Special Reports


  1. The Disruptive Power of Virtual Currency: Is it Real?

    Virtual currency has been a debated concept within the technology community in the past few years, as transactions

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    Virtual currency has been a debated concept within the technology community in the past few years, as transactions through this medium do not require any third party’s involvement. The concept has generated mixed reactions from investors, regulators, traders and online exchanges.

    The potential for virtual currency is immense in this age of technological innovation, and businesses worldwide are assessing the pros and cons of adopting it.

    This document discusses the current and potential impact of virtual currency on sectors such as banking, payments, e-commerce and insurance. It assesses how various countries are prepared to adopt the medium and how it would impact the way businesses carry out transactions in the future.

    Although there are several types of virtual currencies, for the purpose of this study, we have focused only on convertible virtual currency (i.e., currency that can be converted into fiat money).

    The document highlights how virtual currency would play a role in disrupting the conventional payment and transaction models. Additionally, it focuses on how certain industries, such as e-commerce, have largely accepted virtual currency, while traditional sectors, such as banking and insurance, are cautious and still evaluating the associated risks and potential benefits before adopting it on a much wider scale.

    This document further highlights the trends in the adoption of virtual currency in the past few years, from the perspective of companies, regulators, investors and others. Moreover, it showcases countries (for example, the UK and the US) that have shown interest in adopting virtual currency and those (for example, China and India) that are reluctant to adopt it.

    We also discuss the various challenges associated with virtual currency. Based on research, currency volatility and the absence of an authorized regulatory structure are the biggest challenges faced by businesses in adopting virtual currency.

  2. Obamacare: Sectoral Winners and Losers

    As Republicans and Democrats continue to battle over the Patient Protection and Affordable Healthcare Act (popularly known as

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    Touted as one of the biggest healthcare reforms in the US, the Patient Protection and Affordable Care Act, has been the subject of countless political debates and discussions.

    As Republicans and Democrats continue to battle over the Patient Protection and Affordable Healthcare Act (popularly known as Obamacare), certain sectors have emerged as clear winners and losers from the current state of implementation of the Act.

    This report aims to identify the sectors that have benefitted and been adversely affected due to the implementation of Obamacare (beginning March 2010) and highlight the key drivers behind these trends.

  3. Winning Shelf Space: Private Labels or FMCG Brands?

    Consumer preference for Fast Moving Consumer Goods (FMCG), based on quality and affordability, in the high inflationary markets

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    Consumer preference for Fast Moving Consumer Goods (FMCG), based on quality and affordability, in the high inflationary markets led to the emergence of private labels across geographies such as Europe, China, India, and the Americas.

    Higher margins provided by the private labels in comparison to established FMCG brands have resulted in higher sales push by the retailers and hence, has augured well for the growth of private labels.

    This whitepaper is an effort to delineate the emergence of private labels and its impact on branded products in the FMCG sector.

    Through this whitepaper, we aim to delve in the current state of development of private labels globally, identify the headwinds and tailwinds for private labels, gauge the impact of these brands on established FMCG players, and evaluate the steps taken by established FMCG brands to arrest their eroding market share.

  4. FATCA: High-Cost Initiative To Curb Tax Evasion

    Enacted by the United States Congress in March of 2010, the Foreign Account Tax Compliance Act (FATCA) is a

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    Enacted by the United States Congress in March of 2010, the Foreign Account Tax Compliance Act (FATCA) is a federal law meant to deter tax evasion.

    Arguably one of the US government's most controversial mandates in recent times, the act aims to curtail routes that wealthy investors and corporations usually take to stash money in tax havens abroad.

    In agreement with 112 countries, FATCA calls for greater reporting compliance and information sharing among multiple tax jurisdictions, impacting various stakeholders in the value chain, from governments, banks, and financial institutions, down to IT and consulting firms, as well as individual US citizens.

    The act will allow the US government to identify American taxpayers who have accounts at foreign financial institutions (FFIs) and enforce reporting of those accounts; compelling investors and institutions to reconsider investments and ways of doing business.

    The act is not without its pitfalls however; the cost of compliance, implementation, and other legalities may prove to be an impediment to collecting taxes from offenders.

    Although financial institutions would be hard-pressed to implement FATCA-friendly systems and procedures, the US government as well as IT and consulting firms would stand to gain.

    Whether it achieves its purpose or falls short, FATCA's efficacy is sure to be tested in the years to come.

  1. Therapeutic Vaccines for Alzheimer’s — Are We Close Enough?

    Alzheimer's Disease (AD), one of the most common causes of dementia, accounts for nearly 70% of documented cases of

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    Dementia, a set of symptoms that include memory loss, difficulty while thinking, problem-solving, or trouble with language, causes a permanent decline in an afflicted person's ability to manage their own life.

    Alzheimer's Disease (AD) is one of the most common causes of dementia, accounting for nearly 70% of documented cases across the world.

    While researchers have made some headway over the years in their quest for a cure, current therapies simply target Alzheimer's symptoms. Successful cures for the underlying disease, or even the ability to delay its progression, still remain elusive.

    The hunt is on for a breakthrough drug that could treat the underlying disease, arresting or delaying the cellular damage that causes Alzheimer's symptoms to worsen.

    The development of AD vaccines has faced setbacks due to failures in a few late-phase clinical trials.

    While some theories suggest that the failed clinical trials may be due low drug dosage administered during trial phases (as a safety precaution) others postulate that current treatments are targeting the wrong protein to begin with.

    The pharmaceutical industry is exploring all available options to develop a successful therapy for AD.

    The global market for Alzheimer’s treatment is expected to grow at a CAGR of 10.5% from $4.9 billion in 2013 to $13.3 billion by 2023.

    Future research would lean toward the development of vaccines that possess new peptide candidates — such as tau proteins and protofibrils — as well as more accurate diagnosis with the aid of biomarkers. In addition, the advent of advanced therapies like CRISPR could make viable AD treatments well within reach.

    This report covers current research into therapeutic vaccines for Alzheimer’s Disease (AD), with topics that include market drivers, challenges associated with developing safe next-gen therapeutics, vaccines and therapies currently under development, as well as the technology and commercial ecosystem for AD therapy.

     

  2. How to Get the Most Out of IP Financing

    While the use of intellectual property as collateral to obtain finance is an increasingly common phenomenon, intangible assets

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    The use of intellectual property as collateral to obtain finance is an increasingly common phenomenon.

    Over the past three decades, the proportion of tangible assets in the market value of Standard & Poor’s 500 firms has declined from over 80% to under 20%.

    This clearly signifies the rising contribution of intangible assets such as patents, brands, customer goodwill and employee goodwill.

    With companies’ growing IP portfolios, financing against collateralization of IP assets is increasingly seen as a realistic alternative to traditional financing.

    Many banks, non-bank lenders, government bodies and capital venture and financing arms of large corporate bodies provide IP-backed financing — some have been doing so for more than three decades.

    However, herein lies the irony.

    According to a survey conducted by the Federal Reserve System, over 98,000 business loan transactions (secured by collateral) were executed in 2015 by domestic and foreign commercial banks in the United States.

    However, intangible assets — primarily patents — were used as security in just about 4% of them.

    In this article, we analyze what has kept IP-based financing from taking off, and more importantly, what can be done to overcome it.



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    This article first appeared in IAM Yearbook: Building IP value in the 21st century 2017, a supplement to IAM, published by Globe Business Media Group - IP Division.

    To view the guide in full, please go to www.IAM-media.com.

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  3. The Internet of Medical Things (IoMT)

    A healthcare application of IoT technologies, the Internet of Medical Things (IoMT) represents a new era of personalized

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    A healthcare application of IoT technologies, the concept of Internet of Medical Things (IoMT) envisions a network of connected devices that sense vital data in real time.

    It also goes a step further from passive monitoring, through the enablement of machine to machine interaction and real-time intervention solutions that will radically transform the healthcare industry in terms of delivery, affordability, and reliability.

    By providing individual data-driven treatment regimens and devices tailored to individual physiological requirements, IoMT will promote personalized care and high standard of living. Moreover, recent research in sensor, networks, cloud, mobility and big data domains will spur an age of affordable medical devices and connected health ecosystems.

    While IoT-based medical technology applications are still in a nascent stage of development, the implementation of connected devices represents a new era of personalized healthcare and better living standards the world over.

    This report contains analysis and insights on intellectual property and patents held in the Internet of Medical Things (IoMT) technology domain, an industry that could be worth well over USD $156 Billion by 2020.

  4. Cardiac Nuclear Imaging and Radiotracers

    Recent novel radiopharmaceuticals agents developed to target specific subcellular process are capable of significantly improving diagnostic accuracy and

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    Recent novel radiopharmaceuticals agents developed to target specific subcellular process are capable of significantly improving diagnostic accuracy and prognostic evaluation.

    The global nuclear medicine diagnostic (PET and SPECT) market is slated to cross $ 16 billion by 2019, primarily driven by such diagnostic utilities in identifying the functional and perfusion status of targeted tissues.

    These scans are routinely used to visualize a patient’s cardiac physiology, leveraging the advantages of novel radiopharmaceuticals in order to assess metabolism, neural dysfunction, post-transplant cellular response, atherosclerotic pathophysiological progress, as well as tissue viability.

    This report focuses on recent developments in cardiac nuclear imaging.

    We’ll cover their advantages, limitations, a few recently discovered clinical indications, as well as some specific radiotracers that are being explored for viability. We’ll also cover what the future holds for this life-saving technology.

  5. Gene Therapy - Advanced Treatments for a New Era

    Gene therapy involves inserting/deleting/correcting genetic material into human cells to fight or prevent diseases. It is

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    Gene therapy involves inserting/deleting/correcting genetic material into human cells to fight or prevent diseases. It is a promising tool not only for cancer but for several other diseases, such as Parkinson's, HIV, severe combined immuno-deficiencies and hemophilia, to name a few.

    In this report, we’ll cover the challenges associated with gene therapy, various modes of administration of gene based therapies, expected future of gene therapy, companies that are investing heavily in gene therapy research, as well as FDA approved gene-based drugs that are currently available in the market or undergoing clinical trials.


    Considerable research has been conducted in genomics in the past two decades. Extensive research in the gene therapy domain began in 2001, when two separate versions of human genome sequences were published. These drafts contained 30,000 genes, which were used to decipher gene function, gene abnormality, and malignant alternations at the gene levels.

    James Watson was quoted as stating, “We used to think that our fate was in our stars, but now we know, in large measures, our fate is in our genes.” Genes are the functional unit of heredity. When altered, the proteins that they encode are unable to carry out their normal functions. Gene therapy (the use of genes as medicine) is basically used to correct defective genes.

    Gene therapy initially encountered a lot of problems as people considered it unethical to use humans as subjects for clinical trials. However, as time passed, gene therapy has proved to be a useful tool to cure several forms of disease.

  6. Nanoparticle Drug Delivery Systems For Cancer Treatment

    Nanotechnology is a rapidly evolving domain solving various issues associated with conventional drug therapeutics, including poor water solubility

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    At just 1–100 nanometres in size, Nanoparticles are the next big thing in cancer treatment.

    Designed to enter tissues at a molecular level, they can help therapeutic agents pass through biologic barriers, mediate molecular interactions and identify molecular changes.

    A bold new platform for cancer diagnostics and therapy, these particles can be used as carriers in a targeted drug delivery approach, minimizing drug-originated systemic toxic effects.

    The development and application of engineered nanoparticles to more effectively treat cancer have witnessed significant advancement over the past several decades.

    Nanotechnology is a rapidly evolving domain solving various issues associated with conventional drug therapeutics, including poor water solubility, lack of targeting capability, non-specific distribution, systemic toxicity, and low therapeutic index.

    Download our report to know more about current research trends and promising new developments in the use of nanoparticles to fight cancer.

  7. Pharma Patent Monetization: New Approaches, New Synergies

    Patents are the undisputable kingmakers in the life sciences industry.

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    Patents are the undisputable kingmakers in the life sciences industry.

    Pharmaceutical giants who enjoyed a fruitful run while their branded drugs brought in billions have reached a precipice however.

    The exclusive rights to a number of chemical drugs expired over the past four years, a patent cliff that left some of the biggest drug makers scrambling to stem their revenue loss.

    As many biologics are slated to go generic in the coming years, the pharma industry is increasingly looking to reduce its dependence on blockbusters.

    Such steep patent cliffs and far fewer in-house breakthrough innovations in recent years have forced the pharmaceutical industry to re-examine its business models. Many companies are shifting focus from finding their next blockbuster, instead looking for innovations that may become the space’s next big breakthrough.

    An increased impetus on forging alliances has altered industry dynamics; old blockbuster-based operating models have come crashing down.

    Although many small and medium-sized companies own patents and technologies at the commercial stage, they lack the resources to manufacture internally. These companies stand to benefit from their exclusive, sometimes niche patents, and are primed to commercialize their innovations. These fledgling companies forge alliances with investors and pharma companies that are looking to commercialize such promising innovations.

    With old dogs in the market for new tricks, it’s prime time to find and build the right collaborations.

    As companies actively seek associations with similar players to develop symbiotic relationships, monetize patents, and optimize alliances, is this a new age of pharmaceutical innovation?

    This article first appeared in IAM Yearbook 2016: Building IP in the 21st Century, a supplement to Intellectual Asset Management, published by Globe Business Media Group - IP Division.

    To view the guide in full, visit www.iam-media.com.

  8. Intellectual Property Global Masters 2009

    Innovation and intellectual property (IP) have emerged as the key for the development of competitive advantage.

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    Innovation and intellectual property (IP) have emerged as the key for the development of competitive advantage. Especially, in the current context of economic turmoil, shrinking sales and falling profits. However, only fierce protection of the innovations and the resulting intellectual property can ensure sustainable success.

    Having said that, managing IP is a difficult task. According to one assertion, "97 percent of all U.S. patents have no economic value." Further, research suggests that companies with patent portfolios of more than 250 have about 10 percent of invalid patents. Over the course of the 20-year life span, the average cost of a single patent is about $25-250,000 excluding lawyer fees, overheads and other costs. And worse, it is estimated that good companies use only 20 percent of their patents while badly run companies use only 10 percent. Given these facts, corporations have a lot to worry about their current competitive edge and future sustainability.

    And it's not just the corporations; the law firms are also facing several challenges while providing legal services to the clients. According to Inside Counsel's 19th Annual Survey of General Counsel 2008, 85% of in-house counsel said that economic conditions are increasing pressure to spend less on outside counsel while only 11.6% of the in-house counsels believe that the law firms are seeking active ways to reduce cost of legal services. Given these facts, law firms have to rethink about how to meet their client's expectations in changing global IP environment.

    On June 15-16, 2009, over 60 European business leaders and Intellectual Property Managers met in Berlin at the Econique Intellectual Property Masters Global 2009 conference to discuss the challenges and to exchange their experiences in IP management.

    Aranca, a leading provider of IP Research and Analytics Services, was the exclusive Research Partner for the Event.

    This report presents a summary of some of the burning questions discussed, and highlights some of the breakthrough ideas and insights gleaned from the two-day event. We look forward to your thoughts on the issues in managing IP.

  9. Weight Reduction Technologies in the Automotive Industry

    Increasing pollution from the transportation sector has led to strict regulations on major automobile manufacturers to curb the

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    Over the decades, harmful vehicular emissions have shown a negative impact on the environment and human health.

    Increasing pollution from the transportation sector has led to strict regulations on major automobile manufacturers to curb the harmful emissions. With stringent regulations and heavy penalties to contend with, automakers are on a constant lookout for different methods and technologies that help curb vehicular emissions.

    While the majority of research by automakers and OEMs is focused towards developing low-weight components, their ability to incorporate lightweight materials at an acceptable price is a major developmental challenge.

  10. CO2 As A Future Refrigerant

    After refrigeration technology became wide-spread, CFC’s saw extensive use owing to its ease of use and efficiency. D

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    After refrigeration technology became wide-spread, CFC’s saw extensive use owing to its ease of use and efficiency.

    During the 1970’s however, the world got a chilling shock. We discovered that this refrigerant's presence in our atmosphere would damage the planet's ozone layer for years to come. When that came to light, the world united in its hunt for a better alternative.

    While potential solutions faced many challenges to market entry, a promising new refrigerant emerged. As CO2 based refrigeration technology grows in both viability and availability, it shows appreciable promise to reduce atmospheric pollution by Ammonia and other often potent greenhouse gases.

  1. Emerging Markets’ Infrastructural Sector — At a Tipping Point

    Global infrastructure sector continues to bear the brunt of constrained public budgets and lack of effective government and

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    Global infrastructure sector continues to bear the brunt of constrained public budgets and lack of effective government and private partnerships that has led to inadequate investment and a disappointing growth. Consequently, the gap between the required and actual investment continues to widen. We believe, selective investment strategy in emerging markets will open door to plethora of investment opportunities in the sector.

    While in emerging markets basic infrastructural facilities are not up to the mark, there is an increasing demand underpinned by growing populations, rising affordability, the need to upgrade to better standards of living, and improving levels of urbanization and modernization.

    We believe emerging markets in Asia and Africa offer better growth opportunities supported by high single digit growth in their economies in real terms. However, these opportunities tag along challenges related to executional bottlenecks associated with poor governance, and a lack of experience in implementing projects using superior methods.

  2. Saudi Aramco IPO — A Reality Of Mythical Proportions?

    With both the world's largest proven crude oil reserves as well as its largest daily oil production capacity

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    With both the world's largest proven crude oil reserves as well as its largest daily oil production capacity to boast of, Saudi Aramco is a force to be reckoned with.

    In this report, we'll:

    • Gauge the sheer scale of the company and its impact on the industry.
    • Size up what's shaping up to be one of the largest IPOs the financial world could ever see.
    • Examine the potential political and economic ramifications of such an event.



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    This report has also been featured as an article on SeekingAlpha.com and TheStreet.com.

  3. China’s Luxury Market — Losing Sheen?

    China’s current economic slowdown has been a bane for the country’s millionaire club. A weak currency, str

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    China’s current economic slowdown has been a bane for the country’s millionaire club.

    A weak currency, strong ant-corruption reforms, and stiff luxury taxes are forcing global luxury brands to rethink their expansion plans in one of the world's fastest growing consumer economies. While a growing affluent class and improving taste meant the Chinese were among the biggest spenders on luxury goods in 2014, wealthy consumers in China have significantly slowed the pace of purchasing luxury goods on the mainland, raising concerns that China’s love for luxury may be cooling.

    The Chinese Yuan’s surprise devaluation isn't helping things either, with sales of luxury goods expected to drop further.

    In this report, we've covered:

    • Why China’s domestic luxury market is losing its lustre, and the categories that are on the decline.
    • How the Yuan's devaluation has weighed heavily on luxury spending.
    • Why millionaires in China aren't spending as lavishly as they used to.
    • How the Chinese government's crackdown on corruption has affected the country’s graft-by-gift-giving culture.
    • Why Chinese consumers prefer getting their luxury goods abroad.
  4. China Slowdown — Impact On Key Economies

    After three decades of extraordinary growth, the Chinese economy is undergoing a major transition from export and investment-driven

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    After three decades of extraordinary growth, the Chinese economy is undergoing a major transition from export and investment-driven growth to consumption and service-led sustainable growth.
    The transition is underway in the midst of a pronounced economic slowdown however, a contagion that has the potential to spill over to other economies as export-driven economies weather the effects of a Chinese slump. As waning demand from one of the world's most prolific markets has an adverse effect on global trade, commodities exporters are particularly concerned.

    In this report, we've highlighted how China’s economic slowdown could affect some prominent commodities exporters that have strong trade ties with the country. We've covered several Asian economies as well as other countries that would be significantly affected by waning demand as well as falling investment flows & commodities prices.

  5. Aircraft Safety Systems - In The Spotlight

    Not long after we first caressed the clouds, billions of travellers take to the skies every year on

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    Not long after we first caressed the clouds, billions of travellers take to the skies every year on the world’s fastest mode of transport.

    As the aviation industry soars toward lofty goals, a global surge in air travel brought with it an inescapable spike in aircraft-related fatalities. The aerospace industry is working feverishly on technologies that improve safety and help pilots make foolproof decisions. As our world grows smaller and we fly higher, could new and improved technology make air travel safer than ever before?

  6. Value Stocks - At the Cusp of Re-rating

    In December 2015, the US Federal Reserve decided to normalize interest rates, with an increase in the federal funds

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    Value Investing, a Bottom-up Approach

    In December 2015, the US Federal Reserve decided to normalize interest rates, with an increase in the federal funds rate, for the first time since 2006.

    This reversal in interest rates is compelling investment managers to revisit their strategies.

    Traditionally, portfolio managers follow the growth and value investing approaches for stock selection. Under growth investing, a portfolio manager selects stocks with high bottom-line growth, return on equity (ROE), profit margin, and low dividend yield. On the other hand, value investing focuses on companies that operate on a robust business model but trade at a subdued valuation relative to their sound fundamentals.


    Value Investing Has Been Under-performing Since the 2008 Financial Crisis

    Since the financial crisis of 2008, central banks in developed nations have adopted loose monetary policies. This has resulted in a decline in the bond yield from sovereign nations. The low-yield environment has encouraged portfolio managers to add risky assets with high growth potential to their portfolio, thereby increasing the valuation multiple of growth assets.

    Currently, the MSCI World Growth Index is trading at a PE multiple of 24.3x — its highest in over a decade — vis-à-vis the average of 19.8x from 2005-15. Meanwhile, the MSCI World Value Index is trading at a PE multiple of 16.5x vis-à-vis the average of 15.6x from the last 10 years (2005-15).

    By mid-2015, the valuation gap between the MSCI World Growth and Value indices reached the highest level of 9.20x (as compared to 10-yr average of 4.27x). The MSCI World Growth Index has been outperforming the MSCI World Value Index since the financial crisis in 2008.

    TTM PE MSCI World Growth Indices

    TTM PE MSCI World Growth Indices

    Amid Fed Rate Hikes, Value Investing Outperforms Growth

    Since 1985, the relationship between growth and value investing has been consistent throughout the interest rate cycle.

    Value investing usually outperforms when the monetary policy is tightened, as witnessed after the recession in 1990 and during the dotcom bubble. Value investing outperformed growth by 18.5% during 1992–94 and by 50.8% during 2000–06; this is precisely when the monetary policy in the US was tightened.

    Fund Rate vs Difference in Return%

    Fund Rate vs Difference in Return%

    During 2007–15, the MSCI World Value Index marked its longest period of under performance vis-à-vis the MSCI World Growth Index; however, this is expected to change in the near future.

    Between 2004 and 2006, the US Federal Reserve raised interest rates 17 times to slow an overheated economy and curb escalating inflation levels. Despite the rate hikes, equities continued their strong performance.

    There was wide disparity in the performance of growth and value investing however. In fact, although the valuation multiple contracted, value investing outperformed growth investing during this period.

    As evident in the following chart, the MSCI World Value Index outperformed the MSCI World Growth Index during 2003-06.

    Fund Rate vs YoY%

    Fund Rate vs YoY%

    Valuation Multiples of Growth Companies are More Susceptible to Changes in Monetary Policy

    Valuation multiples expand or contract in tandem with changes in the Fed’s interest rates. We have demonstrated this relationship using a simple derivative of the justified PE multiple.

    Based on our calculation, the growth company has a justified PE multiple of 24.0x, while the value company’s corresponding multiple is 12.8x. The primary factor for the difference between the justified PE multiples is the higher ROE and long-term sustainable growth rate.

    Value Indices vs Interest Rates

    Value Indices vs Interest Rates

    As seen in the chart, the growth company’s PE is more sensitive to an increase in the interest rate compared with the value company.

    Vale Investing May Turn Around in 2016

    The US Federal Reserve’s 25bps hike in the interest rate in December 2015 is just the beginning of a series of increases expected in 2016.

    Economists argue that that the Fed could raise the interest rate by as much as 100bps during the course of the year, supported by lower unemployment rate, a marginal increase in wages, and a rise in inflation.

    However, recent turmoil in the Chinese stock market may delay these rate hikes. Despite the risks, we are likely to witness an increase in interest rates in 2016. This would act as a catalyst for re-rating value stocks and drive their out performance over the next few years.

  7. Connected Cars - A Rising Trend In The Global Automobile Sector

    Cars with access to the Internet, also known as connected cars, are gaining popularity in the automobile industry.

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    Cars with access to the Internet, also known as connected cars, are gaining popularity in the automobile industry.

    Its sales are expected to increase at a CAGR of 46% over 2015 – 20 and account for 75% of global car shipments by 2020, driven by increased demand from the young population (aged between 25 and 34 years) as well as higher demand from the North American and Asian regions.

    Connected cars provide consumers with several technological advantages such as mobility management, vehicle management, entertainment, driving assistance, and safety features.

    To offer these features in cars, automobile manufacturers would need to substantially upgrade their existing technologies and collaborate with mobile network operators.

    However, the implementation of these features involves various challenges, particularly cyber security, including unauthorized access and hijacking.

  8. Listed Infrastructure - An Attractive Investment Alternative

    In the current global scenario where traditional asset classes no longer assure stable returns, listed infrastructure is attracting

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    In the current global scenario where traditional asset classes no longer assure stable returns, listed infrastructure is attracting investors in a big way. In 2015, investors have largely been cautious about the equity markets due to expectations of stable growth in the US and the likely interest rate hike by the US Federal Reserve (Fed) amid declining jobless claims and improving consumer sentiment. However, inconsistent economic indicators, the Greek crisis and a slowdown in China impacted returns. Even amid concerns about the global economy, bond yields were at their lowest in most developed economies, making fixed income investments unattractive. Moreover, the continued fall in gold prices more than eroded the safe-haven appeal of the precious metal.

    Global fund managers consider real estate an alternative investment avenue for stable returns on their investments, as real estate assets are likely to witness substantial price appreciation. Listed infrastructure, an upcoming segment of the real estate sector, is gradually gaining traction among fund managers due to its monopolistic nature, price inelasticity, stable predicted cash flows, and inflation hedging characteristic. Although these assets are also traded in the form of equities, the underlying asset is immune to default risks due to strong government backing. Furthermore, these equities act as defensive plays during the downturn.

    Listed infrastructure assets are largely government or quasi-government owned. The sovereign backing makes ongoing infrastructure projects less likely to default compared with other privately held real estate asset classes. These assets work in a cost plus model; hence, profitability is already hedged. Also, listed infrastructure assets typically enjoy monopoly due to entry barriers set by the local governments, thus maintaining stable cash flows. Demand for these assets is often inelastic to price changes, such as electricity, water, toll, as people continue using these utilities despite tariff changes. Thus, this asset class provides stable returns even during an economic downturn. Although investment in infrastructure is capital intensive, the equity route makes it cheaper, investor friendly and keeps transactions transparent.

  9. India Budget 2013-14 Analysis

    Given the limited resources at his disposal, expectations from the finance minister were low.

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    Given the limited resources at his disposal, expectations from the finance minister were low. Domestic and foreign investors were not anticipating an encore of the “Dream Budget of 1997”. There were regular wish lists:

    • Reduce the fiscal deficit, which is crowding out private investment and driving up interest rates
    • Reduce the current account deficit – Energy and gold imports have driven the current account deficit to 5% of GDP, which is double the government’s long-intended comfort level of 2.5%
    • Generate growth – Get economic growth back to 9% levels by providing incentives for consumption and investment
    • Ensure a stable taxation regime – Undo the follies of his predecessor, revise the direct tax regime and hasten the passage of the GST (which, by some estimate, can boost GDP growth by 2%)

    In the face of such expectations, the finance minister presented what must be called a responsible fiscal budget, eschewing the populist agenda of the past. The improving situation in the past couple of months allowed the finance minister enough wiggle room to increase public spending by 16%, increasing outlays on social as well as key economic sectors. This should translate into economic growth of 6.1–6.7% in FY 2014 and keep fiscal deficit under check at 4.8% of GDP… [Read the complete Aranca Analysis of India Budget 2013-14]

    Our analysts put together a short commentary on:

    • GDP, fiscal deficit and taxation matters
    • Proposals to boost investment
    • Measures on corporate fund raising and initiatives in core sectors
    • Sectoral impact analysis
  10. SAUDI ARABIA - A USD1.3 Trillion Economy by 2025

    As the exclusive knowledge partner for The Euromoney Saudi Arabia Conference 2013.

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    As the exclusive knowledge partner for The Euromoney Saudi Arabia Conference 2013, Aranca has compiled a special report on Saudi Arabia’s journey till 2025, highlighting the Kingdom’s economic potential, its influence on the region’s economy and opportunities available.

    The Kingdom of Saudi Arabia (KSA), a completely oil-dependent economy until a few decades ago, has now transformed into one of the most vibrant economies in the Middle East. Today, the country has a diversified economic structure, strong international trade links, a stable political environment, strong fiscal surplus and a vibrant financial services sector. Saudi Arabia’s increasing contribution to the global economy has earned it a permanent seat at the G-20 -- the only OPEC member to get the honour.

  11. Aranca Report on India Interim Budget 2014

    In the last budget of the UPA II government, Mr. Chidambaram stressed on the country’s inherent potential t

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    In the last budget of the UPA II government, Mr. Chidambaram stressed on the country’s inherent potential to regain high economic growth. With the general elections now only months away, clearly some of the targets set in the interim budget appear optimistic. Since this was a vote on account rather than the budget, his terms of reference were restricted constitutionally, and there was very little scope for him to introduce new taxation and expenditure proposals.

  12. Saudi Arabia – Emergence of an Innovation Kingdom | An Aranca Special Report

    Supported by resilient collaboration between the government, academia, and industry, the Kingdom of Saudi Arabia has laid the

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    Supported by resilient collaboration between the government, academia, and industry, the Kingdom of Saudi Arabia has laid the foundation for a knowledge-driven economy. Innovation-led strategic transformation is underway in the Kingdom and is likely to be the foundation of the next wave for economic and social progress. This special report on Saudi Arabia highlights the fact that Innovation (or simply the use of technology) is the most important aspect that will separate the economic leaders of tomorrow from the ‘also-rans’.

  13. India Budget 2014-15 Analysis

    When the Finance Minister Mr. Arun Jaitley assumed office earlier this year, he had his task cut out

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    When the Finance Minister Mr. Arun Jaitley assumed office earlier this year, he had his task cut out for him. The country was slowly descending towards the “Hindu rate of growth” (~3.5%) over the past two years. Fiscal numbers were amiss, indecisiveness and red tape had affected government operations, supply side bottlenecks were creating stagflationary conditions, and business sentiment was in doldrums. Yet, the first budget from the Finance Minister seems to be a concrete step to rekindle growth through fiscal consolidation, investment cycle revival, driving the manufacturing sector, supporting agriculture and restoring business sentiment.

    To begin with, the fiscal deficit for the year has been pegged at 4.1% of GDP in 2014–15; this would be reduced further to 3% by 2016–17. Despite the steep target and sluggish macroeconomic conditions, the Finance Minister has decided to dig his heels in and work on this admittedly hard task. Though he has not outlined how he would go about achieving these targets, the Finance Minister has stated that tax buoyancy (rather than curbing essential expenditure) would be the way forward. The establishment of the Expenditure Management Commission and the introduction of the Goods and Service Tax could be the first steps.

    Jaitley’s Budget did not forget the “aam aadmi” who voted on its feet and gave an overwhelming majority to the government. As a sign of thanks there were a number of benefits in the form of tax concessions (rise in tax exemption, easier norms for student loans, allocations for low-cost housing and rise in investment limits).

    The NDA government has projected this budget as the first step in returning the country to 7–8% growth. Given the short time frame, numerous problems at hand and limited fiscal bandwidth, the Finance Minister unveiled a pragmatic budget which takes into account ground realities and suggests some quick fixes. It would be too early to pronounce judgment on this budget and the government would face its real test in 2015-16, when the honourable Finance Minister rises to present his second budget.

  14. Market Liberalization in Saudi Arabia: Opportunities Galore for Foreign Investors

    In July 2014, authorities approved plans to fully open the Saudi stock exchange (Tadawul) to foreign direct investments (expected

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    In July 2014, authorities approved plans to fully open the Saudi stock exchange (Tadawul) to foreign direct investments (expected by 1H 2015). The move is believed to be a precursor to the much coveted inclusion of Tadawul in the MSCI EM Index (likely in 2017). Following the recent upgrade of the UAE and Qatar to emerging-market status, this could enhance MENA’s visibility among global investors and increase its weightage from 1.35% currently to 5.35% (with Saudi Arabia alone accounting for 4% of this).

    In this backdrop, Aranca’s special report Market Liberalization in Saudi Arabia: Opportunities Galore for Foreign Investors examines the potential opportunity for global investors (both passive and active fund managers). While the likely inclusion of Saudi Arabia in the MSCI EM Index in 2017 would imply an allocation of around USD40bn to the Kingdom by global portfolio managers, our back of the envelope calculations suggest that the market cap could increase by USD150bn if the Mcap/GDP ratio improves by just 10bps. The report also examines the fundamental strength of the Saudi economy and the development of its regulatory regime, which is a key factor for sustained global interest. We also examine how markets in India, UAE and Qatar benefitted significantly – in terms of market activity (volumes, turnover, index movement) as well as rise in foreign ownership – after opening their stock market to foreign investors.

  15. Photovoltaic Industry  Witnessing a Paradigm Shift

    The global photovoltaic (PV) industry has evolved substantially during the last decade.

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    The global photovoltaic (PV) industry has evolved substantially during the last decade. Europe’s dominance in the global PV industry has ended sooner than anticipated, as new ‘power’ centers emerged. Europe accounted for 74% of the world’s new PV installations in 2011, but constituted just 29% in 2013. Although global data indicates momentum in the PV industry, it needs to be rationally analyzed to understand the fundamental changes occurring in the industry.

    In today’s fast-changing business environment, decision as well as timing earns dividend. Therefore, company strategists and investors in the PV industry need to re-calibrate their strategy in sync with the paradigm shift in the industry.

    The analysis of Europe’s PV industry visà-vis the global PV industry may help the companies to devise their expansion/consolidation strategies; moreover, it may help investors rationalize their corpus to fetch better returns.

  16. Demographics in Saudi Arabia: New Age Of Opportunities

    While Saudi Arabia's economic performance has always floated on its oil, the sands of time reveal more vernal

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    While Saudi Arabia's economic performance has always floated on its oil, the sands of time reveal more vernal fortunes.

    An increase in its indigenous working population coupled with an influx of affluent migrants has swelled its consumer population and stimulated key sectors in the economy. The underlying impact of changing demographics on long-term fundamental demand drivers is yet to be seen.

    Could changing demographics be a boon to Saudi Arabia’s economic growth?

  17. Buybacks & Dividends – A Trillion Dollar Offer

    Strong macro numbers, exceptionally low interest rates and a healthy recovery in profits after the economic crisis have

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    Strong macro numbers, exceptionally low interest rates and a healthy recovery in profits after the economic crisis have increased several S&P500 companies' appetite for buybacks and dividends.

    With the buyback index at a three-year high, investors are jubilant as capital-rich companies confidently pursue business plans amidst stable economic recovery.

  18. Asia Pacific: An Evolving VC Market

    Spurred by substantial growth in key economies like India and China, Asia-Pacific has emerged as a sweet spot

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    Spurred by substantial growth in key economies like India and China, Asia-Pacific has emerged as a sweet spot for global Venture Capital investors.

    While Asian governments' focus on favorable policy reforms and good governance has made APAC regions a hotbed for global venture capital, could rising valuations be a cause of concern for late-stage investors?

  19. Gold - Will it Shine In the Near Term?

    Gold prices slumped below USD1,100/ounce owing to a strong US dollar and a slew of other global

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    Gold prices slumped below USD1,100/ounce owing to a strong US dollar and a slew of other global happenings.

    With Gold's net long positions at their lowest since January 2014, should investors lose interest in this once-lustrous commodity? Perhaps not.

  20. Indian IPOs: The Quality vs. Quantity Conundrum

    A phenomenal rise in the variety of IPOs this year heralds India's headway in becoming a more sophisticated

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    A phenomenal rise in the variety of IPOs this year heralds India's headway in becoming a more sophisticated market. This transition is sure to test the readiness of the entire trading system, where debt could become an increasingly attractive option for companies to raise funds.

  21. India Online Travel Industry - Potential For Rapid Growth

    With greater access to technology and connectivity than ever before, a booming middle class and several other tailwinds

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    With greater access to technology and connectivity than ever before, a booming middle class and several other tailwinds are expected to bolster the already rapid growth of online tourism in India.

  22. Greece Impasse – Can Europe Bear Greece’s Future?

    After making some headway in fiscal reforms, Greece is still in trouble.

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    After making some headway in fiscal reforms, Greece is still in trouble.

    Recent risks emerging in its banking system and the impending payments in June have made the country seek extensions through a debt relief program with its Eurozone creditors.

    If both sides continue to take a tough, myopic stance by grossly underestimating the full intensity of a default and exit, regional as well as global stability could potentially be at risk.

  23. RBI's Surprise Rate Cuts: Beating The Rush?

    You found the two rate cuts in 2015 surprising? You are in for more!

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    You found the two rate cuts in 2015 surprising? You are in for more!

    The significance of the two rate cuts in 2015 (January 15, March 4) cannot be overstated. The rate cut on January 15 was not only the first one since May 2013 but also Dr. Raghuram Rajan's first out-of-policy-cycle announcement. It is interesting to note that the rate cut was announced on January 15, just one day after the release of WPI, which was close to zero. The timing of the second rate cut, coming close on the heels of the Union Budget 2015–16, was another surprise.

    Although the budget prolonged the period of reaching 3% fiscal deficit target to three years instead of two, the RBI governor still announced the second rate cut, giving a long rope to the government ('...the government intends to compensate for the delay in fiscal consolidation with a commitment to an improvement in the quality of adjustment'). After maintaining repo rates at 7.25–8.5% for nearly three- and-a-half years (during which India's GDP growth rate nearly halved to 5%), rate cuts were long overdue to support economic growth, especially as inflation has taken a breather.

  24. High Yield Bonds - The Rise of the Fallen

    The global high yield bond markets have witnessed sentiment to risk-off mode.

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    The global high yield bond markets have witnessed sentiment to risk-off mode. This has since been partially significant growth and diversification over the last few years aided by the extraordinary monetary policy accommodation provided by central banks across the world. The unprecedented liquidity made available at record low yields has thus led to a significant pick up in both primary market and secondary market activity in the asset class. Banking disinter-mediation in Europe and regulatory changes in the financial sector further contributed to the deepening and diversification of the high yield bond markets even as emerging market issuance entered the fray.

    In this backdrop, Aranca’s special report - High Yield Bonds - The Rise of the Fallen - examines how liquidity concerns have increased with changing regulatory environment, rising capital requirements and declining risk appetite leading to decreasing bond inventories at both banks and other dealers even as corporate bond issuance are at an all-time high.