In every market there is competition of one sort or another. In the news China for reasons of its own decided to bring Hong Kong into its orbit of influence. This typically means less freedom and more control from China – some of its facial recognition capabilities are amazing to see, terrifying to be in. When China set in motion its desires, Hong Kong had many demonstrations and other countries put out a welcome to firms in China to move operations to their country.

In an article by Alun John, Scott Murdoch and Anshuman Daga of Reuters, countries such as Japan, Australia, Singapore and South Korea have been readying incentives to attract banks and asset managers. The typically incentives include: visa support, streamlining approvals of investment management licences, tax breaks, rent free offices the rule of law and democratic values.

Jason Salim, a Singapore-based analyst at risk consultancy Control Risks believes Singapore is most similar to Hong Kong and is a little higher on the prospects side.

In psychics there is a Newton’s law which says for every action there is corresponding reaction. In political control of any government, all firms have options. If the principals of the firm find their way of life to be changed, they will look for alternatives. Money may keep people, but if the circumstances change, people will find alternatives.

There are more questions than answers, till the next time – to raising questions.

In business such as the airline business, where there are 2 major players, governments see the airline companies as employment generators, skilled workers value added, ribbons to cut and university graduates to be employed. The plane is more than a plane and when it does, government subsidies go into the negotiations. As long as the 2 companies in this case Boeing and Airbus sell about the same ratio of planes, no one really matters. In the case of Airbus A380, the situation was different. Boeing’s planes were better and had greater sales so governments offered the plane at lower rates or subsidized them.

In an article by Tim Hepher of Reuters. the US went to the WTO or World Trade Organization and filed a complaint, it has now been 16 years and Airbus said it would increase loan repayments to France and Spain to settle the complaint.

The issue has been the WTO examined both sides and both the US and the EU were helping their airline makers Boeing and Airbus respectively. Airbus is increasing payments and now feels it is compliant with the WTO and besides it stopped sales of the A380 because of low sales.

The US had imposed a tariff on spirits and the EU wants the US to take off the tariff.

Another issue with the WTO is President Trump has blocked appointments to the appeal process. Typically a person has a set term and those on the Appeal Process of the WTO are coming due and the US will not allow replacements which means no appeals can be heard. Then the President can say the WTO is not working for the anyone including the US.

Linking to dividend paying stocks, all governments around the world subsidize some businesses for a multiple reasons – the firms hire university graduates, why have a school system if everyone leaves? the firm is is the correct industry for the future? people know the leaders better than others? and you can come up with other reasons. Sometimes dividend paying stocks are in the mix just because they are reasonably successful. Government policies matter and changes in them, can and do affect companies. Ensure you vote in the next election.

There are more questions than answers, till the next time – to raising questions.

In late July, Goldman Sachs and the government of Malaysia announced an agreement to end a criminal probe over the role of Goldman in the 1MBD multibillion scandal.

In an article by Rozanna Latiff, Joseph Sipalan and Elizabeth Dilts Marshall of Reuters, the 1MDB principles who included former Malaysian PM Najib Razak stole at least $4.5 billion from the government.

Steven Chubak, an analyst at Wolfe Research wrote. We view this as positive as Goldman Sachs is closer to removing a key overhang for investors, and this provides added comfort that the total settlement amount should be manageable.

Goldman is paying a fine of $2.5 billion and returning at least $1.4 billion in proceeds from assets linked to the sovereign wealth fund 1MBD. Fortunately, Goldman had put away at least $3 billion for legal maters. No one goes to jail, but a number of senior people have left the firm.

Linking to dividend paying stocks, we have seen many times when errors are made at large companies, eventually a cash settlement is made and life continues, albeit governance issues are examined. Till the next time, the company can reap billions on the shady side. Just because a company is large and profitable does not make it ethical, however if it is large and profitable it can pay its dividends.

There are more questions than answers, till the next time – to raising questions.

In late July, there was very good news with COVID, the US government signed a $1.95 billion contract to buy 100 million doses of a COVID-19 vaccine being developed by Pfizer and German biotech BioNTech if it proves safe and effective.

In an article by Michael Erman and Ankur Banerjee of Reuters, the Trump administration has agreed to spend billions of dollars for the development and procurement of potential vaccines under its Operation Warp Speed program.

At the moment, at least 160 drugs are underdevelopment and everyone is hoping for the same results, however what is good in Phase 1 is not necessarily good in Phase 2 because the sample size increases and the likelihood of side effects shows. Normally there is a Phase 3 which is a larger sample size and even the smallest side effect of the drug shows up. This time around if a drug passes Phase 2, then it will likely go into production and we will see.

In the US, who pays is important and if the vaccine is successful, will be made available to Americans at no cost, although their health insurance may be charged, the US Department of Health and Human Services said. The drug by Pfizer, in Phase 1 received 2 doses or 50 million Americans would be given the vaccine at a cost of $39.

There are variety of companies which are producing vaccines which the US government have signed agreements such as Moderna, Astra-Zeneca and Novavax.

Linking to dividend paying stocks, which the vaccine is declared good and available for the public, all companies share prices will rise and the world will move towards normal. The issue will be what will be normal before the shutdowns by the government and after the opening will have changed. It is highly expected for the next 6 months people will be using e commerce rather than walking into a store. We shall see, but will occur again are Festivals and Entertainment which help bring people together. When we hear politicians talk about government deficits you will know normal has returned.

There are more questions than answers, till the next time – to raising questions.

A few years ago, it was easy to read a newspaper report about someone going into a house and trying to steal copper wire. Sometimes the people were hurt and that is why it made the newspaper, the issue was the price of copper or the price of the commodity.

In an article by Andy Home of Reuters, the price of copper went from a 4 year low of $4.371 a tonne to over $6,500 a tonne. The reason for the price increase is the classic supply and demand curve. China has been buying on a large scale as the economy increases; given the low price – the larger miners had cut global production, also COVID played a role, and the recyclable market is in disruption.

Copper scrap accounts for 35% of the global market according to analysts at Roskill. China is the world’s largest scrap buyer, but they wanted cleaner scrap. In 2018 Chinese scrap imports fell 32%, in 2019 the number fell again by 38%.

The big scrap generators such as the US and EC are sending their material to Malaysia for processing and upgrading before going to China. Lower scrap generation owing to price weakness and reduced manufacturing activity has been compounded by locked-down collection and recycling networks and disruption to international shipping logistics.

Linking to dividend paying stocks, there are always more than one market for every product and the COVID-19 has highlighted for example in the food business there are shipments to the grocery store for individual families and the restaurant and larger venue segment. When the shutdown happened and the restaurant and larger venue size was not good, the shipments to the grocery store could not be changed overnight. In the commodity business when the price rises, not only production increases, the recycling market becomes larger. Price matters, but profit is more important.

There are more questions than answers, till the next time – to raising questions.

Whatever country you live in, you have a bias. You have a bias to use domestic services and often it is only after you look outside your country for other investments. There is nothing wrong with that, we all do it, if you examine a fund from New York – New York based companies are often in it; a similar fund doing the same thing based in Los Angeles would have some California based companies. Once in a while we look outside of our borders, travelling helps focus because you see people doing the same thing they do in your home using different companies.

One very successful company has been Alibaba from China. The company is the leading wholesale mobile app in China and is one of the largest companies. The company has a fintech arm for e-commerce called Ant Group. According to an article by Julie Zhu of Reuters, Ant is seeking to go public on the Hong Kong and Shanghai stock exchanges. The offering is expected to enhance the Hong Kong and Shanghai stock exchanges.

Ant Group is expected to be one of the largest public offerings because in 2018 the Ant Group was valued at $150 billion. Could it be more? Ant offers loans, payments, insurance and asset management services through mobile apps.

Linking to dividend paying stocks, everywhere in the world business operates the same – greater revenues than expenses means a profit. If there is profit, there can be dividends. As you examine your portfolio, consider alternatives around the world, they all can make money and have good governance.

There are more questions than answers, till the next time – to raising questions.

Ever since OPEC raised prices of oil in the 1970’s the easiest job in the Middle East was the finance minister. Every year revenues increased and rarely did the Finance Minister have to say no to a project. Money came in, the people were reasonably happy and lifestyles could be enhanced.

COVID happened and demand for oil dropped drastically, then Saudi Arabia and Russia were in a price war to the bottom, oil revenues for oil producing countries and companies dropped and the unthinkable happened. The job of the Finance Minister turned into one of the toughest in the land.

In an article by Ahmed Hagagy of Reuters, Kuwait plans to issue between $17.7 billion and $22.1 billion in public debt by the end of fiscal year ending March 2021.

The country is rapidly depleting its General Reserve Fund (GRF) to plug a budget deficit. Kuwait has to approved a new law to allow budget deficits.

The International Monetary Fund believes the Kuwait deficit will be 11% of gross domestic product this year compared to a 4.8% surplus last year.

Kuwait does a reserve fund called Future Generations Fund which has been growing with annual 10% of state revenues, it would save money if the wording was changed to conditional on budget surpluses. The conditional words would save the government $3 billion in the current year.

Linking to dividend paying stocks, if you are a certain age you will remember or heard about gas line up and when prices of oil jumped to a $1.00 a gallon. This was a big switch because most people spent less than $10 at the pump, depending on how much you drove $5.00 might be good enough. The higher prices from OPEC meant a change in the price of oil and gas, but eventually people adjusted to it. During the stories the wealth of the Middle East was allowed to seen, it is fitting that the basic rule in business is revenues must be greater than expenses.

There are more questions than answers, till the next time – to raising questions.