Day: June 10, 2020

Blockchains and a Fourth Industrial Revolution

On By RistrettzIn Macroeconomic, Personal Finance SeriesLeave a comment

We hear a lot about FinTech funding and block chain technology. Along with Bitcoin, Ethereum or even new funding coins as an alternative way implemented into bank payment systems over the last 3 to 4 years. This is ruling the world today.

It is rather difficult to bring across this concept and idea as it works better in demonstration as compared to talk about it.

What is FinTech?

It is mainly disruptive technology that has the capabilities to replace financial services. It can be in the form of cheaper way or a more convenient way. At the same time, it will proof to be more efficient and safer too.

Just to get yourselves interested on the concept of block chains, do watch this quick video: BLOCKCHAINS

I really like to see, read and hear about Bitcoins in which they are a small subset of the bigger ecosystem and this is a good introduction to start with: BITCOIN

Such block chains systems should be a secure channel as a third party using bitcoin as part of the transaction which in turn can be redeemed back into the real currency thus creating a market and a natural one in doing so.

The World Economic Forum 2016 early this year in Davos discussed deeply into the trends and how the world is moving into. In summary, it could possibly be the fourth industrial revolution.

Revolutions are a result of significant changes that destabilizes and question the status quo. Eventually, it pushes change through over time.  The first revolution might bring about a new form of problems coming many centuries into the future. (Such as air pollution, breaking the ecosystems, genetics and food production techniques just to name a few)

Source: WEF

Changes

Significant changes brings about many issues such as loss of jobs/income. The non-necessary skills required previously and to reduce amount of time and effort required to get things done. Eventually, new skills and new jobs will eventually be created thus it is important to stay relevant. The loyalty that one pledge to the company are no longer viable. Companies are also faced with the same task of returning ROI on every dollar of shareholders’ money and that in my opinion is vested interests.

a. IOT – Internet of Things

The big subset of block chains in my view is Big Data. That is IOT, Internet of Things combined. With many many different concepts to build a computer server that can maintain and sustain all of this. Many of us know this and that is Cloud computing. In time to come, Superhuman computers may be developed into cybersecurity into a whole new level. (e.g. AI, Artificial Intelligence)

I would believe that Amazon and IBM resources would have the capabilities to bank on such new technology. I do see a lot of the practicality developing into China. A lot of these are going on aggressively but the level of secrecy and confidentiality still plays such a big role as a former communist country. My guess is that China will bring blockchains to a whole new level all together and that would be a footprint into the new world technology.

b. Alternative Financial Solutions

Financial Institutions are not tapping greatly on FinTech to date. Take a look at Nokia today. Sometimes it makes us think about embracing change before it is too late. The Financial services are also part of a new form of Robo-Advisors. This is another form of artificial intelligence. From here on, related services are going to be transformed into a new level all together.

The change is here and FinTech and Bitcoins are also an alternative way of investing. That would add on to the list of asset allocation in the previous posts. There are plenty of alternative asset classes. Don’t fall prey to unreal ones so always do your DUE DILIGENCE (DD).

Only Steve Jobs believed in the future of smart phones and tablets before it came here today.

“If at first, the idea is not absurd, then there is no hope for it.” – Albert Einstein

The Dynamic World and our Struggles

On By RistrettzIn MacroeconomicLeave a comment

This can be a bit deep to ponder but with the global pandemic situation, this fourth industrial revolution is probably already in progress.

Macroeconomics

One of the most interesting Macro aspect of the world today and what lies in it for the future on the fourth industrial revolution. This is something that caught my attention as well as made me ponder for a long while then it started to interests me and on a wider perspective, country and globally that is, a topic that is known to all, unknown to many. Why is that so? We probably look to trends in the world today and we know the problems and issues we face while having no answers to all of this at all.

The first 3 industrial revolution talked about the importance and worries of the Labour force as a concept.


1. The first revolution: 1784 invention of the mechanical production and steam power energy.
2. The second revolution: 1870 the invention of mass production and electrical energy
3. The third revolution: 1969 the invention of electronics and IT
4. The fourth revolution: Today? Artificial Intelligence and Big Data? Or something else?


What do they have in common?

That is Automation and Connectivity as proclaimed by Nicholas Davis, the world economic forum Head of Society and Innovation.

Perhaps there should even be a 5th point. The Covid-19 pandemic that digitalise businesses that were putting these options off because of other priorities. Unemployment and redundancy will accelerate and bring about a whole new different way in which we are about to work or to say work from home. These cause and effects, resulting in commercial and office rents demand dropping will lead to other dominos.

Firstly


The first and utmost reaction to structural change is always a fear for job security. Similar to the 1970s, the fear for replacement by computers over current fear over replacement by robots is nothing new but in vary in existence in various forms. Certain Jobs will be lost and many others will also be created so a successful economy is likely to match 4 criteria:


1. Labour market flexibility

2. High skills in the attribute of flexible skills

3. Flexible infrastructure

4. A robust Legal system


The Labour market is one that empowers a lot to substitutes for every country. Whether a particular job results in an inefficiency towards the introduction of technology or a job preservation at the expense of currently inefficiency level, that may ultimately result in the non-existent of jobs in the later part of the revolution which have been the key issues into the third revolution.

Secondly


Skills factor is an subjective matter. In short, a more skilled worker will thrive and eventually earn more in income than a less skilled worker but that being said does not work all the time in all aspects and in all economies. Teaching, self-learning and flexibility to adapt to work trends is crucial to an every evolving revolution of technology.

Thirdly


An industrial revolution is about changing economics structures. Many of these capital intensive infrastructure has been built, developed and enhanced over the longer term and some of these may deemed obsolete. Brick and mortar shops have been significantly reduced since the introduction of internet which pave ways towards e-commerce which is currently a partial result of a complementary support of smart technology, digital connectivity and a more than efficient network.

Fourth


As the economy moves towards a more virtual world, “trade” is likely to become in the form of intellectual property rather than a physical product. Legal protection and legal issues will be the main source of contact point to protect, secure and patent a particular idea or product in order to obtain exclusivity over a virtual world in that sense.


Another point to note would be the power of brand, a quality assurance towards a particular brand that could come in the form of a service/quality or even assurance may be able to enhance the brand power. The opposite also holds for brands that faces competition, margins and quality control or even a layered middle-man system can be greatly reduced in the face of the revolution.


Very likely, we would be very used to seeing powerhouses or Goliath as we know. There will also be another group who have the resources to the revoluionise. This provides a transition phase of moving into a new economy or as we know it, new world. Developed nations, emerging markets look likely to benefit from such a drastic change and the next generation of technology and age will be something different from the hard working baby boomers.


Who benefits from the industrial revolution?  

Like many other things we do in life, It’s never a one size fits all concept. We have to keep on learning because that is the way to stay relevant. Do not stop to innovate and make the necessary changes. Shit happens but being uncomfortable makes us regularly improve and be creative. Imagine a situation when we sit and wait for things to happen, more often things doesn’t happen. Similar to a kind deed, the small acts of kindness usually leads a long way. We never know what might be in store for us.


So I say, keep the faith and keep on thriving in uncomfortable and uneasy situations. Sometimes, it is the comfort that stops us from moving forward.

A, B, H shares? Types of China shares

On By RistrettzIn Personal Finance SeriesLeave a comment

China Shares

Ever wondered what kind of investments are there available in the China and Hong Kong Stock Exchanges? Well, you could simply goggle them and you will probably find the answers but ask yourself again in 2 months time and most likely you will be doing the same again without putting it right in your memory block. Unless, you have an interest for China equity market that story might be different but if you are in it for the quick kill then it probably doesn’t really matter much from this post down.

A shares

Securities in China market refers to stocks that trade on the Shanghai and Shenzhen exchanges.

B shares

Similarly, B shares are the same as A shares but their shares trade in USD. These stocks, known as “B shares”, and most likely used to raise capital overseas. B shares also allowed foreign investors to invest in the market without the restrictions.

H shares

Securities trade on the Hang Seng Index rather than on the mainland China and they are priced in HKD

Red chips

State-owned Chinese companies incorporated outside the mainland China and traded in Hong Kong.

P chips

Nonstate-owned Chinese companies incorporated outside the mainland China and most often in certain foreign jurisdictions and traded in Hong Kong.

N shares

Chinese companies incorporated outside the mainland, most often in certain foreign jurisdictions, and U.S.-listed on the NYSE or Nasdaq (ADRs of H-shares or P-chips)