Articles from Caixin Global, Caixin Global

Caixin Global

Articles from Caixin Global

Caixin is a media group dedicated to providing financial and business news through periodicals, online content, mobile apps, conferences, books and TV/video programs. Caixin aims to blaze a trail that helps traditional media prosper in the new media age through integrated multimedia platforms.

News from Caixin

Cross Asset Strategy

<ul><li>Investors / In Depth: China’s PE investors left empty-handed as cash-strapped startups flout</li><li>Corruption /: Two ex-senior officials accused of holding on to classified materials</li><li>IBM /Exclusive: IBM chief says closing China units is ‘done’ and ‘not reversible’</li></ul>

Investors / In Depth: China’s PE investors left empty-handed as cash-strapped startups floutCorruption /: Two ex-senior officials accused of holding on to classified materialsIBM /Exclusive: IBM chief says closing China units is ‘done’ and ‘not reversible’

CX Daily: China’s PE Investors Left Empty-Handed as Cash-Strapped Startups Flout Compensation Deals 

<ul>
<li>Bonds / Cover Story: Chinese brokerages’ dual roles in bond market sparks concern for conflicts of interest that raises systemic risk </li>
<li>Internet /: New digital ID system is optional, not mandatory, ministry researcher says</li>
<li>Air crash /: Two children among five Chinese nationals killed in Thai plane crash</li>
</ul>


Bonds / Cover Story: Chinese brokerages’ dual roles in bond market sparks concern for conflicts of interest that raises systemic risk 
Internet /: New digital ID system is optional, not mandatory, ministry researcher says
Air crash /: Two children among five Chinese nationals killed in Thai plane crash


CX Daily: Chinese Brokerages’ Dual Roles in Bond Market Sparks Concern for Conflicts of Interest

Semiconductors, Memory and SSDs Specialist, Objective Analysis

Jim Handy

Semiconductors, Memory and SSDs Specialist

Objective Analysis

Objective Analysis offers third-party independent market research and data for the semiconductor industry and investors in the semiconductor industry.

Semiconductors, Memory and SSDs

Thematic (Sector/Industry)

<ul>
<li>Japan's Meteorological Agency has issued a warning of an upcoming serious 8-9-point earthquake</li>
<li>The expected epicenter is home to at least one dozen semiconductor wafer fabrication plants: "Fabs"</li>
<li>While it's hard to predict earthquakes, this news should be considered when investing in the area.</li>
</ul>


Japan's Meteorological Agency has issued a warning of an upcoming serious 8-9-point earthquake
The expected epicenter is home to at least one dozen semiconductor wafer fabrication plants: "Fabs"
While it's hard to predict earthquakes, this news should be considered when investing in the area.


Research from Water Tower Research, Water Tower Research

Water Tower Research

Research from Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

Equity Research Firm

<ul><li>The global Smart Cities market size was valued at $1.5 trillion in 2020 and is projected to grow to $11 trillion by 2030, a CAGR of more than 20%.</li><li>While North America is currently the largest market, Asia-Pacific is projected to overtake it in a few years.</li><li>Smart Cities are urban areas that utilize digital infrastructure and interconnected systems, most likely using artificial intelligence (AI). </li></ul>

The global Smart Cities market size was valued at $1.5 trillion in 2020 and is projected to grow to $11 trillion by 2030, a CAGR of more than 20%.While North America is currently the largest market, Asia-Pacific is projected to overtake it in a few years.Smart Cities are urban areas that utilize digital infrastructure and interconnected systems, most likely using artificial intelligence (AI). 

Tech Talk: Smart Cities Delivering on the Promise

Semiconductor & Technology Specialist, Ingenuity

William Keating

Semiconductor & Technology Specialist

Ingenuity

Our focus is exclusively on in-depth research & consulting in the broader semiconductor industry. We focus on the key players, namely Intel, Micron, Qualcomm, Apple, Samsung, NVIDIA, AMD, TSMC & Global Foundries - as well as some of the lesser known, but nonetheless critical, companies such as ASML (for EUV), Mellanox, Cavium, Xilinx etc. We specialise in their products, roadmaps, process technologies, competitive advantages & threats etc. We also help our clients understand the implications of new and emerging technologies, e.g. 3D X-Point, 3D NAND, Carbon Nanotubes, Autonomous Driving, Graphene, Silicon Photonics, Wafer-Level Optics, Artificial Intelligence, FPGA, GPU, ASIC etc. 

Semiconductor Analysis & Research

Since its emergence as the technology underpinning Bitcoin over a decade ago, blockchain has captured the imagination of technologists, investors and charlatans in roughly equal measure. Blockchain has been portrayed by its advocates as the solution to some of the most fundamental challenges facing modern-day society including free and fair elections, the protection of identity records and title deeds, supply chain integrity and, of course, enabling all manner of exotic cryptocurrencies. Little wonder then that we experienced a wave of blockchain mania which coincided with a similar level of cryptocurrency mania in late 2017. During that time, companies were adding "Blockchain" to their names and seeing their share prices soar by many multiples within weeks. Just as the crypto bubble burst in early 2018, so too did the blockchain bubble. Share prices of so-called blockchain companies collapsed just as quickly as they had risen. Testifying before a US senate committee in October 2018, professor of economics Nouriel Roubini was scathing in his criticism of blockchain <a href="https://www.banking.senate.gov/imo/media/doc/Roubini%20Testimony%2010-11-18.pdf" target="_blank" rel="noopener">referring</a> to it as  “The most over-hyped technology ever, no better than a spreadsheet/database”.
 Now, as the dust settles and the mania fades, we witness the emergence of a new class of enterprise-grade blockchain implementations led by the likes Hyperledger, Corda and various customisations of Ethereum. While the blockchain technologies supporting the likes of Bitcoin and Ethereum are public in so far as the data they contain is accessible by anybody who wishes to view it, these enterprise blockchain implementations are private, a necessary prerequisite for their potential deployment at major corporations and financial institutions. This distinction, along with a number of other important differences, means that enterprise blockchain represents a significant departure from the original public blockchain concept.
Today, enterprise blockchain is being deployed to tackle challenges across a swathe of verticals thanks to the likes of the Big Four consulting firms striving to position it at the heart of their business process reengineering practices. From Maersk to Walmart, they are convincing some of the world's biggest conglomerates to tackle age-old issues relating to outdated, inefficient, labor intensive business practices, all in the name of  blockchain.
It's not just the Big Four that are cashing in on enterprise blockchain. Professional services firm Accenture is investing heavily in its blockchain consulting practice. Blockchain as a Service (BaaS) solutions are available from enterprise software giants <a href="https://www.smartkarma.com/entities/intl-business-machines-corp" target="_blank" data-smartkarma-citation="entities:1064:1" rel="noopener">Intl Business Machines</a>, <a href="https://www.smartkarma.com/entities/oracle-corp" target="_blank" data-smartkarma-citation="entities:1065:1" rel="noopener">Oracle</a>,  <a href="https://www.sap.com/hk/index.html" target="_blank" rel="noopener">SAP</a> and <a href="https://www.smartkarma.com/entities/microsoft-corp" target="_blank" data-smartkarma-citation="entities:15273:1" rel="noopener">Microsoft </a>and more recently from China’s <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd" target="_blank" data-smartkarma-citation="entities:787:1" rel="noopener">Alibaba </a>and <a href="https://www.smartkarma.com/entities/baidu-inc" target="_blank" data-smartkarma-citation="entities:179:1" rel="noopener">Baidu</a>. <a href="https://www.smartkarma.com/entities/intel-corp" target="_blank" data-smartkarma-citation="entities:16764:1" rel="noopener">Intel </a>wants to ensure that enterprise blockchains runs best on its servers while Microsoft and <a href="https://www.smartkarma.com/entities/amazon-com-inc" target="_blank" data-smartkarma-citation="entities:409:1" rel="noopener">Amazon </a>want to host them on their clouds. It's little surprise then that enterprise and government spending on blockchain is expected to reach $2.9 billion in 2019, an increase of 89% over the previous year according to <a href="https://www.idc.com/getdoc.jsp?containerId=prUS44898819" target="_blank" rel="noopener">IDC</a>. Furthermore, they predict that spending on enterprise blockchain will reach $$ja12.4 billion by 2022.
In common with Roubini, our belief has long been that blockchain as a technology offers little that was not already available elsewhere and before. Enterprise blockchains bear little resemblance to the technical ingenuity that gave us Bitcoin, but which is otherwise largely useless. The populist mantra that enterprise blockchain has the ability to transform the business processes of major corporations, key industry verticals and governments is a largely a delusion in our opinion. <a href="https://www.mckinsey.com/industries/financial-services/our-insights/blockchains-occam-problem" target="_blank" rel="noopener">This</a> recent report from McKinsey further supports our perspective, noting that blockchain has yet to become the game-changer some expected and recommending that it should only be considered when it is the simplest solution available.
Paradoxically, if the allure of blockchain can be leveraged as the motivating factor to undertake the much-needed digital transformation and business process re-engineering required to modernize outdated, legacy practices and procedures, then it may indeed have some inherent, albeit unintended, value. Furthermore, our interviews with the CEOs of two small, privately held startups clearly indicated that they are actually finding important, albeit niche, use cases for blockchain technologies in their solution stacks.  In this context, it makes sense to view blockchain as an emerging technology actively seeking real-world use cases and likely to be strongly promoted by its proponents in the coming years.
Against this backdrop, how should investors think about the investment opportunities for blockchain? For starters, venture capital interest grew significantly in 2018 with some $5.4 billion invested in blockchain related startups, up from $1.5 billion the previous year according to <a href="https://next.autonomous.com/thoughts/crypto-blockchain-lands-at-24b-in-2018-funding-1b-in-stos-coming" target="_blank" rel="noopener">Autonomous Research</a>. Nonetheless, our analysis of multiple categories of companies with blockchain exposure reveals a harsh reality. Neither their blockchain related revenues nor any cost savings directly attributable to the technology are significant enough to have any meaningful impact on their valuations from a fundamentals perspective, a situation we do not expect to change any time soon. The same holds true for the blockchain-related ETFs and hedge funds we examined.
On a more positive note, there are some excellent companies doing exciting things with blockchain and related technologies. Privately held GuardTime and Digital Assets should be on investors watch lists for funding rounds and IPOs. We expect publicly listed <a href="https://www.garage.co.jp/en/" target="_blank" rel="noopener">Digital Garage</a> and <a href="https://www.broadridge.com/intl/" target="_blank" rel="noopener">Broadridge Financial Solutions</a> to continue to perform well and feel that they should be considered as part of a broader fintech portfolio. By the same token, we are positive on the growth opportunities of blockchain-associated multinationals such as <a href="https://www.microsoft.com/en-hk" target="_blank" rel="noopener">Microsoft</a>, <a href="https://www.ibm.com/hk-en" target="_blank" rel="noopener">IBM</a>, <a href="https://www.visa.com.hk/en_HK" target="_blank" rel="noopener">Visa</a>, <a href="https://www.mastercard.us/en-us.html" target="_blank" rel="noopener">Mastercard</a> etc, albeit for reasons that have little to do with blockchain.

Since its emergence as the technology underpinning Bitcoin over a decade ago, blockchain has captured the imagination of technologists, investors and charlatans in roughly equal measure. Blockchain has been portrayed by its advocates as the solution to some of the most fundamental challenges facing modern-day society including free and fair elections, the protection of identity records and title deeds, supply chain integrity and, of course, enabling all manner of exotic cryptocurrencies. Little wonder then that we experienced a wave of blockchain mania which coincided with a similar level of cryptocurrency mania in late 2017. During that time, companies were adding "Blockchain" to their names and seeing their share prices soar by many multiples within weeks. Just as the crypto bubble burst in early 2018, so too did the blockchain bubble. Share prices of so-called blockchain companies collapsed just as quickly as they had risen. Testifying before a US senate committee in October 2018, professor of economics Nouriel Roubini was scathing in his criticism of blockchain referring to it as  “The most over-hyped technology ever, no better than a spreadsheet/database”.
 Now, as the dust settles and the mania fades, we witness the emergence of a new class of enterprise-grade blockchain implementations led by the likes Hyperledger, Corda and various customisations of Ethereum. While the blockchain technologies supporting the likes of Bitcoin and Ethereum are public in so far as the data they contain is accessible by anybody who wishes to view it, these enterprise blockchain implementations are private, a necessary prerequisite for their potential deployment at major corporations and financial institutions. This distinction, along with a number of other important differences, means that enterprise blockchain represents a significant departure from the original public blockchain concept.
Today, enterprise blockchain is being deployed to tackle challenges across a swathe of verticals thanks to the likes of the Big Four consulting firms striving to position it at the heart of their business process reengineering practices. From Maersk to Walmart, they are convincing some of the world's biggest conglomerates to tackle age-old issues relating to outdated, inefficient, labor intensive business practices, all in the name of  blockchain.
It's not just the Big Four that are cashing in on enterprise blockchain. Professional services firm Accenture is investing heavily in its blockchain consulting practice. Blockchain as a Service (BaaS) solutions are available from enterprise software giants Intl Business Machines, Oracle,  SAP and Microsoft and more recently from China’s Alibaba and Baidu. Intel wants to ensure that enterprise blockchains runs best on its servers while Microsoft and Amazon want to host them on their clouds. It's little surprise then that enterprise and government spending on blockchain is expected to reach $2.9 billion in 2019, an increase of 89% over the previous year according to IDC. Furthermore, they predict that spending on enterprise blockchain will reach $$ja12.4 billion by 2022.
In common with Roubini, our belief has long been that blockchain as a technology offers little that was not already available elsewhere and before. Enterprise blockchains bear little resemblance to the technical ingenuity that gave us Bitcoin, but which is otherwise largely useless. The populist mantra that enterprise blockchain has the ability to transform the business processes of major corporations, key industry verticals and governments is a largely a delusion in our opinion. This recent report from McKinsey further supports our perspective, noting that blockchain has yet to become the game-changer some expected and recommending that it should only be considered when it is the simplest solution available.
Paradoxically, if the allure of blockchain can be leveraged as the motivating factor to undertake the much-needed digital transformation and business process re-engineering required to modernize outdated, legacy practices and procedures, then it may indeed have some inherent, albeit unintended, value. Furthermore, our interviews with the CEOs of two small, privately held startups clearly indicated that they are actually finding important, albeit niche, use cases for blockchain technologies in their solution stacks.  In this context, it makes sense to view blockchain as an emerging technology actively seeking real-world use cases and likely to be strongly promoted by its proponents in the coming years.
Against this backdrop, how should investors think about the investment opportunities for blockchain? For starters, venture capital interest grew significantly in 2018 with some $5.4 billion invested in blockchain related startups, up from $1.5 billion the previous year according to Autonomous Research. Nonetheless, our analysis of multiple categories of companies with blockchain exposure reveals a harsh reality. Neither their blockchain related revenues nor any cost savings directly attributable to the technology are significant enough to have any meaningful impact on their valuations from a fundamentals perspective, a situation we do not expect to change any time soon. The same holds true for the blockchain-related ETFs and hedge funds we examined.
On a more positive note, there are some excellent companies doing exciting things with blockchain and related technologies. Privately held GuardTime and Digital Assets should be on investors watch lists for funding rounds and IPOs. We expect publicly listed Digital Garage and Broadridge Financial Solutions to continue to perform well and feel that they should be considered as part of a broader fintech portfolio. By the same token, we are positive on the growth opportunities of blockchain-associated multinationals such as Microsoft, IBM, Visa, Mastercard etc, albeit for reasons that have little to do with blockchain.
  

The Blockchain Delusion. A (Mostly) Bearish Investment Thesis.

United States

International Business Machines Corporation (IBM) provides computer solutions through the use of advanced information technology. The Company's solutions include technologies, systems, products, services, software, and financing. IBM offers its products through its global sales and distribution organization, as well as through a variety of third party distributors and resellers.

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International Business Machines (IBM US)

CX Daily: China’s PE Investors Left Empty-Handed as Cash-Strapped Startups Flout Compensation Deals

Investors / In Depth: China’s PE investors left empty-handed as cash-strapped startups flout compensation deals Private equity (PE) and venture...

Caixin Global

CX Daily: Chinese Brokerages’ Dual Roles in Bond Market Sparks Concern for Conflicts of Interest

Bonds / Cover Story: Chinese brokerages’ dual roles in bond market sparks concern for conflicts of interest that raises systemic risk China’s...

Caixin Global

Could a Japan "Megaquake" Disrupt Semis?

Japan's Meteorological Agency predicted that a catastrophic earthquake is now many times more likely than before. This insight examines what that...

Jim Handy

Tech Talk: Smart Cities Delivering on the Promise

The global Smart Cities market size was valued at $1.5 trillion in 2020 and is projected to grow to $11 trillion by 2030, a CAGR of more than 20%.

Water Tower Research

The Blockchain Delusion. A (Mostly) Bearish Investment Thesis.

Back when I wrote this, Blockchain was all the rage, but I struggled to see the true value proposition, felt there was a huge amount of hype...

William Keating

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