When Cameron meets Xi Jingping
Cameron and the Royal Family definitely treated the
leader of 1.3 billion people well. Xi
Jingping, China’s President, visited UK and made friends with the Queen and
princes. It was only 1997 when China got
Hong Kong back from UK and China has grown to the second largest economy in the
world since. Chinese students are flooding
into UK Universities and their parents are buying UK properties without paying
a visit to the local pub. We have seen
hot money from Middle East and Russia and the Chinese is the similar. But the base number of 1.3 billion people
makes everything so much larger. UK,
being the most business friendly country in Europe, is in a good place to capture
the China growth story. Europe wants to
export to China and China wants to invest into Europe. One of the big picture topics is the globalization
of Renminbi, the Chinese Yuan. London
wants to continue its success as a global currency trading center and Cameron
has done a good job to secure UK a front row seat in Renminbi globalization. Mr Osborne’s northern powerhouse project is hoping
China will put some money to revive the Industrial North. Education, tourism, healthcare, design and
technology, fashion are some of the sectors where UK has good chance to attract
Chinese investors.
US election is getting interesting and people start
to think it could be Hillary Clinton versus Donald Trump. Donald Trump has brought his television
personality to the election and his appearance is almost entertaining. It is hard to imagine how global leaders view
Mr Trump’s “Apprentice” style. The lucky
thing is that the next US President is likely to enjoy US being the super power
by far in the next decade. Europe is
barely keeping Eurozone together. Russia
is cripple and depending too much on its oil export. Japan will continue to lean towards US rather
than China. China will grow in a much
lower pace in the next decade than the past decade. The gap between US and China may actually
widen due to the lead US has in science and technology. In 10 year time, it may not be Microsoft or
Google that lead the pack, but likely to still be a few US companies leading
the industrial revolution.
If you talk to a teenager, there is a fair chance
that he or she finds IBM a rather unknown brand. Although IBM probably has every Fortune 500 company
as clients, there is a fair chance it would be a much smaller company in 10
years than today. For a 104 years old
company that reports lower quarterly revenue for 14th straight
quarter, investors have the right to be skeptical. IBM share price closed at USD 144.71 on 23
October, 2015. It is at a low range if
one looks at its USD 140 to 215 trading range in the past 5 years. Dividend yield at 3.6%, 12.7 times Price to Earnings
Ratio. Microsoft on the other hand is at
its highest share price since 2000 as the stock was up 10% on 23 October to
close at USD 52.87. 2.72% dividend yield
35.7 times Price to Earnings Ratio. IBM
is trying hard to transform to services, platform and cloud but new leaders
like Google and Amazon are also in this space.
Old guards like SAP and Oracle are defending their territory as
well. While IBM is getting out of
hardware, Microsoft is moving into hardware like notebook, tablets and
phones. Windows is probably the only
meaningful candidate to squeeze into the mobile operating system arena that
Apple IOS and Andriod occupy. Microsoft
has subtly following Apple business model and their Surface Book and Surface
Pro are competing against MacBook and iPad.
And Microsoft Xbox has all the additive gamers hooked already. Imagine you have an Xbox in your mobile. It will be like iTunes driving consumers to
buy iPhone.
According to a research carried out by network
experts Ericsson, it estimates there are 2.6 billion smartphone users in the
world in 2014 and growing to 6.1 billion by 2020. Looking at the number of people staring at
their phones in the tube or even in restaurants, we know human has just
mutated. However, what more do we need
from the phones which is already dominating our lives. There are already too many apps for
everything one could dream of. The
iPhone6 Plus or Samsung Note 5 is already more powerful than most PCs in the
office. The phones already justify more “face
time” than your loved ones. It is time
to think how many more dollars can iPhone, Note or Galaxy can get from
you. Perhaps the next Uber can give you the
next Nokia smartphone for free as long as you promise to use their services 4
times a month. Apple share price has
gone from USD 40 to USD 120 in 5 years.
It could be the next IBM in this fast changing world.
