price return. But Kok and her colleagues point out that self-described value investors increasingly content themselves with analyzing a firm’s value using book value alone or in combination with a few other narrow metrics, such as trailing earnings per share (EPS) or expected ones.

Such “formulaic value investing” tends to select firms with inflated fundamentals, the authors find, rather than underpriced shares. Value investing has “taken on a meaning we don’t think Graham and Dodd intended,” Ribando told Investopedia by phone Monday. And people are losing out on potential gains as a result.

Continue reading HERE.