World Cup 2014 … Asian telcos & cable operators … between a Rock & a Hard Place

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Asian telecommunication companies (telcos) have long enjoyed oligopolistic hold in their respective markets in the past 2 decades when Asians found their love with mobile phones, internet broadband & cable TV. From the normalised (adjusted to USD) chart above (encompassing Singapore, Malaysia & Hong Kong telcos & cable operators), since the 2008 financial crisis, they have managed to performed very well indeed given their phenomenally stable earnings & relatively high dividend yields averaging 2.5 – 5% in general.

However, all good things must come to an end, sometimes it is some disruptive technological change or advance that renders certain businesses and processes obsolete. We have seen that with the steam locomotive, polaroid instant snaps, Xerox copiers, pagers, … the list goes on.  The roll-out of 3G-4G networks and fast breakneck fibre broadbands across Asia encouraged the growth of social media, peer-to-peer streaming & other usage of applications that are able to harness the tremendous speed & connectivity into the last mile into Asian consumers’ homes & even when they are on the move.  However, the country / domicile walls that these oligopolistic Asian telcos & cable operators have enacted in the past with their respective government support are crumbling down fast!

The key is that there are serious dearth of unique domestic content & services provided by all these Asian telcos & cable operators. Most contents, apps and media come from the West or recently from China, Korea & Japan that all the Asian operators syndicated, bought or licensed from.  This extends to the current FIFA 2014 World Cup that has enthralled all viewers around the world.  The ridiculous price that Singapore football fans have to endure to watch the World Cup matches  http://www.goal.com/en-sg/news/3880/singapore/2014/03/18/4690244/singapore-costliest-place-to-watch-world-cup is a case study of what has gone wrong in ”paying based on where you happen to live” when it can be free or much cheaper even within other Asian countries.

Asianmacro has been using a VPN service so that he can simply be in the USA, UK, Europe, Latin America or any other country he fancies as identified by his IP address & gateway / DNS to provide security for his online activities.  The fringe benefit to this is I have access to watch all the FIFA 2014 World Cup matches for free in those countries that provide free viewing to residents in them too (where Asianmacro will be simply be there by choosing to be there online)!

I have taken profit on my long position in Asian telcos like Singtel recently.  While I am not going short these stocks as they pay relatively high dividends that many yield hungry investors do chase, the question that we should be asking is whether Asian telcos really have a future besides being “dumb pipe” gateway providers in communications & media, without any real innovative apps or unique domestic content that people want & will pay for!

P.S. And asking Whatsapp or Skype to pay for using its network by Singtel’s CEO is definitely not the way to go! http://www.techgoondu.com/2014/02/26/commentary-singtel-wants-whatsapp-and-skype-to-pay/#.U6wq8PmSySo

Full moon reversal & doing nothing .. football might save the world

It was a full moon last night on 14 May 2014 & usually more often than not, it signals a short term market top or reversal especially in equities. We did see an intraday high where S&P500 pushed above 1900 before reversing lower. It does not mean that we do not get a potential summer rally squeeze in risky assets https://asianmacro.com/2014/05/13/the-summer-carry-melt-up-in-risk-assets/ as we are not into summer yet but just knocking the door around the corner.

However, it does bring to mind the uncertainty & sense of not knowing what to do on certain days with conviction especially by the humble Asianmacro here who is only a small minion in the big scheme of things in the financial markets. The only thing that made sense is the video clip produced by Samsung assembling some of the best footballers on Earth to save us from an Alien invasion where the outcome is determined by a football match .. what else is new!

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From the chart above, if you look at the spread between the 1st & 2nd VIX futures contract, we are back again to 155 b.p. difference. Usually a big & growing difference where the 2nd contract value is greater than the 1st contract value implies an upward sloping volatility curve (for VIX) & represent a normalisation of sentiment (or complacency).  A small or narrowing difference and in the extreme when it goes to negative value implies an inverted volatility curve (for VIX) where heightened fear of imminent risk of crash in markets resulted in buying of volatility (or VIX) in near contract over that of far contracts.

The above is just a generalisation so as not to bore most of you who might not be equity derivatives & volatility traders. However, as you can see above, whenever we reach 155-175 b.p. spread in VIX 1st & 2nd futures, we do see a correction lower in S&P500 subsequently for a short period of time.  Anyway, there are just so many mixed signals in the markets at the moment. Sometimes it’s best to just sit back on the sidelines & wait …

“The desire for constant action irrespective of underlying conditions is responsible for many losses on Wall Street even among the professionals, who feel that they must take home some money every day, as though they were working for regular wages.” – Jesse Livermore

 

How many screens do you need?

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This dude beats me hands down. Mrs Asianmacro thought my 12 screens set-up was already an overkill, wait till I show her this!

Once upon a time, except for the CEO of the investment bank who does not even need a PC as everything is screened & read out to him by his assistants. The sign of how important a trader was lies in the number of screens & where he/she sat in the dealing room. Only the BSD (*whether he has a screen each to play youtube, PC games instead of actual price/data stream does not matter) sat in prime real estate right in the middle of the dealing room with the minions spread out into the ‘suburbs’ with their miserable 2 – 4 screens standard set-up.  Anyway supposed trading heads in banks or hedge fund honcho with only 1 – 2 screens have either gone managerial full-time or achieved nirvana like Warren Buffet where he just buys and hold forever.

Over the years, through trial & error, Asianmacro has found that 8 – 12 screens work best as everything will be within peripheral eye-ball view of about 140 degrees. Anything more becomes bragging rights … anything less, you probably need many minions to monitor & execute on your behalf.

Who wants to be a trader millionaire ?

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The 2015 Lamborghini Huracan LP610-4 is supposed to be comfortable on the road & also superb for that weekend track day with the boys. Now how should I know given that I am not about to blow away $1 million on this toy.

From the canyon of Wall Street in Manhattan, to the City & Canary Wharf in London to Raffles Place (and now Marina Bay) in Singapore; successful traders in banks and funds go hand-in-hand with their fancy rides & loud exhaust notes!

Many unemployed chaps have been eyeing that lifestyle giving rise to the growing ranks of day-traders including those who signed up for many ‘get rich through trading’ courses thinking that it can magically transform anybody into the next market wizard http://www.bbc.co.uk/programmes/b01s8mnx.

Interestingly, even in the ranks of the real bank traders, those numbers are diminishing with impending job cuts if they have not been thinned by now with Barclays announcing another 15,000 job cuts after dismal results 2 days back http://www.bbc.com/news/business-27312798.

Asianmacro used to see quite a number of Ferraris & Lamborghini cars parked at One Raffles Quay at Marina Bay in Singapore whenever he was in town & visiting that area.  I have been seeing fewer of those cars the last time I went by & perhaps they are found here for sale now: http://www.sgcarmart.com/used_cars/listing.php?BRSR=0&MOD=Ferrari&RPG=20&VEH=8http://www.sgcarmart.com/used_cars/listing.php?MOD=Lamborghini&RPG=20&VEH=8

Not a good sign indeed when it runs to 4 pages of exotic cars for sale in each …