May and her Brexit plan

Although the Parliament has voted against a no-deal Brexit, the chance of exiting the European Union with no deal still exists as no-deal Brexit is the default option if the UK cannot negotiate an exit plan with the EU.  At the moment, there is an exit Brexit deal existing between the UK government and the European Union, which is the deal proposed by the UK Prime Minister May to the Parliament; however, the Parliament has rejected the deal several times already. So far, it seems that this deal is the best of which May is capable of providing because what we are seeing is that May is trying to get the deal passed by the Parliament instead of trying to negotiate an improved deal with the European Union.

At the moment, May is trying to gain the support from the Parliament by offering her Prime Minister position as she promises that if the deal can be passed by the Parliament, she will resign. This really is a bad move in terms of politics, as she offers something that gives other politicians some personal benefits in return of a policy that will determine the country's fate unless the policy is definitely the best for the country. So far it seems that May believes in her deal.

At the moment, I do not think that any opposition will support May because of her promise, not because they do not want to be the next Prime Minister, but because they are seeing the fall of May as an inevitable outcome. If May cannot get her deal passed, she will not have the face to remain at her positions as the Prime Minister as well as the Conservative Party leader. She's efforts to get her deal passed in the Parliament I do not think will work.

Can governments really manage the technological risk?

The 5G is coming and many countries are preparing themselves for it. One major concerns of many countries which need to rely on other countries' hardware to build 5G network is the security. The companies which have the technology for 5G network all want to win the contracts from governments; therefore, they will cooperate with governments to ease their security concerns, including unveiling codes to governments. Then here comes a question that if governments have the ability to manage the technological risk and detect firms' cheating behavior.

Governments are often believed to be powerful even in the field of innovation and invention. However, this may be only true during war time or in a highly centralized government, when the resources are highly concentrated in governments. However, when the economy is running in the market's invisible hands, the resources will be allocated based on the rule of profit maximization that resources will be used to generate profits, especially private profits. The technological risk is a source of negative externality that it does not create substantially high costs for any individual or firm. Under such circumstance, governments have to step in and reduce or eliminate the negative externality. However, unlike some other externalities, governments cannot solve the issue by simply placing taxes or providing subsidies, but instead governments have to identify the risk and then eliminate the risk. Because the technology market is very concentrated and even sometimes monopolistic, governments sometimes have to make some compromise and choose to work with companies which may have potential risk. Then the next step for governments is to identify the risk. In the Boeing scandal, we can see that companies often have better experts than governments because companies can pay experts better.

To compete with firms, governments can spend more on hiring the best experts or they can outsource the checking job to a third party firm which has the resources; however, either way will cost governments a lot more. We can see the increased costs for governments are the negative externalities.

Can Apple succeed?

What Apple is trying to do right now is not only to provide more contents for its customers, but also to build an ecosystem to contain its customers. Many people find after owning their first iPhone, they start to use Apple's laptops and tablets, then buy Apple's Apple Watch and AirPods; they are buying more and more products. Moreover, they do not only just buy more Apple's devices, but also buy more and more Apple services, such as Apple Music. Once people become addicted to Apple's ecosystem because of the convenience brought by the ecosystem, they are not easy to switch to other firms' devices or services.

However, it does not mean people will always stick to Apple's ecosystem. People are always making cost and benefit analysis, they will always choose the options which make their benefits greater than their costs. The convenience is a benefit, but people have to pay for the convenience provided by Apple. Once people find the benefit of the convenience no longer exceed the prices they pay, they will give up the convenience and switch to something that may not be so convenient but a lot cheaper. This is why Android smartphones are occupying a greater market share than Apple's iPhones are. High prices can definitely boost revenues if the sales do not drop significantly, which was shown in Apple's previous report (after the launch of iPhone X); however, high prices do not only reduce the sales of hardware, but also reduce the attractiveness of services. If Apple wants to use its services to generate greater revenues, it has to make the benefit of the convenience greater than the cost.

At the moment, Apple's products are still relatively more expensive than other competitive devices on the market; however, after the departure of the former Burberry boss from Apple, Apple may deviate from its current route of being a luxury brand and lower its prices again. The new iPad release may be a signal that Apple is now providing devices which have good quality and also reasonable prices (though the new iPads are not cheap, they are at least not a lot more expensive).

Apple differentiating itself from other tech tycoons

On Monday, Apple hosted an event in its famous Steve Jobs Theatre, the slogan given to the event was "It's Show Time". There was no any upgrade to its hardware (Apple released several new devices before the event), it seemed that Apple wanted audience to focus on its upcoming services. Apple released Apple News+, Apple Card, Apple TV+ and Apple Arcade in addition to its service updates. We can see the new upcoming services cover finance as well as entertainment. 

Apple does not only open its platforms for a wide range of developers and content creators, but also tries to create its own content. We should not be surprised about this, Apple has shown its ambition of being a content creator for a long period of time, and its Radio channel under its Apple Music was its first big move (at least according to my memory).

Apple has tried to launch its own services which have already existed in its App Store. Some people may still remember that iPhone used to have Google Map and YouTube by default; however, due to the complicated relationship between Google and Apple, Apple launched its own Map (this could also be its first step of content creation). What surprised me is Apple's ambition in finance. Although Apple Pay has existed for a significant period already, providing credit card service is something different.

Apple has set a bar for all its services, which is privacy and security. This has been cheered by many of Apple's customers and this is also the image that Apple has always been building. In terms of convenience, Apple may have to make some compromise. Google has a wide range of users, but because most of its products are free, it has to seek profits from third parties, which has been criticized by many about exploiting users' private information; Facebook has also been attacked for similar reasons. Apple wants to differentiate itself from these two companies; therefore, according to Apple's claims, the user information from all its services will not be sold to third parties and the personalized content provision is done on devices rather than cloud. The success of Apple will then depend on how much users value their own privacy. It is difficult to make a judgment because some people say that they care about their privacy but often give up their privacy for cheaper or free services.

The economy slowdown fear

The global stock market fell sharply due to the disappointing data from Germany's manufacturing sector. However, many economists and institutions viewed the Friday's selloff as a market overreaction. At the Credit Suisse Asian Investment Conference in Hong Kong, the former chairwoman of the Federal Reserve, Janet Yellen, said "I don't see a US recession as particularly likely". In addition, the financial institutions generally believe that weakness among German industry is "manageable".

The risk currently facing the world economy does exist and also always exists. We cannot make any particular prediction about "blackswan risk" (otherwise, it is not "blackswan risk"); the sources of risk are known to the market (maybe not all individuals know), and the market performance should reflect all the information available to the market under the perfect circumstance. However, as we know, the market can overreaction, then the market does not reflect the information perfectly and people can draw wrong conclusions from the overreacting market performance, accumulate the overreaction in the market.

The known risk is from the changing in the world trading, the economic shocks within the world economy and others. However, no one knows when the next recession will come and what the next recession will cause. Like now, maybe many well known experts are saying the market is overreacting to the negative news; however, once the entire market overreact to some extent, the fear will come true.

Is Esport to be as successful as traditional sports?

Esports has been drawing people’s attention and many tech tycoons have put lots of efforts into Esports. The famous game developer, Activision Blizzard, hired people from the traditional sports (including the famous NBA) to lead its new esports; it wants to borrow the success story to help its esports events to be similarly successful. Tencent also has invested billions of dollars into esports, is hosting the world largest PC game (League of Legends) competition and the world largest mobilegame (Honor of King) competition. Alibaba is hosting WESG every year after Samsung ended its WSG event. Recently Google unveiled its gaming platform, Stadia. When Google introduced its new platform, it seemed that the new platform would help game developing and live streaming. While many companies are investing in esports, can Esports be as successful as traditional sports?

Esports can have as many fans as traditional sports does, so there is definitely a market over there. However, there are some key differences between Esports and Sports. Traditional sports does not have copyright, that any party can host a sports event. However, traditional sports need facilities to host the events, like a stadium. On the other hand, esports normally needs the authorisation from game developers. This can be costly, that is why we often see game developers are also the hosters of their game events. In addition, more and more video games are released every year. After a video game becomes popular, more similar video games will be released. But esports events do not necessarily need a stadium to host, there is a plenty of online esports competitions. Moreover, to some extent, people can watch esports competitions better from their own computer screens rather than from a huge monitor when sitting in a stadium. Moreover, many live streaming platform has provided ways of communication between audience across the Internet.

To conclude, I personally expect esports can growing more popular, but there is not a single video game which can have a dominating power as Football has.

From Boeing to others

It is reported that Boeing decided not to provide extra training for 737 pilots other than a just over one-hour iPad training session. Such decision was made based on cost concerns, it could also have been welcomed by airlines, as airlines did not pay for the high costs of training their pilots. People are shocked by this report and asking why the FAA (Federal Aviation Administration) did not intervene. According to some people who are familiar with the issue, the FAA lacks funding to find professional experts to conduct proper examines of aircrafts; therefore, the FAA has to rely on the aircraft manufacturers, especially Boeing (the US biggest aircraft manufacturer), to conduct the tests including safety tests.

The FAA is a government branch and Boeing is a private company. Boeing can pay their experts and engineers much better than the FAA does, so the majority of the good experts and engineers will go to work for Boeing rather than the FAA. Under such circumstance, the regulators lose their regulation power and ability.

In the future and actually at the moment, the technology development will make the government much less capable of regulating the market, because the government does not have the experts to understand the issues raised by advanced technology. Therefore, more and more lacks of regulations are not caused by the technology development is moving too fast, but caused by the regulators lack the ability and power to understand the issues.

The gaming industry

The tech tycoon, Google, enters the gaming industry by launching its gaming platform, Stadia. Unlike Sony's PlayStation and Microsoft's Xbox, Stadia is a cloud platform that allows players to play games from all kinds of devices including PCs, smartphones and tablets, without any strict requirement for high-end hardware. Google states that its digital platform is far more powerful than any console and allows game developers to develop games which require very high-end hardware and announces its partnership with AMD to provide GPU for games (the news pushed AMD's share price to rise over 10%). In addition, the platform will provide better speed and quality for game streaming.

In China, the gaming tycoon, Tencent, increases its investment in esports tournaments in China. The tournaments for its mobile game Honour of Kings, and PC game League of Legends can attract 80m online viewers per match. Even given the enormous population size, such number of audience is still amazing. Tencent has a longer history of being interested in game streaming comparing with Google. The company has already invested over $1bn into game streaming platforms Douyu and Huya, which are the largest game streaming platforms in China. More than half the world's esports fans are in Asia and China earned $163.1m revenues from esports while the US earned $344.3m. Given the size of esports fans in China, the Chinese market has great potential for companies to generate greater revenues from this industry.

Gaming is a way of entertainment and is also a relatively cheap (or at least manageable) way. The industry will suffer less volatility from the world economic performance, but in China is deeply affected by the regulation environment (Tencent's market price fell when the regulators freezed commerical video game licensing for nine months last year).

The world trade environment

The world trade order is currently changing due to the power struggle among countries. The world is focusing on the trade negotiation between the US and China. (According to FT report)The US leading trade negotiators will travel to China to resolve the remaining issues in talks to end the trade tension between the two countries; the US trade representative, Robert Lighthizer, and the Treasury secretary, Steven Mnuchin, are expected to meet the Chinese vice-premier, to seal the final deal by the end of next month. However, it is still uncertain that the two countries will eventually seal a final deal, the Tuesday's market was down due to the report on China pushing back against American trade demands. Besides the trade battle with China, the US has also pressured other countries on trade, including Germany and Japan. The US president has said in public several times that German cars are a threat to the US national security. And Lighthizer blamed his boss's decision of pulling out of the Trans-Pacific Partnership, and wanted to speed up its trade negotiation with Japan since the US farm exports to Japan have sunk. For countries which are dealing with the US, they can try to run out the clock in the hope that the US domestic power struggle (especially 2020 presidential campaign) will make the administration easier to deal with.

While the US is negotiating new trade deals with other countries, Britain is negotiating with the EU about how the UK exits the EU. There has been a deal between the UK government and the EU; however, this deal has not got approved by the UK Parliament, this leads to a very difficult position for the UK government. The UK government does not have sufficient within the Parliament, this can weaken the UK government's ability and confidence when negotiating with the EU, since the government does not know if the negotiation result will win the Parliament approval and the EU can potentially use this as a counter argument (as the deal with the UK has greater uncertainty) in the negotiation.

Is Boeing losing its market?

Boeing's 737 Max 8 has been grounded due to the safety issue. However, due to the contracts signed between Boeing and airlines, airlines cannot get refunds and send back their purchased 737 planes; in addition, they cannot end the contracts and stop future 737 aircraft delivery without paying enormous compensations to Boeing. Therefore, the financial losses are more significant on the airline side, rather than on the trouble maker, Boeing, side. The  airlines which have bought Boeing 737 Max 8 are the victims of this crisis, though Boeing is the one that should definitely take the responsibility.

Buying planes is an expensive investment for all airlines and grounding the planes they buy means their expensive investments will not generate any incomes for them in the short while they also need to pay the interests for their loans borrowed from banks. Moreover, grounding the planes does not mean there is no further cost, the cost of maintainence of these planes is not cheap either. Therefore, these airlines do not only not receive any incomes from their recent purchases of the new aircraft Boeing 737 Max 8, they are burning cashes everyday for their investment. Some airlines are facing serious financial difficulties after the governments deciding to ground all Boeing 737 Max 8 planes.

On the other side, Boeing may face potential losses in the long term, but its immediate financial losses are not significant unless the airlines can win legal battles in court and make Boeing pay for their losses, which is not very likely. Moreover, in the future, when airlines make their purchase decisions, they will do cost and benefit analysis based on the information they have at that time with relatively limited consideration of the crisis this time.

Overall, the Boeing scandal's biggest victim is of course the people who tragically died in the accidents, but the airlines are also big victims; on the other hand, Boeing who causes the crisis may not face any significant consequence, especially given the size of the company.

Implication from Chinese used car market

According to FT, the new passenger car sales in China dropped in 2018 but the used car sales rose and the aggregate car sales still rose. It is clear that people still demand more cars in China; however, there are now more people buying cars from the used car market. Previously people were significantly more likely to buy new cars, now many people have turned to the used car market. There could be several reasons to explain this phenomenon.

First, new cars have very expensive premiums comparing with used cars. New cars should be valued higher than used cars; however, when people find the premium given to new cars for being new is too expensive and unreasonable, they will choose used cars. Secondly, it may show that the demand for cars is still growing, but people's affordability is falling, When people still find buying cars necessary but do not have sufficient money to buy new cars, they will buy used cars. Thirdly, improved information in the used car market can help to improve used car sales. One of the reasons that why people buy new cars is because they do not have confidence in the information they receive in the used car market. In the used car market, people do not only seek for lower prices, they also want to the conditions, especially safety, of the used cars they are choosing. When they have more confidence in the information they receive from the used car markets, they are more confident to trade in the used car markets, thus the sales in the used car market increase. Fourthly, people are spending their money more wisely on cars now. There are many reasons that people should wait for buying new cars, such as high premium, the coming of next generation cars. However, owning a car can make life more convenient, so people decide they probably buy cheaper used cars and buy something much better in the future.

I think all these reasons are valid and there may be other reasons and all factors contribute to the phenomenon we see from the Chinese used car market.

The PM takes some control back

On Thursday, a series of votes took place in Westminster and the Prime Minister won this series of votes. This would improve May’s leadership within the Conservative Party. The Parliament on Thursday voted against a second referendum and holding indicative votes as well as Corbyn’s amendment, and voted for delaying Brexit. The results all went in May’s favour. Some were not surprising and won widely and some were won very narrowly.

The defeat of holding indicative votes largely means May’s government still plays the major role in design the Brexit deal and negotiate with the EU and the Parliament will not take over the control of the Brexit process and replace the role of May’s government. This was a narrow victory for May that she only won by 314 to 312 with almost full support from her Party. Moreover, the vote on Corbyn’s Brexit amendment was also a close match and May only won this vote with full support from her Party as well as the DUP.

The other two victories were far less surprising. Without the support from the Labour Party, a second Brexit referendum did not have any chance of winning. Moreover, for delaying Brexit, although the Conservative Party is divisive over this matter (more voted against delaying),  other parties all agree that after failing to pass any alternative plan, the Britain should take more time to complete the Brexit process.

Overall, people still should not be optimistic about Brexit that the only difference made by this week’s votes is Britain now has more time for leaving the EU. Given the PM has been insisting her deal is the best that the UK can have, she may not be able to deliver any improved version in the near future, then the current chaos will repeat itself all over again.

Now, who is in charge?

On Wednesday evening, the UK House of Commons voted by 321 to 278 to reject a no-deal hard Brexit. Before the vote, the general public expected this to happen, as it was always the least favoured option by the majority. Now the UK has only two options now, either the UK leaves the EU with a new deal other than May's old one, or the UK stays in the EU. If the House of Commons decides that the UK should stay in the EU, then there will no further debate about how the UK should leave the EU. However, I do not think that the House of Commons has the courage to do this and overturn the referendum result, they are much more likely to achieve this by offering a second referendum as given the chaotic situation at the moment the UK population is more likely to vote for staying in the European Union. The previous big supporter of a second referendum, the Labour Party, withdraws its support for a second Brexit referendum but will support a referendum to vote on May's deal if her deal is passed by the Parliament. Therefore, we are now seeing the majority of the House is working to eliminate the possibility of staying in the UK from both the Labour Party and the Conservative Party.

On the other hand, the UK can leave the EU with a deal. However, people need to know although the Parliament has rejected a no-deal Brexit in all circumstances, a no-deal Brexit will be automatically triggered if the UK cannot produce an alternative deal. It is the time that the House should take in charge of producing a Brexit deal. Of course, the House can tend to pass what they want to be included and what they want to be excluded in the new deal; however, that will take a much longer time, it is not efficient. I do not think that they can produce something that is satisfying in a short period which is expected by the EU.

There are certainly a lot of challenges ahead of the UK. I hope it can go well as in a globalised environment, a bad UK economy is not going to benefit anyone. However, now it seems that the House is now in charge and I am not very optimistic and do not expect much.

What’s ahead of the UK?

On Tuesday evening, the UK Parliament rejected the Brexit deal proposed by the Prime Minister and now the Parliament needs to vote on whether the UK will leave the European Union without a deal or not tomorrow. Though May lost her voice during the debate, she still provided us with a clear picture about what political decisions the UK Parliament has to face in the very near future (like tomorrow) after she gave her defeat speech. I do not think that the majority of the UK population will see a hard no-deal Brexit as a good strategy to play, but we cannot eliminate this probability since at this moment anything can happen. The more likely options seem to be the UK either holds another referendum or extend the process of exiting the EU. These were also unlikely options in the past that the Conservative Party, the majority party in the Parliament, did not back May for delaying Brexit and strongly opposed the idea of holding another referendum. This is why I think that all options are possible at this stage now. The Labour Party welcomes another referendum, but will definitely face a lot of opposition from the Conservatives. I think that uncertainty mainly comes from the Conservative Party. It is the majority party in the House, but so far I personally do not see what the majority of the Conservative MPs will support. There is only one thing that is clear with the Conservative Party, which is they do not support May’s deal; however, now they have to deliver something that at least satisfies the Conservative Party itself. So far I think for the next votes, the Conservative MPs will split their votes, and this may strengthen the Labour Party and deliver a result that is preferred by the Labour Party. Therefore, I personally think that another referendum is the most likely option and no-deal is the least likely option; but again who knows.

The looming uncertainty surrounding Brexit

This week, the UK House of Parliament is going to vote another Brexit proposed by the PM. Last week, May warned the country that if this deal is rejected by the Parliament again this week, then the UK may never leave the EU. It may be good news for some people and bad news for some people, especially those 'Leave' politicians. The report has shown the business investment has been falling due to the looming uncertainty surrounding Brexit.

However, there is not just negative news, there is some positive news. According to data from the European Banking Authority, three out of four European bankers who earn more than €1m a year are still based in the UK despite the looming Brexit uncertainty. There can be several reasons given to explain why these wealthy and talented bankers largely base themselves in the UK. First, it still has some time for them to react to Brexit, and maybe some of them want to make their moves after the removal of uncertainty. Secondly, these bankers are in very senior positions and have responsibilities of directing their institutions in the mist of Brexit; therefore, they need to stay in the UK to manage their institutions. Thirdly, the UK has been the financial centre of Europe for a long period, it is just not so easy to move out of this environment. The UK has a much more friendly environment than anywhere in Europe. Therefore, the current allocation of these talented bankers do not necessarily mean they are not going to move out of the UK at some time in the future.

Overall, the negative impact is increasing over the looming uncertainty surrounding Brexit.

Is this really a threat?

A piece of news is that the UK PM warned the country that if the Parliament fails to pass the deal, the UK may never leave the EU. Is this really a threat? To me, this is not a threat. To some British people and EU countries, they are very welcoming this. But this is a real threat to many of the MPs, especially those from the Conservative party. For many of the MPs, they are the ones who has enjoyed the success of their ‘Leave’ campaign in the 2016 Brexit referendum. If the UK fails to leave the EU, it is definitely a humiliating defeat for these ‘Leave’ MPs as they fail their campaign promises and their political careers may be over.

Therefore, this is a real threat for those MPs who want the UK to leave the EU. May’s threat may be able to help her to win more votes from the ‘Leave’ campaign beneficiaries. This could increase the probability of winning her proposed Brexit deal. On the other hand, there are some politicians in the Parliament who want the UK to stay in the EU, such as the SNP. Her threat can be a great encouragement for them to create more opposition against her Brexit deal in the Parliament.

Overall, May’s threat can win more support but also create more opposition in the Parliament.  

The long lasting Brexit problem

Since the 2016 Brexit referendum, not just the UK, almost the entire Europe is clouded by the mist of Brexit. The Prime Minister, May, has suffered several defeats in the House of Parliament and still not produced a deal that makes the majority happy yet. One of the advantages claimed by the 'Leave' campaign is that the UK is free to sign trade deals with non-EU countries after leaving the EU; however, many of these trade deals have not been formally signed yet. Therefore, maybe the UK can sign new trade deals, but it has its uncertainty that these trade deals may not be signed eventually if other countries feel the UK economy is weakened significantly by Brexit and find it no longer profitable enough to sign trade deals with the UK.

Currently, the UK has one safe way, which is abandoning its plan to exit the EU. However, the Parliament has rejected this plan and I do not think this action will be reversed at any point in the future. I think that the UK may delay Brexit and buy itself more time to negotiate with the EU as well as its own Parliament. The Brexiters are themselves very divisive and do not have any much agreement within them. I do not know at this moment that how the UK government produces a deal that makes everyone happy, but I do not even think this is possible. I think that the Brexit problem is highly likely to be passed to the next government.

Why Chinese applications find it hard to break into foreign markets?

I went back to China during the Chinese Year New, found it so cool and convenient to make payments by mobile applications, such as Alipay and WeChat. Moreover, people can use these Alipay for making investment, buying insurance including pensions, booking taxi, paying utility bills and many other things. It is just far more convenient than any application used in the West. Google can provide AI assistance which can help people to book restaurants and make payments, but still it is not as convenient as WeChat or Alipay in China. Why do these convenient Chinese applications find it hard to break into overseas markets?

Actually these tech companies are trying to break into overseas market and have some overseas customers. But many of these overseas customers are Chinese students and those who are doing businesses with Chinese. There are several challenges for these tech companies. First, they do not have such enormous connections or power in the markets as they do in China. In China, they are connected to Didi (Chinese Uber), various financial institutions and other subsidiaries or companies; in overseas markets, they do not create such wide webs to cover all types of services. Secondly, to many foreign users, they simply contain too many functions. Many foreign users are not used to having so many functions in one application, they may have some difficulties of finding correct functions among so many functions in one application, when they are more used to applications like Uber, which only delivers one core function. Thirdly, these tech companies are still mainly focusing on the Chinees market. In China, they have the power and more importantly the Chinese market is large enough for them to generate good amounts of profits. Fourthly, translation and different using habits can make foreign users find these Chinese applications unattractive. And Chinese users are looking for different functions from foreign users, and many these companies make Chinese users’ demand a priority.

Overall, the Chinese market has its uniqueness, companies which succeed in foreign markets may not succeed in the Chinese market, and companies which succeed in the Chinese market may not be able to succeed in overseas markets.

How our civilisation may end

The G20 Health and Development Partnership released a report that claims the threats from deisease and antimicrobial resistance are as significant as climate change and G20 governments should make the health issue a priority just like finance. People can understand the importance of health and are able to draw links between population health and economic performance; however, when talking about economic performance, many people forget about health to some extent. This could be caused by there are simply too many factors affect economic performance and health is not the most obvious one especially comparing with banking and finance. Moreover, the impact of health on economic performance is not direct or immediate, the costs of bad health are often indirect and long term. There are other such indirect factors affecting the world economic performance. Another classical example of such factor is climate change. Environmental issues have been recognised for a long time, but climate change is relatively very new. In the past, people treated environmental issues as a threat to people's health. This remains true, but people widen the issue to a global scale and treat it as a systematic change rather than one isolated problem.

There can be a lot more such factors that are waiting for people's recognisation. However, the sad thing is that these indirect or unimmeidate factors do not gain people's attention until they are making significant impacts on our lives. When there is only one single person, he or she does not have the abilities to think about everything. With the entire world population, we cannot say that we are able to think everything but we should certainly think much more than what one individual thinks. And we certainly do. However, we also think that we do not think enough, the more we are thinking, the more problems we recognise. One individual has his or her abilitiy boundary, the entire population still has its ability boundary, though it is much much larger than the individual boundary. If we assume we have infinite problems ahead of us and the growth rate of new issue recognisation is strictly increasing. We will eventually end with the situation where we have too many serious and urgent problems to be solved with our abilities. Then our human beings will extinct after we fail to solve these urgent problems.

The Chinese stock market

The Chinese stock market has been rising over the latest month, due to the positive news surrounding the US-China trade negotiation. However, the investors are not only optimistic about the Chinese stock market at the moment, some international investors have also been interested in the Chinese stock market for a relatively long period of time. There has been a nearly $17bn inflow via the stock connect corridor with the HK since the launch of the programme in November 2014.

There is an interesting article on FT (https://www.ft.com/content/d008122c-3e56-11e9-b896-fe36ec32aece) written by Fabiana Fedeli (global head of fundamental equities and portfolio manager of emerging market equities at Robeco) explaining why overseas investors are optimistic about the Chinese stock market. Fedeli gives her explanatins in her article. First,  the opinions about the Chinese stock market future performance are very divisive. Secondly, foreign investors see the Chinese stock market from a global aspect while many Chinese investors see the Chinese stock market in a vacuum. Foreign investors compare the Chinese stock market performance with the world stock market performance, especially the MSCI World Index, and underperformance may imply undervaluation. Thirdly , when people expect the US economy to cool off, it could boost investors' demand for emerging markets.

I agree with her explanation; however, I have some extra points. The Chinese economy is the world second largest economy, so its stock market cannot be ignored. All global investment portfolios should have some proportion of Chinese assets, they can have negative views about the Chinese stock market and merely do this for risk pooling. Furthermore, $17bn inflow is not a significant number when we compare the investment inflow in the US stock market. Increasing inflows do not necessarily mean that the foreign investors hold different opinions in general.

Elon Musk and his Tesla

Tesla's share price dip over 7% on Friday. The stock was halted yesterday because the company had some big announcement; however, I think the so-called big announcement was rather disappointing. Tesla announced that it would close most of its brick-and-mortar stores and lower the price of its Model 3 and would not turn a profit in the first quarter.

The profitability of Tesla has always been a concern of the market. We cannot expect a newly established firm to be profitable from its early stage. In the auto industry, Tesla is a new company; however, in the EV sector, Tesla has been a leader in the sector, so its profitability has been in the market focus. The profitability concern definitely was the biggest drive for today's fall.

The decision of moving sales to online is not something that new. Many companies have tried some similar strategies, since online stores can reduce some costs. Morever, Tesla wants to be more capable of delivering cars to its customers as soon as possible, moving sales to online can help to improve the capability.

The reason for Telsa to lower its Model 3's price I think is largely because it is facing rapidly increasing competitions from other companies, including Volvo, Volkswagen, these traditional auto companies. Lowering prices without significant cost reduction will affect Tesla's profitablitym unless it can create a significant increase on its sales.