Gini co-efficient explained
TECHNOLOGY Stop this me-too app thought
A lot of what goes into technology investments come up as ‘me-too’ apps. Want to find out what stock to buy? Well, the app store would probably have at least 100 apps with overlapping or similar capabilities in technical analysis, valuations, etc. It is time to stop the trend of getting on the bandwagon or gravy train and start being truly innovative instead of following the crowd. The real money is made in novelty not duplication.
FINANCE Impending bubble?
Banking theories are one thing, banking practice within China, however, is perhaps quite another. The lack of transparency in determining market efficiency of firms that include state-owned enterprises, and the masking of non-performing loans through various tricks of the trade can be quite a scary thought. The fact that McKinsey & Co. suggested that the official figures on non-performing loans in 2015 were closer to about four times what was reported could be a telling sign. A financial domino effect could be in the horizon.
PROPERTY Incessant buying of condominiums
The current property development strategy in building homes in super prime districts of major cities, packaging them neatly into a marketing piece and then selling these packages to the rich is still hot and much desired. After all, it is a nice thought to own a piece in the heart of London, Barcelona, Paris, Kuala Lumpur, Los Angeles, New York… you get the drift. Will there be a point where prices come crashing because of irrational price increases? Much remains to be seen.
CULTURE Adjusting to a Chinese hegemony
Former Australian ambassador to China, Stephen Fitzgerald, hit the nail on the head when he said that “the influence it (China) wielded in its own universe for two thousand years before the Europeans came is unknown… there’s intrinsic worth in understanding Chinese culture for its own value”. The behemoth of a nation has soft power like no other, and it behooves us to prepare ourselves so as not to be poorly equipped to deal with its dominance.
NEW IDEAS Rewarding management
It is nothing but rent-seeking behavior for CEOs to be paid exorbitant amounts of money despite conclusive evidence against the performance-pay argument. Current measures include tying a larger portion of CEO pay to bonuses, but that may only cause them to focus on the short-term while ignoring the long-term effects. Perhaps bonuses should only be paid out across a much longer term than they are right now, with the option for ‘obligatory donations’ to charities and educational causes. Not too bad a thought to instil a giveback culture starting at the apex of the organisation.
SOCIETY An alarming Gini coefficient
The Gini coefficient measures income inequality in a scale of 0 to 1, 1 being the most unequal and possibly very shaky societal foundations. China’s Gini coefficient at the moment nearly stands at the 0.5 mark, which is significantly higher than the OECD average. This is a possible brewing ground for social unrest in an economy once known to experience “reform without losers” all the way to the 1990s. .