Here’s why Australia shall be the next Silicon Valley

Posted on May 28, 2018Categories MBA   Leave a comment on Here’s why Australia shall be the next Silicon Valley

That’s right – the next Silicon Valley will be right here in the east! Silicon Valley in California USA, serves as the unofficial capital for research and innovation in Science and Technology, as well as Venture Capital resources in the World. The success and popularity of Silicon Valley is closely linked to the success of the IT/ tech industry. It grew in size and strength in the 1980s, when IBM PCs started selling like hot cakes.

Today, the Silicon Valley boasts of hosting some of the most popular and successful companies of the World such as – Adobe, Cisco, Google, Facebook, Apple, Oracle, Netflix, HP and many more. What are the reasons for this small part of the World to host some of the most successful and valuable companies of the World?

  1. Abundance of natural resources

The primary reason for it being called the Silicon Valley is the easy availability of Silicon due to an abundance of the mineral in the region. Silicon was needed in large quantities to manufacture various components of computers and other electronic devices that were made there. Many other natural resources such as iron, copper, zinc, magnesium, etc. are needed for large scale industrial production of tech products. Due to the easy availability of raw materials for manufacturing, Silicon Valley has managed to attract a lot of industries for setting up large global manufacturing hubs.

Australia, also has an abundance of natural resources. It has many Millionaires and Billionaires who have made their fortunes by supplying raw materials/ minerals to various industries. Being a mineral rich country is an advantage as manufacturers always prefer having their factories located close to the source of raw materials.

  1. Availability of skilled talent

Silicon Valley is said to be the home of some of the best engineers and innovators of the World. It has been successful in attracting the best minds from all over the World for well over five decades. This has a lot to do with the progressive nature of businesses/ founders, who focus on innovation, creating new products and technology hitherto, unheard of. This noble vision of changing the world with great technology has allowed the San Francisco Bay Area of Northern California, or Silicon Valley to attract fresh talent from across the globe and thus create some of the best products that the world has ever seen.

Australian Universities are considered to be some of the best in the World. They attract students from all over the world as all Australian Universities have a curriculum that is upgraded every year in accordance with the Skill Shortage list. Their curriculum is basically in line with the skills that the economy needs.

Australian Universities are known globally for the, excellent financial courses that they offer. Masters courses such as The University of Western Sydney’s MBA and MAF programs are some of the most sought after financial courses in Asia. It is offered in association with one of India’s premier finance institute – BSE Institute Limited. They are some of those rare courses which are recognized globally and have a record of getting $50,000 jobs for their graduates right after graduation.

It is because of Universities like these, that startups and MNCs are able to recruit highly skilled students who support and grow their businesses. The same talent is available in Australia and is used not just for engineering and innovation, but also in Banks, Private Equities and Hedge Funds who choose to invest in these startups.

  1. Cheap finance available

When starting a new company, one has to be ready for a few lean months/ years. This is true especially in the case of companies that are coming up with new or alternative products! Innovators need the support of investors. Investors who would be willing to bank roll them through the development and growth phase of their products. Cheap finance allows entrepreneurs and innovators to build great products at the lowest cost possible. It allows them to hire great teams who compliment their strengths and make the products better.

As Australia is an advanced OECD economy, it has well developed financial centers in all its major cities that offer easy and excellent ways for promoters and entrepreneurs to raise capital for their businesses.

  1. Supportive Government

Governments in the USA have been extremely supportive of entrepreneurs. They are cognizant of the fact that entrepreneurs create jobs and generate a lot of revenue for their country. It is for this reason that they have many funds dedicated for funding and supporting innovators. This eases a lot of pressure that could be caused due to a shortage of funds. A supportive Government that understands the challenges of running a new company is one of the best support that a startup can get.

The Australian Government has budgeted a staggering $10 Billion for promoting innovation and entrepreneurship. This amount is categorized as an Innovation Budget and is used only for encouraging young entrepreneurs innovate. Considering that many organizations get funding worth a few Million Dollars, $10 Billion is a huge amount that could easily fund a 100 companies that employ thousands of people.

  1. Affinity to international markets

Silicon Valley is based in the USA, which is one of the largest market in the world. Additionally, it has large global markets of China & India to its west, which serve as ready markets for its products and services. This gives it a ready testing ground for its products, which can be tweaked easily in case the markets do not accept them.

Australia is very close to large markets of Africa, India, China and South East Asia; and this makes it ripe for having multiple manufacturing plants that can churn out products at a rapid pace and have them shipped out to these lucrative markets.

These are the reasons why Australia is poised to be the next the Silicon Valley.

The Australian Industry and the Australian Government have cleverly gone about executing a plan that ensures that every factor necessary for building a great innovation hub is in place to help young entrepreneurs build and nurture their companies. These signs seems to make it quite clear, that the next Silicon Valley will be down under.

Studying and working in Australia just became extremely rewarding!

 

With a Commonwealth Free Trade Agreement, Auckland is on its way to be the next London!

Posted on May 18, 2018Categories MBA   Leave a comment on With a Commonwealth Free Trade Agreement, Auckland is on its way to be the next London!

Great Britain, the empire on which, once, the Sun never set, is currently in the eye of a storm! Ever since the country voted to leave the European Union, there has been utter chaos in all of EU. An ill effect of UK leaving the EU, there may no longer be tax free import/ export of goods between the UK & the EU. With over 50% of UK exports being sent to countries who are EU members, it has suddenly become very tough for businesses and industrial houses to think beyond 2019, when the UK will officially leave the EU.

 

There is utter panic spreading throughout the EU as industrial nations such as France, Germany and Italy are also worried about their exports to the UK/ Scotland. However, the UK Govt is not as concerned as the newspapers make it out to be. At the recently concluded meet of the 53 Commonwealth Head of Governments meeting (CHOGM), an idea to have a Commonwealth wide Free Trade Agreement was mooted.

 

It is an idea which would be a huge success. The Commonwealth of Nations is a group of 53 countries that were previously ruled by the United Kingdom. When referred to collectively, they cover an area of 29,958,050 km2, which is equal to 20% of all landmass, across 6 continents. The Commonwealth of Nations has a total population of over 2.4 Billion, which is close to 33% of all the World’s population.

 

The European Union has a GDP of $ 18.4 Trillion with just 28 member countries. The Commonwealth, has a combined GDP of over $14.6 trillion, even with there being no Free Trade Agreement in place. With the membership of some of the largest growing economies such as India, UK, Canada, Australia, South Africa and Nigeria, the Commonwealth of Nations truly promises to be the next big Union of countries, which can be bigger and more influential than the EU.

 

With a Free Trade Agreement in place, most of these nations will be able to trade freely with each other without the need for businesses to pay taxes for export/ import of goods and services. This is indirectly an incentive for a country to reduce its trade with other countries and increase its trade with one where it doesn’t pay taxes. This motivates global corporations to shift their regional/ corporate head offices from one jurisdiction to another.

 

The countries mentioned above are highly industrialized and have huge markets that need a steady supply of goods and services. However, barring London, there is no other city that stands out for its financial prowess. Although London can easily serve European and African countries, most countries on other continents find it difficult to match their work timings with London. This disadvantage presents an opportunity for Auckland.

 

Auckland is the major economic and financial hub of New Zealand. It has a GDP of NZ $ 93.5 Billion, which is 37.2% of the GDP of New Zealand. This is mainly due to the large number of business & financial services that it offers businesses across the globe. Operation costs for most businesses in New Zealand are 25% lower than other developed economies. Also, there are no payroll taxes, no stamp duties, no social security taxes, no long/ short term capital gains taxes and no estate taxes.

 

Auckland is the 3rd most liveable city in the World as per the Mercer Quality of Living survey. New Zealand is 12 hours ahead of GMT and a couple of hours ahead of all major Asian cities, thus making it easy for global MNCs to service their major clients from one location.

 

However, just having great infrastructure is not enough, unless you have the human capital to operate your businesses.

 

New Zealand also has some of the best universities in the World, with its top 8 universities ranking in the top 3% of the World regularly every year. The reason for the same is simple: they select only the best students after a rigorous selection process and then train them with a curriculum that is revised every year in consultation with Captains of the industry. Selected students are then trained with not just theoretical classes, but also with practical sessions which are conducted by senior industry professionals.

 

One University that has been a pioneer in introducing World class teaching techniques in New Zealand is the University of Otago. It has a glorious history of over 150 years and is known World over for the excellent faculty, facilities and courses that it offers students across the World.

 

One course that fits perfectly here is its 12 month Masters in Finance. It is offered jointly with India’s premier financial institution BSE Institute. The course trains students to be qualified as global Financial Analysts, Credit Risk Management Analysts, and M&A Analysts and Financial Managers who easily get a salary of over $50,000 in their first job after college.

 

It is graduates like these who are employed by MNCs across the World. With New Zealand being eyed by most MNCs across the World, the availability of graduates like these, makes it more tempting for corporations to shift offices immediately.

 

All these have made Auckland, New Zealand an investor’s and a manufacturer’s paradise. Hence, there are over 100 MNCs which have their regional offices in Auckland instead of other hubs in Australia/ Asia.

 

With the rise of emerging economies such as India, South Africa, Indonesia, etc, New Zealand stands to gain the most if it is able to use the vast resources it has at its disposal. The Commonwealth Free Trade Zone can work wonders for every country that is a signatory, but it is sure to transform Auckland to be the London of the Pacific!

 

Would like to end by quoting the poet Robert Frost – “The woods are lovely, dark and deep, but I have promises to keep and miles to go before I sleep.”

 

 

 

Here’s how extended F & O trading hours can help you earn more

Posted on May 9, 2018Categories Financial MarketsTags , , , ,   Leave a comment on Here’s how extended F & O trading hours can help you earn more

SEBI has announced that Futures and Options Trading shall be allowed till midnight from 1st of October, 2018. Let’s take a look at what trading in Futures and Options could really mean for retail investors and debunk the myth that F & O trading is too complicated for everyone.

A lot of investors stay away from futures and options because they think they’re complicated, but this simply isn’t true. With the right amount of discipline and commitment, ANYONE CAN LEARN HOW TO TRADE FUTURES. At its very core, a futures contract is nothing more than a binding agreement between a buyer and a seller to either buy or sell the asset or financial instrument involved at a predetermined price and time. When compared to stocks futures contracts offer a number of distinct advantages.

  1. Higher Leverage

The single biggest advantage of trading futures and options is the leverage that comes with it. This makes trading in F & O very attractive for small pocket traders. By taking position in options, one can reduce their cost significantly. An investor doesn’t have to put up the full amount – but usually just a small fraction of the total amount (typically 10 percent). In other words, an investor can get his hands involved in a Rs. 100,000 contract with just Rs. 10,000 of his own money. This is what makes trading futures so exciting.

  1. Fixed Up Front Costs

For the most part, the margin requirements for a major futures commodity are pretty constant and well known. They don’t fluctuate very much – even over a number of years – which is contrary to option premiums that can vary rather significantly as the market shifts. This stability means traders know what to expect and are aware of how much is required to be put up as the initial margin.

  1. High Liquidity

You don’t have to worry about tying up your money long term. Futures contracts are traded in very significant volumes every day, which makes them highly liquid investments. For someone who has other holdings on the opposite end of the spectrum, this makes futures extremely attractive.

  1. Limits Risk

Another benefit of options buying is that the risk is limited to the investment you make. Suppose, in context to the above example, you buy shares of ABC Ltd. and on the next day, the company comes up with the news of closing one of its subsidiaries and aftermath the stock opens 15% below your entry price. Now, the stock price falls to Rs. 110.50, while the 130 call becomes zero. In case of stock, you would incur a loss of Rs. 2,34,000; while in options, you would lose Rs. 60,000 – the entire investment amount, which is far less than the one incurred in stock trading.

  1. Futures are great for trading certain investments

Futures are a great way to trade specific investments such as commodities, currencies and indexes. Their standardized features and very high levels of leverage make them particularly useful for the risk-tolerant retail investor. The high leverage allows those investors to participate in markets to which they might not have had access otherwise.

  1. Better Tax Rate

Did you know that you can actually get a major tax break when trading futures, versus stocks and securities that command short-term capital gains rates?

  1. Ease of Filing

Another tax-related benefit of trading futures is that you don’t usually have to provide a detailed list of each trade you made throughout the year – as is the case with securities traders. This saves you a ton of time and makes it a lot easier to manage things during tax season. However, you do still have to keep very detailed files and records. If you’re ever audited, you’ll have to provide enough details to support your numbers.

  1. Higher potential returns

By trading in options, one will experience higher percentage returns compared to stocks. Lets assume, the delta of ABC Ltd. is 0.80, which suggests that options price will rise by 80% of stock price. If stock moves up to Rs. 13, you will earn 10% return. While your option position will gain Rs. 10.40 on the investment of Rs. 5. Here, the return on investment is nearly 208%, which is much better than the return on stock.

  1. Works in different market scenarios

One of the key advantages of options trading is alter strategies as per different market conditions. There are various strategies for all kind of markets, whether bullish, bearish or sideways – Long call, Bull call spread, Long Put, Bear put spread, long straddle, short straddle, etc. One can switch his strategies as per market condition.

  1. Hedging

Every individual trading in stock market is exposed to a certain risk. In the event of any adverse market movements, hedging simply protects your trading positions from incurring loss. Suppose, you picked a stock of ABC Ltd. for Rs. 100 six months back and now it is trading at Rs. 125; here, you are earning a return of 25% on your investment. Now due to result season, you realize that the markets may soon enter a turbulent phase, which may also result in losing the money you earned during this time frame. In such scenario, you can hedge you position by simply buying At-the-Money put option for same quantity, which will limit your downside during adverse market condition.

Learn more about Futures & Options at BSEvarsity.