The last couple of weeks have been incredibly exciting for Singapore: SuperReturn Asia, DealStreetAsia's PE/VC event, the Milken Asia Summit, Forbes CEO conference and the F1. Visitors getting into Singapore today are neither required to serve any quarantine nor wear masks in public. Everything feels like it's been reverted back to 2019 - big MICE events, face-to-face meetings, public gatherings, etc. It almost feels surreal.
Except that I am not in Singapore.
Envious onlookers residing in Hong Kong can only drool at the party from afar and read about these large-scale social events in the news and LinkedIn feeds.
Last week, Hong Kong finally announced that it was lifting mandatory quarantine for arrivals into the city. From the 14-day quarantine implemented last year to 7 days and recently to 3+4, inbound travelers now simply need to do 0+3 i.e. no quarantine but just a 3-day monitoring period (still better than serving quarantine in China). It was a long awaited step, but some have said this was too little too late.
Against the backdrop of an increasing number of people and firms moving from HK to Singapore, and the recent high-level summits taking place over the last couple of weeks, I guess HK is finally saying "enough is enough and we have to get back in the game or run the risk of really losing out in the long term."
It seems like Singapore has played its cards well and somehow "gotten ahead of the game".
"Singapore may have the edge at the moment, but Hong Kong has more longer-term advantages to attract capital and talent" - HKEX
Despite the COVID restrictions, the relatively high costs of housing, stilfing space and population exodus, there is some truth in HK being better positioned than Singapore in terms of leveraging the resources of Asia's largest economy - China. Besides, conference go-ers are generally indifferent to where the party is held as long as they are invited and there is reasonable certainty of a huge turnout.
Understandably, those sitting on either side are motivated to swing the odds back into their favour.
I am not trying to pre-empt whether or not the tables will eventually turn for both cities but recall back in 2020 at the onset of the pandemic, Hong Kong was at one point of time leading the charge on potentially emerging from the abyss.
And then in a twist of events, it was tightened again in late 2020 due to the resurgence of the 'second wave'.
When the dust finally settled in early-mid 2021, I vividly recalled HK was gradually moving back to larger group gatherings and reinstating back-to-the-office work.
Over that same period, Singapore on the other hand was back-tracking.
I had been preparing to depart Singapore in May, looking forward to getting some reprieve that at least face-to-face meetings were possible in Hong Kong.
Singapore didn't make any significant headway in lifting the restrictions until later that same year. And then in 2022 after the spring break, HK again went into partial shutdown for over a month.
Look, you might be wondering what is the point behind all of these.
If there was anything I learned over the last 2 years from the pandemic, it is that nothing is ever really permanent.
The stable state of things we are familiar with can be easily contested at some point of time or another.
We took public gatherings for granted until COVID happened. Singaporeans took for granted chicken rice, a somewhat common staple would always be there until Malaysia halted the exports of Chicken for awhile in May 2022.
The same way energy stability in Europe have always been considered a given until they were forced to take sides amidst the Russia-Ukraine war. Even the economies that were halfway around the globe probably didn't expect their food supply chain to be disrupted by a territorial conflict involving one of the world's largest exporter of grains.
Things can change in an instant.
In 2021 when I thought Hong Kong had finally sorted COVID out and Singapore was still lagging far behind in terms of getting infection numbers under control, look how one year has totally reversed the state of things when Hong Kong became the unfortuate victim of the Omicron resurgence in February 2022.
Just like the conference go-ers, the companies and workers that have relocated to Singapore can easily find themselves moving back to Hong Kong very quickly once normality has been restored.
Change is the only constant and the race is long. Sometimes you are in front and sometimes you are behind.
All things - no matter how good or bad they may seem to be today - can change very quickly.
Footfall has improved since circuit breaker in June. It's nowhere near pre-COVID levels but still it's better than none. Everyone is masked up except for those who are eating or having a coffee like me. The tables are now more widely spaced - which I'd always thought it should be that way. On the face of it, everyone seems to be getting used to the new normal.
It's good to see some activity in the malls. It implies that the office crowd is back and that in turn drives the F&B businesses. It keeps people employed and keeps the economy running.
Generally speaking, this crisis is somewhat different from the 2008 financial crisis.
In theory, some jobs should only be more directly impacted than others, particularly those in the travel and tourism sectors. And savings from non essential travel should technically allow businesses to sustain operating expenses and maintain headcount.
That said, as companies today have largely regional / global operations, and are significantly reliant on travel, the entire economy takes a hit. The lack of inter-city commute provides a good 'excuse' for many decision makers to withhold aggressive marketing and expansion plans, creating a further drag on revenues across the entire value chain.
I imagine that the uncertainty can be unnerving. For now, let's all sit tight and I'll check back again in another three months.
Zoom's share price was up 40% last week.
"If we can work well together online now, perhaps it will permanently reduce the need for business travel"
Work-from-home protocols, tele-commuting, webinars and virtual meetings may permanently alter business travel, which accounts for a significant portion of aviation revenues. Zoom isn't the only winner here. Given the restrictions on daily commuting, technology has become an enabler of businesses and lifestyles. Many tech-related stocks ranging from cloud computing, e-commerce to data security have benefited greatly as a result of this migration to the digital realm.
Early investors in Zoom and other tech stocks were lucky. But one might wonder if it still makes sense to even buy its shares. At its peak, Zoom traded at more than 2,000 price-to-earnings, implying a dividend yield of 0.05%.
“Our ability to keep people around the world connected, coupled with our strong execution, led to revenue growth of 355% year-over-year" - quote from Zoom's recent earnings call
Clearly investors are not buying technology stocks for their dividends.
Everyone who has a positive rating on the sector is valuing it based off the scenario that we won't be returning to our offices soon. Not at least within the next 12 months.
A few months ago, people had already been speculating about a second wave. This has since emerged in several major cities - South Korea, Hong Kong and Japan. The effect of the virus is also festering down south in Australia where it is currently winter. Governments are holding their breath in anticipation of a third wave towards the year end.
For now, it doesn't look like the nightmare of travel bans and city lockdowns are easing anytime soon. This virus could linger around for a few years and you could be using Zoom for a longer time than you think.
Right place at the right time
Using Zoom underscores the innate desire to engage in a face-to-face setting. Apple has tried to do this with FaceTime in the peer-to-peer context. Skype has video calls. Polycom even offers an immersive platform which is targeted at large corporates with the budget to invest in virtual-presence-type meetings. Doing so allows their professionals based in multiple cities to communicate in real-time without the need to fly to a single location.
While these paid-for-service features have not been cheap, corporates weigh the trade-off between the cost of a business class air ticket vis-a-vis the cost of an enterprise-grade platform.
Video conferencing is not state-of-the-art tech. But Zoom was caught in the right place at the right time. In a world without safe distancing and masks, demand for real-time video communications and webinar broadcasts might never have evolved into the defacto standard today.
Unlike Polycom, Zoom had somehow managed to make tele-presence accessible easily and quickly for everyone across all budgets during a time where the world needs it the most. Albeit the initial security issues that surfaced as a result of its popularity, the app continues to serve its main purpose of facilitating conversations between people and it connects seamlessly. Most importantly: it just works.
Take a look at Apple. The technical specifications of its products are not superior to the Microsoft or Android counterparts. In fact, Apple products are pricey. But loyal fans of Apple (including me) continue to buy the iPhones and Macbooks, happy to settle for a less than top-notch hardware.
Maybe it's Apple's iCloud ecosystem, or the make of the phone. Or maybe there's something enigmatic and addictive about its minimalistic design that appeals to a certain group of users.
And just like how people are drawn to the allure of Apple's simplicity, if there's anything that Zoom has gotten right, it is probably the ease of installation and use.
More important than usability, the majority of governments and organizations around the world have also mandated extended periods of work-from-home procedures and no physical client meetings. Very draconian you say, but who can afford the socio-economic risk of a second lockdown?
What happens when the show is over?
After this pandemic is over (either through herd immunity or via a vaccine), I am guessing that most people would still use Zoom in their day to day work, but the real question is how many will continue to pay for its enterprise grade functionalities? Keeping in mind our natural instincts to engage someone else in person, and also because as humans, we will probably start to forget the pain of the initial lockdowns. People around the world will likely ditch the newly formed "work-from-home status quo" and revert to air travel, physical meetings and mass events.
But in the current day where airline stocks continue to battle for survival and media reporting new cases daily, it might be easy to rationalize why Zoom can trade at 2,000 times earnings.
Investors and stock watchers can be restless and impatient people.
In 2013, CEO of Apple, Tim Cook, told the media that "some really great stuff [was] coming in the fall and across all of 2014". This was equivalent to saying: "We've got nothing for you this year, but stay tuned next year!". Analysts and investors listening to the briefing were unimpressed and Apple's share price took a mild beating.
Like the ubiquitous smart phone, video-conferencing tools are not cutting edge technology. It remains to be seen if Zoom can really deliver on growth through innovation, transformation and create sustainable value for its customers in the same way Apple had done with the iPhone.