When Cameron meets Xi Jingping

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 14^th 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.