1 Internet giants shine in data-driven economy (Goh
Eng Yeow in Straits Times) Like US tech giants Alphabet and Facebook, China’s Tencent
has been enjoying a sharp run-up this year. One common trait shared by all
these firms is their ability to deploy far fewer assets and human resources
than the traditional bricks-and-mortar companies to expand their businesses
once they have achieved a certain scale in their operations.
What is interesting to note is that at the recent
shareholder meeting of Berkshire Hathaway, its boss Warren Buffett bemoaned the
fact that he failed to spot these winners early on and invest in them. Mr
Buffett has remained true to his lifelong philosophy of investing only in what
he can understand, but admitted that he should have understood Google.
One reason to want to buy these tech firms, based on
Mr Buffett's investment philosophy, is the sustainable moat they have created
for themselves to enable them to scale up their business without requiring huge
amounts of capital. But the more important reason to want to get our hands on
them is the fabulous treasure trove of consumer information they have built up
on shopping, eating, travelling and wealth.
The Economist magazine recently described data as
the most valuable commodity in the economy we live in, giving enormous power to
the companies with access to it. By collecting more and more data, a firm has
more scope to improve its products and attract more users which, in turn,
generates even more data.
The Economist notes that this gives them a ‘God-eye
view’ over their markets and beyond. "They can see when a new product or
service gains traction, allowing them to copy it or simply buy the upstart
before it becomes too great a threat," it said. This helps explain why
Facebook was willing to fork out such a big sum - $22 billion - to buy the
messaging service WhatsApp in 2014 even though it had no revenue to speak of.
The success of upstarts like Snapchat suggests new
entrants can still make waves, despite the dominance of Facebook in social
media networking. Even Apple's late boss, Mr Steve Jobs, might not have grasped
the enormity of the changes which he had unleashed.
With a market value of over $460 billion, Tencent founded
by Pony Ma is now worth almost half as much as all the companies listed on the
Singapore Exchange, even though it has been listed for only 13 years.
2 Arabs struggle to get local talent (Francis
Matthew in Gulf News) Arab countries all lag behind their peers around the
world in getting the talents of their people into the work force. Three major
reasons are the dominance of the public sector, the short comings of the private
sector and a state-centred paradigm of development that has relied on oil
revenue, foreign aid or remittances.
According to the third annual edition of the Mena
Talent Competitiveness Index by INSEAD and the Centre for Economic Growth, the
UAE was the top Arab state in the Competitiveness Index, and the UAE came 19th
in the global survey of 118 states. Qatar was the second Arab state and was
21st in the global survey. These two states were well above the rest of the
Arab states, with Saudi Arabia third (42nd in the global survey), Bahrain,
Kuwait, Jordan and Oman following in that order.
The UAE scored very well in the ability to enable,
attract and retain talent in which measures it was ranked well into the top 20
in the world, but it suffered from much lower rankings in its ability to grow
talent, in which it was 40th in the world. An INSEAD commentator said this indicates
a deep problem of a structural dependency on imported skills, which is
inhibiting the country’s ability to grow its own skills base.
3 For Church of England, a 17% ROI (Simon Goodley in
The Guardian) The case for profitable ethical investing has been bolstered by
the Church Commissioners for England, as the fund announced divine returns on
its financial portfolio for 2016.
The body, which manages investable assets worth
£7.9bn in order to “support the Church of England as a Christian presence in
every community”, said it had smashed targets by making a 17.1% return on
investments during 2016 – figures which will be the envy of many high-profile
figures in the fund-management industry.
The church’s fund’s outperformance over the past
decade has slightly outpaced even the Yale Endowment fund, which is rated by
the Financial Times (paywall) as the most admired in the sector. The Church
Commissioners, whose target is making a return of inflation plus five
percentage points, said it had been partly aided in 2016 by sterling’s weakness
after the Brexit vote, with the fall in the value of the pound accounting for
about half the gains made on its equity portfolio.
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