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FINSUM

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Friday, 11 July 2014 00:00

Portugal Suffering from Brain Drain

(Lisbon)

In spite of its widely covered economic recovery, Portugal has been losing hundreds of thousands of talented and educated workers to foreign jobs. Every five minutes a young and educated Portuguese citizen flees their country in search of greener pastures elsewhere, mostly in Europe, and often in Germany. In some sectors, like nursing, pay is quadruple outside of Portugal versus domestically, and jobs are much more stable. The country has not seen an exodus on this scale since the 1960s, when people fled the iron-fisted rule of dictator Antonio de Oliveira Salazar. Portugal has slowly emerged from its recession and is again growing, but youth unemployment (under 25s) still stands at 37.5%, and young graduates are vacating the country as fast as possible. The shortage of workers is said to be most dire in the healthcare sector, where one-third of qualified staff is leaving the country.


FINSUM: This story is hugely important for the future of the Portuguese economy. If the government cannot convince young workers of a future bright enough to stay at home, then the country will not have the workforce to kickstart the economy.

(New York)

The newest wave of medical treatment is setting Wall Street, and in particular, Private Equity firms alight. So-called “urgent care” centers, or non-hospital walk-in clinics where physicians treat an amazing array of everyday injuries and ailments, are growing rapidly across the US powered by investors’ cash. The centers have  grown popular with residents because they often have much lower prices—$100 to treat an ear infection instead of $500 at a hospital, which is very important for people with large deductibles. The centers focus on high turnover, with visits averaging around 30 minutes, and centers treating 30-35 patients per day at a $150 average visit. The centers are also popular because unlike regular doctors, they are open 24 hours a day. Investors like the businesses because of their high cash generation as well as the fact that they have the distinct advantage over hospitals of being able to pick and choose their patients. Where as hospitals are forced to treat all patients, insured or otherwise, “urgent care” centers can turn away whomever they like.


FINSUM: From the article, it appears these centers have grown rapidly and are reshaping care at a time when the industry is already in flux. Apparently, the battle is on to develop the first nationally-recognised brand in the space.

Friday, 11 July 2014 00:00

The Gasoline Glut in Europe

(Brussels)

This article, which is ostensibly about Exxon Mobil’s shift into more diesel refining, is really a study of the changing nature of the European automobile and fuel markets. The piece shows that due to great technological advances, diesel cars are now far outpacing gasoline-powered autos across Europe. More than half the new cars registered every year are diesels, with the figure at two-thirds in Spain, France, and Belgium, and astonishingly, Europe now burns 2.5x the amount of diesel as gasoline. The transition has been fairly quick—as short as a decade ago, the mix was even, and ten years before that, gasoline was dominant. Buyers now like that diesels get better fuel mileage and feel faster than gasoline cars. However, all of this means that European refiners have drastically mismatched infrastructure compared to market demand and have far too much gasoline, which is hurting their business. Formerly, suppliers could export surplus gasoline to the US, but with prices so cheap there due to the North American oil boom, the suppliers have nowhere to sell the fuel.


FINSUM: This story is important for investors in both autos and refiners. The changes taking shape in car sales, fuel refining, and distribution are sure to lead to some big winners and losers.

Friday, 11 July 2014 00:00

Inside China’s Ecommerce Boom

(Beijing)

This highly informative article chronicles the rise of Chinese Ecommerce and focuses on its unique character and differences to the US. For instance, whereas in the US customers will buy the lowest-priced item without even considering that it might be a knockoff, Chinese consumers often buy middle-priced items to avoid fakes. Secondly, shipping in China is a great deal cheaper and faster, often costing less than a Dollar and generally being delivered the same day. Using a vast network of bicycle and moped delivery men, Chinese Ecommerce sites generally deliver within just a few hours and are often faster than going to a store. However, ordering on Chinese sites is often as labour intensive as going to stores, as each sale is usually accompanied by several phone calls back and forth which involve information exchange and price haggling. According to the author, even if you do not have any issues, each sale usually takes another half an hour on the phone. Finally, Chinese sites rarely allow refunds or returns, meaning all sales are final and buyers must be sure they want what they are ordering.


FINSUM: This is a fascinating article for understanding the immensely different nature of Chinese Ecommerce. It also adds some insight into the upcoming and much-covered Alibaba IPO.

Friday, 11 July 2014 00:00

Fed Explores Overhaul of Funds Rate

(Washington)

The most important benchmark in the world, the Fed funds rate, is apparently set to overhauled by the US Federal Reserve. The rate, which is the main overnight borrowing rate governing Dollar transactions, underlies $174 tn of interest swaps, so the implications of any shift will be massive. The Fed is looking to change the format of how the rates are calculated ahead of a possible interest rate rise, as many say the current system, which has fallen into disuse because of the long-term low rates, will be inadequate once rates rise. The Fed is likely to consult heavily with financial markets as it does not want to make any moves which would jeopardize the validity of the existing interest rate swaps in the market.


FINSUM: This piece is fairly short on details, as are many murmurings coming out of central banks, but this could be a hugely important change.

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