Sovereign Wealth Funds: Building intergenerational equity

Image source: institutionalinvestor.com
Image source: institutionalinvestor.com

 

It was in the early 1950s when the Kuwait Investment Authority established the world’s first sovereign wealth fund (SWF) as a way for the Gulf state to diversify its investments, anchored largely by its excess revenues from oil. With its primary role as a practical solution for a nation with a budgetary surplus, it has been later on adapted and created by other resource-rich and export-orientated sovereignties.

SWF is a resource that helps stabilize a country’s economy. In definition, it is a government-owned fund allotted in investing into various financial assets for two main purposes: to gather savings for the country’s future generation, and the diversification of their total income base.  This is a more practical approach in order to take advantage of a nation’s excess money, funneling it into investments than just letting it stay idle in the central bank.

Sovereign wealth funds are classified depending on how they are financed: commodity and non-commodity.  Commodity SWFs are primarily created by revenue surpluses from exporting major commodities such as oil, metallic ores, and diamonds; the latter, meanwhile, is usually funded by an excess of foreign currency reserves from current account surpluses.

Many countries establish SWF and are motivated by different economic and political circumstances. One example is how the United Arab Emirates create a huge part of their funds from their oil exports. Because of this, they need a reliable solution to protect the surplus reserves from oil-based risks and this is where SWF does its work—allowing the country to sustain or even accumulate more profits.

In the age of globalization, SWFs have been proven to contribute in developing assets in need of a substantial capital.  Because of its unique characteristics and its long-term benefits, countries around the world can create a brighter economic future for their citizens and the generations to come.

REPOST: Top 10 Hot Artificial Intelligence (AI) Technologies

In the very near future, AI can already be as ubiquitous as smartphones in many business transactions, operations, and even customer management systems. Here are the 10 hottest artificial intelligence techs that are rapidly shaping up the business world, according to Forbes:

 

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The market for artificial intelligence (AI) technologies is flourishing. Beyond the hype and the heightened media attention, the numerous startups and the internet giants racing to acquire them, there is a significant increase in investment and adoption by enterprises. A Narrative Science survey found last year that 38% of enterprises are already using AI, growing to 62% by 2018. Forrester Research predicted a greater than 300% increase in investment in artificial intelligence in 2017 compared with 2016. IDC estimated that the AI market will grow from $8 billion in 2016 to more than $47 billion in 2020.

 

Coined in 1955 to describe a new computer science sub-discipline, “Artificial Intelligence” today includes a variety of technologies and tools, some time-tested, others relatively new. To help make sense of what’s hot and what’s not, Forrester just published a TechRadar report on Artificial Intelligence (for application development professionals), a detailed analysis of 13 technologies enterprises should consider adopting to support human decision-making.

 

Based on Forrester’s analysis, here’s my list of the 10 hottest AI technologies:

 

  1. Natural Language Generation: Producing text from computer data. Currently used in customer service, report generation, and summarizing business intelligence insights. Sample vendors: Attivio, Automated Insights, Cambridge Semantics, Digital Reasoning, Lucidworks, Narrative Science, SAS, Yseop.
  2. Speech Recognition: Transcribe and transform human speech into format useful for computer applications. Currently used in interactive voice response systems and mobile applications. Sample vendors: NICE, Nuance Communications, OpenText, Verint Systems.
  3. Virtual Agents: “The current darling of the media,” says Forrester (I believe they refer to my evolving relationships with Alexa), from simple chatbots to advanced systems that can network with humans. Currently used in customer service and support and as a smart home manager. Sample vendors: Amazon, Apple, Artificial Solutions, Assist AI, Creative Virtual, Google, IBM, IPsoft, Microsoft, Satisfi.
  4. Machine Learning Platforms: Providing algorithms, APIs, development and training toolkits, data, as well as computing power to design, train, and deploy models into applications, processes, and other machines. Currently used in a wide range of enterprise applications, mostly `involving prediction or classification. Sample vendors: Amazon, Fractal Analytics, Google, H2O.ai, Microsoft, SAS, Skytree.
  5. AI-optimized Hardware: Graphics processing units (GPU) and appliances specifically designed and architected to efficiently run AI-oriented computational jobs. Currently primarily making a difference in deep learning applications. Sample vendors: Alluviate, Cray, Google, IBM, Intel, Nvidia.

 

Read the full article on this PAGE.

Building blocks of growth: Cities with the best infrastructure

Mercer, a global consulting firm, annually carries out a survey to help them rank the quality of living of various cities around the world. And this year, in the 19th Quality of Living Ranking, city infrastructure gets its own ranking, as Mercer believes that multinationals pay close attention to this when establishing overseas offices and sending workers abroad.

 

The survey considers the following aspects in ranking each city: traffic congestion, public transportation, the range of international flights available from local airports, telephone and mail services, electricity supply, and access to clean water.

 

Image source: The New York Times
Image source: The New York Times

 

Overall, coming in first place, and the only Asian country in the top five, is Singapore. In fact, Singapore has done so well in infrastructure that the World Bank has decided to create an Infrastructure and Urban Development Hub in its Singapore branch. Citing Kyle Peters, World Bank Senior Vice President for Operations,

 

“This agreement with Singapore to create the World Bank Group’s first global Infrastructure and Urban Development Hub is built on our mutual belief that sustainable infrastructure and urban development are critical to fostering economic growth, improving the quality of life of the poor and building opportunities for more equitable prosperity.”

 

And despite political and financial turmoil in Europe, the succeeding four ranks have an overwhelming majority of European cities with Germany’s Frankfurt and Munich both tied in second place. After all, both cities are known for their transit and airports, with Frankfurt known for having the “largest airport in continental Europe and the second-largest European train station” and Munich for having a vast system of metros, both above an underground.

 

Image source: metroeasy.com
Image source: metroeasy.com

 

Copenhagen, Denmark, bagged the fourth place. While the most popular mode of transportation here is the bicycle, Copenhagen also has a huge network of public transportation. Dusseldorf in Germany rounds up the top five.

 

In almost every case, quality infrastructure is the most important consideration when measuring a city’s capability to provide high living standards for its citizens, attract foreign investment, improve business operations, and display a positive overall reputation. Infrastructure is most especially critical for investors who want to make sure that they are pouring their assets in a globally competitive and vastly sustainable city.

Fundamentals: The mechanisms of the futures market

In the capital market, a trader has several options and investing opportunities in which he can foray into, depending which ones suit his needs, goals, risk profile, and personal preferences best. One of these is the futures market. Basically, buyers and sellers create and finalize agreements by entering into futures contracts. It is stated within the contract how much goods will be paid for and its date of delivery.  As The Balance defines it, a future contract is “an agreement between a buyer and seller of the contract that some asset—such as a commodity, currency or index—will be bought or sold for a specific price and quantity, on a specific day, in the future (expiration date).”

 

Futures-Contract

Image source: marketbusinessnews.com

 

As an example, let’s consider Ben and Marcus. Ben is a fisherman while Marcus is a fish vendor. They have entered into a contract wherein Ben has to sell Marcus 100 tunas at $1 per head for the next fishing season. Ben is trying to secure a future selling price, while Marcus on the other hand is trying to establish a fixed buying price. If the price of tuna increases to $2 the next day, then Marcus would have profited since the buying price is already fixed. Ben on the other hand would have incurred a loss since he can’t sell his products at the adjusted market price. These fluctuations are then calculated and monitored daily until an agreed upon date. If the next fishing season arrives and the price of the commodities hasn’t changed, then Ben would have lost $100 while Marcus would have made $100.

 

Futures-Contract2

Image source: entrepreneur.com

 

One economic importance of the futures market is price discovery. Because of its highly competitive nature, it becomes an important factor in determining the prices based on the present and future estimated supply and demand. It is also important in reducing risks when making purchases since the buying price can’t be changed even if the market price has increased (or decreased) significantly. Prices are fixed however the market moves.

 

To know more about futures contracts, trading, or the investment industry in general, consult with any of LOM Financial’s investment advisors.

REPOST: Hong Kong’s Bermuda Bent

Companies domiciled in the Cayman Islands and Bermuda make up nearly half the market capitalization of the Hang Seng index. Here’s a comprehensive report on Hong Kong’s offshore companies from Bloomberg:

As this week’s release of the Panama Papers has shown, most investors like to keep their links to offshore financial centers on the QT. Not so in Hong Kong.

Take a look, for instance, at the front page of the latest annual report from one constituent of the Hang Seng Index, a noodle maker that Chinese consumers know by the cuddly name of Master Kong:

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The name helps remind local investors nervous of Beijing that while Tingyi’s main offices are in Shanghai, its legal base is an island 90 minutes’ flight from Miami whose governor is appointed by the Queen of England.That attitude isn’t unique among the city’s businesses. About 45 percent of the market capitalization of the Hang Seng Index consists of companies whose registered offices are in the Cayman Islands or Bermuda — including its largest constituent by weighting, Tencent, and all the main firms in Li Ka-Shing’s Cheung Kong empire.

 

Bermuda Option

Companies domiciled in the Cayman Islands and Bermuda make up nearly half the market capitalization of the Hang Seng index.

Hong Kong Bermuda

As the past week’s revelations have demonstrated, Hong Kong’s companies are far from alone in carrying out this sort of global regulatory arbitrage.Wolseley, the world’s biggest supplier of plumbing parts, was founded in Australia, earns most of its revenue in the U.S., is listed on the London Stock Exchange, is domiciled in Jersey, and pays its taxes in Switzerland. Pfizer is said to be terminating its $160 billion merger with Allergan after U.S. officials proposed new rules that would make it harder for the group to benefit from low Irish tax rates.

 

Continue reading HERE.

Wallet in the cloud: The rise of the Bitcoin cryptocurrency

The United States has the dollar, Japan has the yen, while the Internet has Bitcoin. It is a computer program that acts as a unit of account or payment system that only exists in the digital world. Therefore, it is not minted from metal or printed on paper, which is always the case for real currencies. Its monetary value is completely virtual.

 

Bitcoin is the very first example of a growing trend known as cryptocurrency. During its infancy (c. 2008), there were a lot of negative speculations about it, including its authenticity as an acceptable monetary unit. However, nearly a decade since its creation, it has become a popular way to ‘buy’ goods or services. In fact, for the first time since its birth, the value of 1 Bitcoin has already eclipsed that of an ounce of gold.

 

Coin 1

Image source: coindesk.com

 

Bitcoins are basically ‘rewards,’ derived mainly by winning in a competition in which users—also known as miners—offer their computing power to verify business deals into the blockchain, which is a ledger or database that record all bitcoin transactions. As of February 2015, bitcoin is accepted as a payment method by over 100,000 merchants and vendors worldwide.

 

Early this month, the Internet currency was able to gain 3 percent, while the precious metal fell down by 1.3 percent. Looking at the progress data of both assets from a year ago, Bitcoin was able to nearly triple its value, while gold practically stayed at the same level. Both of them are alternative assets, though it is important to note that they aren’t usually traded in correlation.

 

Coin 2

Image source: bitcoin.org

 

Gold is practically the “gold” standard of all alternative assets. Investors usually use it as a hedge against potential losses from traditional assets such as stocks or real estate. That is why Bitcoin overtaking the valuable metal is notable since some predicted that the former would replace the latter as the preferred alternative asset. One can only speculate as to what could happen if ever the SEC approves of its listing.

 

Despite its remarkable rise in recent years, bitcoin is yet to truly prove itself as a viable and safe asset to be used in numerous transactions or even as a good addition to one’s investment portfolio. It cannot also be commoditized, unlike precious metals or crude oil. As such, bitcoin prices will tremendously suffer if the SEC does not approve a bitcoin ETF. Serious investors and investment managers will have to make extensive research before they can consider the virtual asset as something they could venture in.

Expatriates and their investment portfolio: Adding mutual funds into the mix

Investing in a variety of assets and securities, such as stocks and bonds, need not be complex and excruciating. For international investors, most especially, there are unlimited opportunities to grow their wealth base. The advent of Big Data and cloud technology has made investing in key markets around the world even more plausible and easier. Regardless of where you are in the world, you can always have the chance to tap into emerging financial powerhouses and safely diversify your portfolio with utmost security, confidence, and convenience.

mutual fund etf investing

Image source: thestar.com

Pooled funds, such as mutual funds, are among the easiest investment machines to own. In this type of investment, clients ‘pool’ their money together to form a large capital. This fund is then managed by an experienced, fully licensed professional manager who will do all the work (market monitoring, choosing which stocks to buy, etc.) on behalf of the investors in exchange of a small management fee. Mutual funds can be composed of pure stocks (equities), fixed income assets (bonds), or a combination of both (balanced).

Professional Management
Mutual funds do not require investors to have extensive market knowledge as they can delegate the specific investment decisions to a portfolio manager or a team of managers. Investors are provided with the services of an experienced professional who work with top-notch research firms, industry experts, and economic analysts to come up with the most prudent and sound financial decisions commensurate to the fund’s objectives.

Diversification
Mutual funds help mitigate risks by automatically distributing investors’ money across a wide range of assets, industries, and companies. In investing, diversification is one of the fundamental principles necessary to maximize returns and avoid significant losses. The adage “do not put all eggs in one basket,’ applies accurately on this type of fund. It also allows for a more cost-effective strategy than directly owning individual stocks or bonds.

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Image source: benzinga.com

Innovative infrastructure
Excellent online technology infrastructure, such as that of LOM Financial Management Services, is critical to making these transactions seamless and meaningful. IT systems and networking structure used by most mutual fund companies are state-of-the-art, secure, and easily navigable.

Convenience and Liquidity
Buying a mutual fund can be as easy as setting up a savings account from the bank. Cost-efficient and time-saving, it is an ideal investment option for those who lack the time to comprehensively study and monitor the market. Initial investments are relatively low while additional capital will entirely depend on how much the investor would want to deposit. They can also buy or sell their shares anytime they want. Best of all, investors are free to pursue their personal dreams and career aspirations while their money work hard for them.

For more information about mutual funds and how you can invest in them, follow this LINK.

Should you make an offshore investment?

Offshore investments means having to deposit you money in a foreign country. These investments offer a higher return rate compared to the local banks. The interest rate is usually about 8% but they require specific capital and you also have to pay some small fee.

These investments do allow for transfer of the asset’s ownership especially for those people who worry of confiscation of their assets. One can choose to change the ownership to other foreign entity, as long as it’s legal, through foundations and trusts.

Offshore investments officials will never reveal your financial details in the country. If this happens then the client has a legal reason to sue the official since most investors will not like to have their details, stocks they are buying, be made public.

These investments will offer you the freedom to make choices. They allow investors to diversify hence spreading the risks widely possible since just like any other investments offshore can go up or down.

Anybody who has the required capital can make an international investment thus protect their assets from certain liabilities that they would have experienced at home, debts and obligations.

People from some countries have a certain limited number of opportunities to make such international investments. These investments will require you to have enough capital to start as the minimum required amount can be around a hundred thousand dollars and will have such fee as corporation registration and a legal fee.

Average income earners can form a company that will make the offshore investment or get into a company to have investments that are in special funds. Trading companies that are involved in such activities as imports and exports can make offshore accounts. Other companies which can do so include; professional service providers like designers and engineers, shipping companies, intellectual property companies, asset protection companies, employment companies, holding companies and investment companies.

More info at these links from lom:

lom/mutual-funds

lom/investment-brokerage-services

These investments are safe and one should not be worried it is very important for you to get an investment firm who will make the necessary arrangements for your offshore investment process.

More info at this video:

Investing In Stocks – How To Invest In Stocks Wisely

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Before you get too excited, you have to consider first what you are getting into before you enter into the world of stock investment. Like for instance, you have to study first what stocks you will invest, how much you are willing to invest, and many other things you have to consider.

If you are new into investing, you have to study first everything – do some thorough research and talk to some investors – even in this way, you can already have a little knowledge of everything. Don’t involve yourself in something you don’t know, you might just be wasting money.

Investing in stocks needs not only time and money but also skills. People invest in stocks because they benefit from the company’s remarkable value potential. When you purchase a stock, you already become part of that corporation.

Stock investment provides great profits in return than any other investments. Investing in stocks also needs to be wisely and monitored thoroughly the same as any other investments. You need to track the record of stock market to reduce the risk of losing your investments.

Below are some ways on how to invest in stocks wisely:

  • Angel-Investing-82963_577x280If you are just a beginner in the field of investments, you have the need to consider how interested you are and how much time can you give for the said investments. It requires careful judgments as you have to distinguish a money making investments or just a financial disaster one. You have to know the risks in investing, how and what will they do of your money and most importantly if you have potential profits in it.
  • Take time or several months to invest all your money. Do not buy all at once, but invest your money one by one. This will help to minimize the risk in market timing.
  • Do not just focus on one type of asset. Do not put all your money in a single company for it may have a negative impact when the company you’re trying to invest will decline. It is much better if you diversified into other sectors and spread your investments in different categories.
  • As your investment grows, it is best if you keep adding in your investment. So, instead of investing only once a year why not try to double your investments. You might just be surprised of how much money you can make in a year. In this way you can increase your funds and you can already retire early with huge profits in your pocket.

Careful planning is a key to successful investments. Do not jump immediately to any stocks that are in demand in the market, take time in thinking what you really want to do in your money. After all it is yours and you should know how to handle and what to do with it. Always make sure that when you enter into stock investments; you are already financially and emotionally ready, because this would be your weakness or hindrance to reach success. Our partners, Idhammar cmms are notorious for understanding that.

Investing is not just all about saving or putting your money to work, it also requires technique and strategy before you get to reach your desired success in terms of money, especially in stock market where rate is inconsistent. Which means you will not be able to guarantee yourself that you are going to gain more money from just investing to any kind establishment or brands, because this is the real world of business. All is inconsistent but using your wise decisions, you will be able to reach what you desire in not time.