Bill Winters said it on behalf of all the banks out there: The elimination of “lower value human capital”[1]. Unfortunately, the distasteful comment drew waves of backlashes from the online community as Stanchart contends with launching a series of job cuts. I don’t think he meant it that way but this has obviously turned into a public relations nightmare. When the interests of the rank and file are being threatened, especially their livelihoods, it is no surprise that the people will fight back. It is just survival instincts at play. Nonetheless, it also reveals how resistant we are in terms of embracing artificial intelligence, and potentially how much denial we are in as to the limits of what technology can do these days. Or maybe we are just too sensitive. Since the beginning of commerce as we know it, companies have been consistently trying to cut costs to maximize profits. And technology, even in its most rudimentary form dating back to the Industrial Revolution, has always sought to alleviate manual and tedious labour. How is that vastly different from eliminating “lower value human capital”? Besides, the perception of value has always been subjective depending on the yardsticks in which we measure corporate success—Revenue, profitability, market share...or being the go-to employer-of-choice. A common misconception is alluding "low value" to those who are paid minimum wage for an outcome that can be automated or mechanized. I assure you that there are many low-value employees who are paid a maximum wage, but contribute very little in terms of business function and are of little to virtually no use. Many of them still hide in the blind spots of their organizations pushing paper year after year. Still, in the words of Jamie Dimon, it was an “inartful” comment[2]. The difference is that instead of just sacking the lift attendants, we have gone all out to proclaim that the world no longer needs a whole bunch of people sitting in the corners of lifts to operate them. It is great that you have found a way to meet our growth and profitability targets, just don’t say it out that loud. [1] https://www.reuters.com/business/world-at-work/stanchart-cut-more-than-7000-jobs-bank-steps-up-ai-adoption-2026-05-19/ [2] https://www.bloomberg.com/news/videos/2026-05-21/jpmorgan-s-dimon-on-bill-winters-ai-job-comments-video

Several years ago at this very table in the Starbucks at Capital Towers, I met with an investor to debrief him with some feedback after helping his company in its search for new capital. Coincidentally, it had also been the same year that Joseph Schooling won Singapore’s first-ever gold medal in swimming at the Olympics. I would find out shortly that the gold medal wasn't simply just a victory in the local sports scene but a go-to symbol used by a delusional few who think they can also be champions. It was on that day at Starbucks that my investor took this spirit with him into the fundraising process. We had just gone on a two week roadshow and had met with eleven fairly prominent investors in the local startup scene. Every meeting we attended involved a productive dialogue with both sides making the introductions and talking about the story—the pedigree of the founders, the company, technology, market, opportunity and future plans. After more than ten roadshows, none of them unfortunately said ‘yes’ to funding this 'dream'. So he asked me: “Why did Joseph Schooling win?!” I could sense the rhetoric undertone and a little impatience. I replied: "Erm...because he trained hard?" "No!! It was because he believed in himself!" He was alluding that we did not believe in the business enough to sell the story effectively. At this point, his face was so red I swear he looked like he was going to blow his head off. He continued rambling about how Schooling, being a young boy born and bred in Singapore, became a global champion, all the while drawing parallels to his company - A 'champion' in the making. “It is a no brainer. People should be lining up for this! Why aren’t investors buying our business?” I just sat there, wide-eyed and speechless. The company went on to put together a product demo on my suggestion a couple of weeks later as part of a follow-up from our roadshows. We sent invitation memos to the folks that had we had met and informed them about the proposed two-hour session to be held in the company’s office at Telok Ayer. I had thought it was a good idea. It was an opportunity to see first-hand how the product worked in real life. More importantly, a second chance for the company to prove itself and make a tangible impression after that first meeting. We sent emails to all the investors we had met and only two replied. Eventually one showed up, largely because his office was located around the vicinity. Nevertheless I looked forward to it as it was also the first time I would be watching the demo, and so we went ahead. But the outcome was un-impressive to say the least. The demo did not go as smoothly as expected. There were technical issues and people ended up waiting while the engineers troubleshoot the problem. Long story short it all went as if the company was selling an over-priced archaic software that was full of bugs. Fortunately (or unfortunately) we had only one investor on scene to watch. We stopped the roadshows after that and I learned a few things: You can't put lipstick on a pig. A commercially viable product is at the heart of any start up. No company should raise institutional capital without being able to produce a working prototype or demonstrate an orderbook of customers. You can never have a rational discussion with a delusional person. What I had seen in the founders was a blind and almost religious belief in their product—to the extent they weren't even open to feedback. Having devoted almost all their time into the product, it's easier for founders to be oblivious to the shortcomings of their own business. Self bias is very real. An employee-CEO - someone who is not a founder but hired to raise capital for a startup is almost doomed to fail. There is simple no skin in the game. A founder that throws money to delegate a CEO for fundraising can be a huge red flag and a potential recipe for disaster.

Competitive rivalry A lot of professionals in the venture capital and mid-cap private equity space seem to be bad-mouthing each other. I attribute this to two reasons: Either a misplaced sense of pride or the intense competition in fundraising. The state of venture capital Venture capital investing looks like a game of ego. Every week I see numerous congratulatory posts relating to successful investments or fundraises on LinkedIn. It's all good. But a lot of folks seem to be either ignoring or oblivious to the long line of investors that has silently accumulated over the years and who are now queueing up for the exit. Someone recently told me that the DPI (distribution to paid-in) for VCs in Southeast Asia had apparently been only four percent in the last ten years. If we assume 2014 as the vintage year for which hot LP money started to pour into Asia and an average fund life of 10 years, this would indicate that the harvesting period has come due. But the hearsay of 4% DPI would suggest that 96% of capital deployed is still stuck, waiting to be sold, written down or written off. I haven’t been able to verify this. A lot of wealth is sitting in this part of the world[1]. Yet at the same time, a lot of VC money also wants to get out. Those who put their capital to work 7 to 10 years ago in early stage ventures are still waiting for their payday. GPs and founders face an incredibly tricky job of having to re-direct this flow of money somewhere, or to someone else, just to avoid a meltdown of the startup ecosystem and perhaps more importantly, repercussion from the broader investor community. Maybe they aren't really clueless. They just don't want to look bad by admitting that valuations had been overstretched in the earlier rounds of fundraising. Recession. China is probably already in a recession - a contraction in economic growth, decreasing FDI flows, and stark unemployment. The financial behemoths such as JPMorgan, UBS and Nomura had also ‘downgraded’ China equities recently. Of course no one is publicly admitting it yet, because no one can verify the data and information[2]. But let’s not rock the boat now… The smoking gun here are the unemployment rates in Shenzhen, one of the country's core economic engines. I don’t see the economy getting better, not at least in the near term. The balance sheets of individuals first need to be fixed before companies can be fixed. That means prioritising job creation, spurring disposable incomes and sustainable consumption. The upcoming Single’s Day sales in November will be a bellwether for things to come. Tech jobs in China. Many youths in China are retreating to the countryside in search of jobs and a more meaningful pace of life. The economy seems to be backtracking on being an innovation and manufacturing powerhouse, and losing ground as one of the go-to destinations for business expansion. A documentary on CNA reveals the state of affairs in some of the leading tech giants: "Everything that could be done has already been done. At this point, the work mostly involves minor fixes. Or we repeatedly work on the same functionalities. You might create one version today, then scrap it and create another version tomorrow, with only very subtle differences between the two. The improvements might be minimal or even negative. That’s the kind of work we are doing now. It feels like there are over a dozen teams all working to enhance and fix a small issue. How much significance does that really have?” - a tech professional-turned-farmer in China Founder's mentality. One thing that founders dislike more than incompetency is hearing that “it can’t be done.” "Potato, potahto." Wealth is created both by selling hot potatoes and selling 'hot potatoes'. You make money by either selling products or selling stories. It is easy to get carried away by confusing stories with products. The work of bankers. Most of the bankers I meet today don’t know the half of what they are talking about (sorry if this offends). Whether it is wealth management products or advising on strategic decisions involving raising capital, bankers ain't got a clue. They mostly talk about the general market sentiment at meetings (nothing that is not already in the news), talk about corporate strategies using different words, and then take a slice from the proceeds of the fundraising. Aside from the infrastructure backbone that banks provide to facilitate huge flows of capital, the proprietary insights and value-add in arranging investor meetings seem to be either marginalised by fact that companies themselves can get access directly to the investors, or are otherwise non-existent. I would run deals very differently if I ever went back into banking... A pipe dream. Getting listed on the SGX looks increasingly like a pipe dream. As much as regulators and industry groups have committed to spending the next 12 months discussing the way forward, there are some very fundamental issues that needs to be addressed, listing costs being only one of the factors. Following roughly two decades of successful REIT listings, investors trading on the SGX have gotten used to yields. Anything that doesn’t sound remotely like a fixed income product just isn’t attractive. Companies that raise capital via issuing new shares in Singapore simply do not offer the same outsized returns investors can be getting in other high growth markets and structured investments. The biggest selling point for any stock exchange therefore is liquidity. To solve for this, the 'tap' needs to be flowing. A cut in interest rates to “push” money from safe havens out into the open seems like one of the most direct way to solve for this. Beyond institutional participation, we need punters, speculators, aunties and uncles. Singapore already has the Sands and RWS casinos. For what it is worth, we now need to turn our exchange into a vibrant online marketplace that allows people to make 'bets' on the shares of companies. I use the word 'bet' loosely: When retail investors trade shares, we consider them to be punting. But when an institution trades, we say that they 'invest'. We use the proverbial labels "stupid money" and "smart money" to describe the two. The stereotype here is that the market believes risk can be assessed and quantified using statistical and mathematical models, accessible by "accredited" investors. When something goes wrong, it's bad judgement on the part of institutional investors, but comes off as gambling for retail investors. A proper functioning stock market requires the participation of both retail and institutions - that is why the exchange mandates publicly traded shares to be in the hands of at least 500 shareholders. Regulators and stock exchanges around the world can't say this, but the reality is "smart" money needs "stupid" money to create liquidity. The sophisticated models and assessment of returns that we 'worship' so much are built on a large stochastic universe of individual investors. In order to galvanise liquidity, greed, at this point, seems to be good. Selfish interests. Everyone has their own selfish interests at the deal table whether it is running a $100,000 company or a billion dollar company. It is always the same: Everyone thinks they know it all, everyone wants you to listen to them, to do things their way, and to top it off, some even want your money. Clarity is king. When looking back on my professional career over nearly two decades, I realised that most of my younger days were characterised by long hours of churning models and slides with very little time for critical thinking and in-depth analysis. This proportion changed over the years of course, but I wished that I had spent more time thinking and synthesising ideas. The clarity of mind, even when you are not doing anything, is always better than blind productivity. How to legitimately lose money. A lot of people don't realise that the covenants involving raising equity are very different from debt. The science around risk-reward for both equity and debt is well documented. Equity holders are generally willing to risk all their capital in exchange for a share in future profits, while most debt holders prioritise capital preservation in exchange for lower returns. Both involve an obligation by the parties involved to perform, or not to do certain things, but fundamentally with debt, there is an implicit expectation that the investment can, and will almost always be recovered. It pays to keep this in mind when contemplating any investment: Companies and founders who are asking you to invest equity (as compared to a loan) are not just trying to up-sell you on the huge returns, they are also asking your permission to legitimately lose that money. [1] McKinsey also has an interesting report that details this flow of capital to Singapore particularly from family offices: https://www.mckinsey.com/industries/financial-services/our-insights/asia-pacifics-family-office-boom-opportunity-knocks [2] The Economist: “The Chinese authorities are concealing the state of the economy“, https://www.economist.com/briefing/2024/09/05/the-chinese-authorities-are-concealing-the-state-of-the-economy

“All I ever wanted was the freedom to make my own mistakes.” - Mance Rayder[1] Toxic dumbness. Years back when we entered the advisory business, we had a whole bunch of M&A and capital raising deals. It was thrusted on to our plate by a certain someone who claimed to know important people from all over the world. On our plate were companies looking to raise capital or those trying to get into new markets, early stage start ups looking for venture funding, or investors who were simply trying to put capital to work. It was a buffet of deals. We had spent a considerable effort evaluating each and every one of them. Most times it involved a systematic way of filtering and deciding whether or not to proceed. Other times we ended up having to do 'favours' such as meeting brokers of the deal as part of the process, sitting mindlessly in a classroom lecture for days. When ever we hit an impasse, felt it wasn't cost-effective or disagreed with going ahead, that someone would say: "When starting up, sometimes you just have to do the things that you don't like to do." But our deal pipeline had been so full - full of long shots and losers. Projects that had a low probability of closing, clients that likely couldn't pay, or simply just a waste of our time. In the spirit of cooperation and good faith, we continued to listen. But in reality we never had any real decision-making authority to kill the deal or proceed with what we felt in our gut made more commercial sense. It was only over a year later that I had begun to realize the ironic and toxic dumbness of it all: The idea of starting up had been ours, us bearing our own costs, but somehow suffocating under a blind workload, executing a totally different agenda that belonged to someone else, just to heed conventional wisdom. We were told that the rites of passage of starting up was part of the process, that is—to do the things that we didn't like to do. Realization. I couldn't pinpoint exactly when it started to dawn on me, but one day amidst the frenzy of calls and meetings, I woke up, subconsciously dragging my feet out of the house and feeling that morning anxiety of arriving at the office before 9:30am. I was also checking my emails and text messages in the same way I used to check my Blackberry on a Friday evening, hoping that you don’t get a nasty email from the ‘boss’ to turn around a slide deck by Monday. And in any job, the moment you start counting down to Fridays or dread Monday mornings, you are basically f**ked. One day I decided to re-examine the leads I had on hand. I had no full context to these projects, no direct connection to the source, no tangible resources to mobilise. Perhaps, more importantly, no autonomy in dictating any of the commercial terms. It wasn’t even a client that I originated. I was stuffed to the neck with work that wasn't mine and was simply churning slides and spreadsheeting numbers. At every discussion, I found myself mostly on the receiving end, listening to fluffy ideas and being fed with lofty dreams, all the while being told to follow up on execution in the background. A lot of these didn't have any commercial mandates tied to it. It was basically a bunch of errands done in goodwill, in the blind hope that would one day convert into a billion dollar opportunity. We were being played. And as the proverbial Chinese saying goes, I was being led by the nose. And in that whole process, I think no one really considered what I wanted for myself. The whole experience felt like doing corporate finance work all over again except that my bank account was drying up faster than I could replenish it. Then as the dust settled, everything started to clear up: My intention of starting a business had been to unshackle myself from a corporate job, but I ended up in a situation whereby I was working on someone else’s projects and providing the ‘weekly reports’ on a regular basis. Suddenly I was an employee all over again. This reality hit me really hard when I ran this through my head and played it out right till the very end— I was no longer the owner of my business, whatever the form it had evolved into. Notwithstanding the lofty dreams that were being fed to me, the reality was that: I had no say, no control, no money, no visibility. I had all of the downside and none of the upside. That whole process taught me something important: In any moment of vulnerability, if you are not careful in protecting your dreams, someone else will show up and make you build their dreams for them. Vulnerability often creates a blind spot, sometimes causing people to turn to those who are seemingly more successful when it comes to decision making. The truth is that everyone has their own personal agenda and are just trying to validate their own narrative based on what works for them. Sometimes the alignment of interests are matched, but most times it isn't. After all, humans are complex organisms. What works for one person may not necessarily work for another. And if you are not careful, you can even fall into someone else’s dark agenda. What matters. In any enterprise with more than one shareholder, it is almost inevitable that decision-making and relationship dynamics get entwined. Everyone brings a set of different resources to the table--some bring sweat, some bring relationships, some open doors, others bring influence. But regardless of what you bring to the table there are always some fundamental rules to abide by: Integrity and transparency above and before economics, always. Respect the money i.e. everyone has the right to their opinion, but only those with skin in the game get to decide. In any deadlock or impasse, refer to point number 2. Whenever you feel that you are getting the short end of the stick, refer to point number 2. If you find yourself doing the things that you don't like to do, refer to point number 2 Everything fundamentally defaults to point number two. Money talks. You can be well credentialed, bring grey hairs and sweat accumulated from years of experience, or show off selfie photos with the big shots. But none of that really matters unless you put money on the table. That is all there is. And so, I still remember the January of 2020 (just before COVID), when I was walking to my usual morning coffee hangout in Singapore around the neighborhood, while reflecting upon decisions that were made over the last four years. On hindsight, I should have been panicking given the unnerving amount of cash in my bank account and thinking about what lies next. But even in those dark moments, I had found a quaint inner peace, taking responsibility of all the good and bad decisions that were made. It was a liberating feeling of sorts. A peaceful morning walk Perhaps all I really wanted out from starting a business was the freedom to do what I wanted, including the freedom to make my own mistakes. [1] Adapted from Mance Rayder, leader of the free folk, from the HBO series "Game of Thrones"

I spent a random morning with my niece last week art jamming. I am not particularly into painting but there is something calming about sitting in a quiet room for three hours just throwing random colors on a white canvas. The last time I recalled using acrylic was probably in primary school. In fact I don’t even remember what I drew. My niece is eight-going-on-nine and totally fascinated about drawing just about anything. The studio was located on the 4th floor of a quiet Orchard shopping mall next to an upmarket cafe that had all day breakfast and an expensive looking decor. Both were under the same establishment. Art jamming lasts for three hours, which is the approximate duration it takes to complete one painting. Each person gets one complimentary drink from the cafe and one canvas board to paint on. She took the ice chocolate while I had the sour plum ice. Towards the end, we ended up getting one additional board before heading off to have some fish and chips for lunch. The great thing about painting (or maybe art in general) is that regardless of age or experience, there is never really an ugly picture. While some art collectors might try to put a price tag on a piece of work, this is usually tied to the reputation of its creator or that it has some cultural significance. Otherwise art is just art—it is original, perceptive and personal. You just go with the flow and draw whatever comes to mind without any expectations or the faintest idea of how the end product might look like. For someone like me who has been trained for many years to think in terms of net present value and quantifiable outcomes, it can come off as incredibly contentious as to whether I did anything productive at the end of the three-hour doodling session. Aside from contributing to the shop’s overall top line, our paintings were most certainly far from being commercially sell-able or even “exhibition-ready”. And then after lunch, as we were walking to the MRT station to part ways, she looked up and asked, “Can you ask mama if I can come over to play and stay over again tonight?” Paul Graham has an interesting anecdote about how to measure the “shortness” of life, especially when it comes to spending time with kids[1]. “If Christmas-as-magic lasts from say ages 3 to 10, you only get to watch your child experience it 8 times. And while it's impossible to say what is a lot or a little of a continuous quantity like time, 8 is not a lot of something. If you had a handful of 8 peanuts, or a shelf of 8 books to choose from, the quantity would definitely seem limited, no matter what your lifespan was.” Interacting with young children makes you wonder how much of time has passed, and also how much is left. And it will probably be just a few more years before my niece stops asking for sleepovers and starts wanting to hang out with her own circle of friends more than with me. It can be difficult to conceptualise the shortness of life. But when you think of time in countable units, everything suddenly seems finite and few. It makes you also think about how much of your daily life can easily be consumed by simply doing stuff that you don’t like to do, or doing things that disagree with your core values. These days I usually wake up without the alarm from the phone sounding off in my face. In fact, I seldom leave my phone by the bedside overnight nowadays. I rarely check my messages with the same frequency I did in the past. I am even half thinking of jettisoning my Apple Watch that logs my steps and sleep down to the last digit. That precision is a constant reminder that we have become excellent at measuring everything but know the value of nothing. At 730am, I make my coffee at home, toggling between the usual dark roast beans I get from the local merchant and burgundy-infused ones from Yunnan. After months of practice, I am glad to say that my flat white is more perfect than the ones I get from the cafes outside (I use two shots of espresso of course). If I am overseas, I usually find the cafe that opens the earliest and am usually one of the first in-store customers that show up for the first cup of joe. The value of an empty morning is priceless. Mornings are when my mind is the clearest. Most mornings are reserved for coffee, reading and thinking about stuff. Other times it is reserved for sitting in a quiet space for three hours throwing colors on a white canvas with the people you love. Life is short, never mind what the rest of the world says. There is no pride in being stuck in a perpetually busy state. Pay attention to only the things that matter, prune the bullshit, and start doing the stuff you want to do today. “When someone contradicts you, they're in a sense attacking you. Sometimes pretty overtly. Your instinct when attacked is to defend yourself. But like a lot of instincts, this one wasn't designed for the world we now live in. Counterintuitive as it feels, it's better most of the time not to defend yourself. Otherwise these people are literally taking your life.”[1] [1] From "Life is short", Paul Graham, https://paulgraham.com/vb.html

Recipe for an average life. "A few hours of distraction everyday is the most common recipe of an average life. Assume you don't have much time, and focus. The years are short even when you clearly know what you want to do. Cut the noise and get things done. - Orange Book "If you know how hard it was and how long it took to build my little universe of peace and happiness, you would understand why I am so picky about who I allow in my life." - unknown Faith in people. “Better to give talented (unproven) people a chance, and endure a few disappointments along the way than to not believe in people at all. - Jim Collins Decision making. "The more the state plans, the more difficult planning becomes for the individual. - Friedrich A. Hayek, economist Almost all of life comes down to being able to think independently and make decisions. No governing body can act in the best interests of everyone. If you don't set your own goals, you will be given one. The importance of being "pigs". Lei Jun shares a whimsical anecdote from Xiaomi’s early days: "90% of success is attributed to luck (being in the right place at the right time). When a typhoon is approaching, even pigs can fly. Xiaomi didn't succeed because it was a great company or that I was incredibly capable. We were merely pigs in a vortex of a typhoon. So if we want to succeed, we must adopt the mentality of being 'pigs at the centre of a whirlwind'." - Lei Jun, CEO and co-founder of Xiaomi [1] The wisdom of Pooh bear. Pooh Bear, there's one thing we didn't do today. And what thing might that be? Hmm... Nothing. Nothing? Christopher Robin, what exactly is "doing nothing"? Well I'm told it means going along, listening to all the things you can't hear, and not bothering. It's when people say, "What are you two doing?" and we say, "Oh, nothing"... and we do it! This is sort of a nothing thing we're doing right now.I wish it could last forever. Well then we must do it again tomorrow, and the tomorrow after and the tomorrow following that! - Christopher Robin and Pooh bear from the movie Winnie the Pooh John C. Maxwell once said in his book, The 360° Leader: "The greatest enemy of good thinking is busyness." Are you truly free? "We are slaves to the opinions and words of others, slaves to what we see, slaves to the work that we do. Our self esteem is highly dependent on the opinions of others. If others disapprove of us, we are disappointed and become doubtful about ourselves. And that is why we can never be truly free." - Jet Li, actor and martial artist [2] A choice of response. “When we are no longer able to change a situation, we are challenged to change ourselves. Between stimulus and response there is a space. In that space is our power to choose our response. In our response lies our growth and our freedom." - Viktor Frankl, Holocaust survivor and Austrian psychologist Use the difficulty. One of Michael Caine's life philosophies was drawn from a stage rehearsal as a young actor: “...and they got carried away and started throwing things, he threw a chair, and it lodged in the doorway. And I went to open the door and said [to the producer], ‘I'm sorry sir I can’t get in. There’s a chair in my way.’ He said, "What do you mean?" I said, "There's a chair there." He said, ‘Use the difficulty.’ So I said, ‘W-What do you mean, use the difficulty?’ He said, ‘Well, if it’s a comedy, fall over it, if it’s a drama, pick it up and smash it!’ Now, I took that into my own life. There is never anything so bad, that you cannot use that difficulty. If you can use it a quarter of 1% to your advantage, you are ahead, you didn't let it get you down. That's my philosophy, use the difficulty." - Michael Caine, actor and war veteran [3] [1] Excerpt adapted and whimsically translated from - https://www.instagram.com/reel/DG2l0X6Ry10/?igsh=bjV1NGc1YWNkeXJo [2] Translated and slightly adjusted from the Mandarin version. Jet Li's anecdotes are largely influenced by his faith in Tibetan Buddhism. Full video (in Mandarin only) from the Tzu Chi Culture and Communication Foundation - https://www.instagram.com/tzuchicultureandcommunication/reel/DGh6jRhJcPs/Watch [3] From Michael Caine's interview with Michael Parkinson - https://youtu.be/t-7xyd5_IfY?si=qkx-E_wvwyQizdjB

1992 PSLE It was the year I took the PSLE (Primary School Leaving Examinations). Some might say I was in one of the top notch primary schools in today's terms. The school had come from humble beginnings, being located in a neighborhood whereby most of my friends stayed in HDB flats and everyone knew their neighbors. I had been fortunate enough to almost always be in the top one or two classes with the best performing students. Back then, my childhood dream had been to be a doctor. So for my PSLE, I had aimed for a score of over 260 (300 was the maximum) as that would surely propel me into the best secondary schools. But when the results came back, my score was an astounding 237 - a decent grade no doubt for many, but it fell incredibly short of what I had hoped for. I could not qualify for any of the schools that I had initially shortlisted and I remembered walking along the road to the bus stop just outside the school after collecting the result slip as mum and I re-evaluated my secondary school options. I eventually went to a secondary school that I had never heard of (which later also turned out to be quite a good school). Despite the turn of events, those four years were one of the most transformational periods of my life. Excellent teachers and numerous outdoors expeditions would shape me into a highly athletic, all-rounded and balanced person that good grades alone could not achieve. 1996 Food poisoning On the morning of my English 'O' levels, I came down with an extremely bad case of food poisoning. It was so bad that on that fateful morning, I had to be sent to the hospital. I vaguely remembered the nurse putting me on a drip as I gradually passed out on the wheelchair. Back then, I enrolled in a triple science route as part of the pre-requisites to study medicine. I had nine subjects under my belt and English was just one of them. Failing or skipping the English papers meant that you had to re-take the entire year of school again, regardless of the other eight subjects. Everything was on the line here. By the time I had woken up, I remembered distinctively that it was 8:25 in the morning and a man was seated just across the bed where I was. As it turns out, the man was from the education ministry--the school was informed of my circumstances and had sent an invigilator to the ward. As a result, I ended up taking my English papers nearly an hour behind every one else, in a slightly woozy state and with a thick hypodermic needle stuck in my right arm. The couple of days later and some tests, the doctors put the diagnosis as a simple bout of food poisoning, and I was placed under further observation for a week. Ironic as it seemed, I scored an 'A' for all the papers that I sat for during my stay in the hospital. But I still fell short of the overall grade requirements to break into the top five junior colleges. 1999 Career choices I did well enough for my A-levels to do nearly any course I wanted in university except for medicine. But there is an interesting backstory to this. During my first year in college, I did so badly in my exams that the school principal gave me an ultimatum: Choosing between biology and athletics. I eventually traded biology for athletics which I obtained school colors for getting into the national finals for the 400 meters and winning the bronze medal for the 4 x 400 relay. I vividly remembered the day we reported back to collect our A-level results, my biology teacher exclaimed with a hint of amusement (and dark humour), "Look! This is the boy that gave up biology, and still scored straight As!" After I left junior college to serve my mandatory national service in the army, I was offered a prestigious government teaching scholarship to study at some of the most reputable universities in the US. The catch was that I had to commit six years of my life to the public education sector upon graduation. So I passed. A year later when I graduated from OCS, they had once again offered to send me overseas to a military college in Japan and engineering school in exchange for serving six years in the army. I declined again, mostly because I didn't like the idea of working under a covenant. I figured there were much more job opportunities beyond civil service after four years of studying in a university. Back then I wanted to be an engineer. I remembered one of my teachers in junior college saying, "Go study engineering, it will always be in demand". So I went and enrolled in computer engineering, believing that it would lead me to the holy grail of all professions. 2006 China Studying engineering in university proved to be much more difficult than I had thought. I was toeing the red line and nearly got booted out. But my life changed forever when I decided to spend a year living and working overseas in China. It was at a time when the country was undergoing market reforms and opening up to the world. I was introduced to the world of business, finance and private equity. Everything that I initially looked forward to in an engineering career had basically been undone during those twelve months in Shanghai. To earn the big bucks in finance, I convinced myself that after graduation I wanted to be in banking, more specifically investment banking. My entry into the corporate finance department at KPMG marked the day that I would renounce my engineering career forever. Its offices were in Raffles Place, at the heart of Singapore's financial center. I was excited to be in the league of like-minded aspiring fresh graduates, constantly on the lookout to make that transition into a bulge bracket bank with a five-figure monthly paycheck. But I missed that boat when the 2008 financial crisis struck, crippling the hiring plans of the large investment banks across the globe. In the twist of fate, I managed to join a mid-market Korean securities house that was looking to expand in Southeast Asia. I clocked my mileage, put in the hours and late nights, adhering to the rites of passage, before subsequently moving on to BNP Paribas and Standard Chartered Bank to get more exposure as part of a larger and more institutionalized corporate finance set up. 2010 Rinse and repeat Investment banking turned out to be a jealous and selfish bitch five years into the job, demanding one's personal and social time more than anything else. I was working up to sixteen-hour work days, eighty-hour work weeks, pulling all-nighters, even on weekends and holidays. One of my co-workers summarized it aptly—we were simply trading time for money. The routine was: Wake up, drink coffee, generate pitch books, run financial models, update trading comps, get yelled at by seniors. Rinse and repeat. Over the years I had received several offers to jump ship, some of those include buy-side and corporate development roles that promised a more balanced lifestyle and decent pay check. But all this time inside my head was a voice that kept saying, "just stick to the plan, put up with this for a few more years, and then leave." 2016 Starting up Leaving banking to build a business from scratch was probably one of the best and worst things that happened to me. On hindsight, it was one of the most liberating initiatives I had done for my career. But nothing would prepare me for what was to come: Waking up every day without having to report to a boss at the office, learning the ropes of HR, operations, finance, legal and sales all at the same time. Not to mention the disappointment of getting repeatedly rejected by prospective clients. But most trying of all was the nagging anxiety of watching your bank account being depleted month after month. No one would be able to understand this without having ever gone through it first-hand—Entrepreneurship would basically test your limits and push you to the breaking point, again and again. Starting up a business was good mental training and personal development. Because your mind would always force you to find a solution no matter how hopeless and impossible the situation seemed. Looking back, I recalled reading in some random article that said: Money shouldn't be the reason why you start a business. It should always revolve around purpose, it should involve addressing a pain point in the industry, or making a better product, or offering a better service. I never explicitly admitted it, but what mostly drove me to start a business was the naive illusion that I could make lots of money, and in a relatively short time. The startup journey made me realize that employees are in fact the richest people in the world. They will all be slaves but they are still rich[1]. But at least I could say to myself that I had tried my hand at least once in starting a business—been there done that. 2021 Hello, Hong Kong It felt surreal the day I left Singapore. The opportunity came in late 2020 in the midst of the pandemic. A friend had asked if I was keen to put my banking credentials to use in an investor relations role for a Chinese company. The catch was that the position was based out of Hong Kong. I am currently at my fourth year of residing in Hong Kong. In some ways, it feels so much different from it was three years ago. A part of the experience of staying here feels like home and a sanctuary. At times, I would think about how life would be like had I not accepted the offer to be based overseas. Paterson Walk, CWB... where I currently stay. The reality is that the things we set out to do in life doesn’t always go according to plan, regardless of how well you planned for it. Nothing is ever so bad or so good as it seems, and the outcome always leads to the discovery of something else. At the time of writing this, I was watching a documentary on CNA about a young man who had just graduated from university and had decided to make a living out of being a hawker as compared to his peers who went into white-collared jobs. He was describing how he started his business, grew and transformed it along the way. Some of what he said relating to the twists and turns in his entrepreneurship journey stuck with me: "You don’t really know what’s going to happen... in five year’s time, it’s very very far. You can have big dreams, and you can plan way ahead, but you never know what’s going to happen tomorrow. Even for this hawker stall, I didn’t even plan to open a hawker stall. My plan was to open a restaurant but things didn’t work out. But I realised that the day I stopped planning is when things started to flow. I think that’s how life should be, just go with the flow. Things don’t work out, pivot, change, adjust.” [1] Entrepreneurs of course have the potential to be much more wealthy, but no one considers the tail event. Only a miniscule percentage of entrepreneurs make it really rich. For every mind-blowing successful start-up seen on social media, there are at least a thousand others that have failed and don't even show up in the headlines.

Accountants, investors, and many large corporates around the world use the discount rate as the go-to metric for pricing any asset that has elements of uncertainties in its future economic value. In the context of business, discount rates simply provide a guide for analysts in terms of determining what an appropriate investment value should be, that is, based on a series of estimated future cash flows. It broadly takes into account the perceived risks in execution as well as the opportunity costs of deploying that capital. But perhaps more importantly, it represents the expected return of the investor. The bigger picture "The complexities exist to give bankers and lawyers a reason to exist." I often thought: How were business deals discussed and negotiated decades ago before the invention of computers and spreadsheets? How did investors made the call for investing $10 million in a particular real estate that gave say a 7% yield over buying a cluster of houses in another remote part of the country? How did they know that investing $200,000 in the neighbourhood bakery would generate a return of 15% over the next three years? How did shareholders split equity? Did they have drag and tag clauses, used term sheets and signed MOUs? I think we had relatively simpler lives back in the days. Deals were probably mostly executed as gentlemen agreements or done in the presence of credible witnesses which gave the covenant legal effect. But aside from the law, your word meant everything, and high-level numbers were calculated with no one needing to build complicated financial models. Today we have powerful spreadsheets that can do intricate calculations on valuations and IRRs to three decimal places. We can also write code in spreadsheets that precisely calibrate 10 years of projected cash flows to comply with a DSCR[1] of exactly 1.3x, no more no less. By embedding programming code into spreadsheets, you can even automate certain calculations to value stock options, run scenarios for valuing start ups, do debt sizing, etc. On the documentation side, we have chunky shareholder agreements accompanied by pages of legal jargon comprising disclaimers, indemnities and warranties. Sometimes I feel that the complexities are there only to give bankers and lawyers a reason to exist. And the burden of technology and excessive information at our disposal have made us so caught up in being faster and overly precise that most of us lose sight of the bigger picture. A numbers game. The presentation and analysis of numbers in huge quantities mean something. At every session of my Corporate Finance and Investment Banking Bootcamp class, there is almost always a newfound perspective and opinion on how we go about applying the discounted cash flow analysis to valuing businesses. I consciously hold back diving too deep into explaining the discount rate, or the weighted average cost of capital. “Don’t spend too much time getting the right figure”, I always said, and I sometimes question the appropriateness in my unorthodox teaching delivery. From my perspective, it always seemed that the discount rate has always been investor driven. Consider this: The primary objective of trying to value any business is to arrive at a decision of to "buy" or "not to buy" Assuming future cash flows are whatever they are, the outcome of using the NPV is solely driven by how much you want to make from the deal: If you want a higher return, you pay a lower value, and vice versa. And if you had sourced that money from elsewhere, then there is usually a cost to that, a fee of sorts that you need to pay back in exchange borrowing the money (i.e. the interest of debt). Taking all of this into consideration, the overall cost of capital would reflect the expected return on investment plus a premium from doing the transaction that allows you to sleep peacefully at night or make a decent profit out of it. That’s all there is to it, really. In reality, there will always be mis-priced deals whereby investors end up paying more than they should, and also business owners selling themselves short. Given the relative transparency in terms of how much banks charges their clients on taking out a loan, a big part of what drives any asset pricing really comes down to the cost of equity - a mathematical estimate calculated based on something called the Capital Asset Pricing Model (CAPM). The objective of the CAPM is to ascribe a commensurate return on equity based on the underlying risk of the asset. This is essentially driven by two things: Establishing a baseline (equivalent to a default-free risk) and; Adding a risk premium, which involves market volatility and taking a view of how borrowing increases risk in a business. Since volatility in share prices results in uncertainty, and uncertainty generally equates to risk, CAPM tries to transcribe volatility to risk. In chemistry, volatility is the tendency for something to evaporate under normal temperatures. In the finance world, volatility indicates the tendency of something to change rapidly and unpredictably, to deviate from the norm. Hence, beta in CAPM is simply a regression analysis to understand how far a company's share price deviates from the performance of the overall market. Within the boundaries of the CAPM model, we attribute this solely to the company's leverage i.e. A firm that borrows more to fund its business is deemed to be a higher risk than its peers. But there are so many things that can affect the share prices, and leverage is only one of them. Furthermore, we are determining a return on equity based on a series of random events looking back over three to five years. First there is the conventional saying of: What happens in the past does not imply that it will happen the same way in the future. Secondly: The speed at which information travels across the world and its accessibility today is very much different from what it was more than 30 years ago. The retail and institutional investor community, which plays a huge role in influencing the movement of share prices, is also significantly larger than it was back then. Therefore CAPM essentially is a game of numbers. Living in an evidence-based, data-driven world, we believe that numbers, when presented and analysed in huge quantities, mean something. To make sense of a chaotic market "There is more art in valuation than science alone can justify." Recently, a hedge fund manager wrote a paper about the "less efficient market hypothesis"[2], suggesting that capital markets today are not what they used to be. A multitude of factors today influence the movement of share prices - social media apparently being one of the biggest culprits. Not to mention low interest rates encourage punters and traders to gain access to cheap financing just to take huge speculative bets on companies they have no clue about[3]. It is probably getting so difficult to make sense of the stock market even with the abundance of information. So difficult that many investors have basically given up and turned to the trillion dollar ETF market which only became popularised over the last 20 years. Funds today can simply invest into a basket of stocks and just ride the trend. Besides, the idea of ascribing a single variable to a complex system of moving parts for valuing a business just seems absurd. Seth Klarman writes in his book "Margin of Safety": "I find it preposterous that a single number reflecting past price fluctuations could be thought to completely describe the risk in a security. Beta views risk solely from the perspective of market prices, failing to take into consideration specific business fundamentals or economic developments." Here's the interesting thing: Establishing a discount rate using the weighted average cost of capital in deriving the fair value of an asset is mostly aimed at bridging any expectation gap between a buyer and a seller. This is simply an attempt at using history and science to convince the other party that they are looking at things the wrong way. In reality, a lot of deals are done based on impulse, greed, competitive tension, fear-of-missing-out, herd mentality and in some cases bad judgement. There is more art to valuation than science alone can justify. And it doesn't get better. The onset of COVID in 2020 had led to the emergence of meme stocks - something quite non-existent not very long ago - supported by an entire community of keyboard warriors with nothing better to do than ride on the trend of social media influencers. “For whatever reasons, markets now exhibit far more casino-like behavior than they did when I was young. The casino now resides in many homes and daily tempts the occupants.” - Warren Buffett So much for relying on math to make sensible investment decisions in a largely chaotic world. Where do we go from here? Don't get too caught up with the discount rate when it comes to valuation. If your objective is to impress the other party through a demonstration of knowing the inside workings of the financial markets, then go for it. But in my experience, most people sitting in this part of the world don't care much for CAPM and WACC. The ways investors and businessmen perceive value differ across sectors and geographies. Take for instance in China, where size is everything and winner takes it all, businesses will not think twice to burn cash through their balance sheets at the expense of grabbing market share. Profitability without scale is useless. But Southeast Asia can be somewhat different. The gameplay is a race for profitability - a simple function of maximising top-line and optimising expenses. Value is created by achieving profit break-even in the shortest possible time, fixing the cost structure and searching for dislocations in prices to arbitrage the market. Considering the difference in cultures and market dynamics across countries in this region, it is only logical and prudent that investors put more focus on earnings quality over size. Yet, most of what we learn about finance in the comfort zone of our classrooms are originated largely from the observations and statistical findings of financial markets in the US, which operate nothing like Asia. CAPM, for all its robust mathematical foundations, hadn't been able to capture the impact of black swan scenarios such as SARS, the 2008 financial crisis or COVID-19. I do not discredit the theories of finance. They have been after all backed by empirical data over long periods of time. As chaotic as the world may be, leaders of organisations cannot be seen to make decisions without relying on some form of credible evidence-based analysis. But the rules of capitalism that work well for an efficient, mature and functioning capital market, are sometimes irrelevant in other economies where there is information asymmetry and deals are done differently. Coming from a practitioner point of view, we should avoid being too numerically precise but instead be more commercial when it comes to valuing businesses. Unless someone higher up or sitting at the dominant end of the negotiating table says so, valuation is always just a number. Ultimately, it is the folks with the cash who decide what the magic number is, calibrated based on however much they want the returns to be. Value sits with the beholder of cash, who are you to say otherwise? [1] DSCR = Debt service coverage ratio. Calculated as cash flows divided by debt service: a metric that measures how much cash flow buffer a company has to cover its interest and principal repayments. [2] https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4942046 [3] Check out Mark Minervini's interview on CNBC as he gets asked about the companies he invested in. Simply hilarious.

I crossed the mid-point of my economic life some months back. The term 'economic life' can be loosely defined as from the point of time one steps into the working world to the point at which one retires. The exact points vary depending on where you live, cultural nuances and personal choices. According to the conventional wisdom of society and mainstream media, spending twenty years on the proverbial hamster wheel means that I am in the prime of my life. From an alternate darker perspective, governments and organizations probably see an "obedient, housebroken dog[1]" that can be plugged into the system to make money on a tightly-controlled leash. Bankers love these people. It presents an extremely lucrative opportunity to monetize a further twenty years of revenue through management fees on their investment assets or interest from those who live delicately under the crushing weight of their mortgages. I recall a former co-worker in banking who used to describe our jobs, he said: “You are basically trading time for money.” And time, being a non-replenishing commodity, increasingly becomes more important than money as one gets older. After twenty years on the hamster wheel, I had realized we spend most of our time just learning how to game the system, living life by "passing" each level in the game, collecting coins to reach the end point. In fact, we had started to do this since our school days. Here’s the thing: The pathway to being an good student isn’t acquiring knowledge, but to excel at exams, and excellence is mostly marked on a bell curve. To get on the right end of the bell curve, one simply needs to be good at predicting which questions will come out so that you can maximize the probability of getting the highest grades. When I step into the exam hall, I am only concerned about my score relative to everyone else, and not whether I had enjoyed the learning process or could apply what I had learned. I used to know people who graduated with distinctions in the field of Computer Engineering, but clueless on how to troubleshoot their network router at home. On the other hand, there are also those who aren't credentialed with a CFA or an MBA, and are great managing teams and building a great product. You can succeed at the workplace by gaming your way into getting employed - simply learn and exploit the dysfunctional aspects of an organization, give a false impression of capability and suck up to the right people. According to Paul Graham[2], "There will always be a certain amount of fakeness in the work you do when you're being taught something, and if you measure their performance it's inevitable that people will exploit the difference to the point where much of what you're measuring is artifacts of the fakeness." That was how many of my former co-workers who were terrible at their jobs managed to stay hidden in the blind spots of their organizations every year. You can also succeed at fundraising by trying to learn the techniques for convincing large celebrity-like investors to endorse the business, or using fanciful slide decks to tell stories. There is nothing wrong with using a sales pitch to sell a product but some firms (both the buy and sell sides) have gotten so lost in telling stories when playing the fundraising game that they fail to realize customers and revenues are the key fundamental factors in driving the decision to invest. The cardinal principle in any corporate fundraising was to always solve for cash flow from operating activities first then address cash flow from financing. But knowing how to manufacture a good equity story has become the yardstick for measuring performance that so many companies out there do it the other way around. We have spent nearly our whole lives learning how to game the system just to beat the competition and look good. And when you have been brought up most of your life learning how to game the system, the metric for success becomes defined as beating someone rather than curating the life you actually want. Incidentally, those who succeed in the competition are often the same ones who are suffocating those who are succeeding by doing what they love at their own pace. Some of us feel the pain of our own stagnation by looking outwards at everyone else progressing forward. But looking inwards, you realize all that resentment and envy stemmed from an unhealthy sense of competition. There is nothing wrong with being ambitious, but the race for returns and big money has transformed most people into lifeless souls trying to step over each other at all costs. Not all of us wants to outrun a ghost. Some of us just want to slow down and breathe. I would like to end with something actor Daniel Day Lewis said about his career during an interview with Rolling Stone[3]. How he described the final days of his film career was something I somewhat resonated with. “The work was always something I loved. I never, ever stopped loving the work. But there were aspects of the way of life that went with it that I had never come to terms with — from the day I started out to today. There was something about that process that left me feeling hollowed out at the end of it. I was well acquainted with it. I understood that it was all part of the process, and that there would be a regeneration eventually. And it was only really in the last experience [...] that I began to feel quite strongly that maybe there wouldn’t be that regeneration anymore. That I just probably should just keep away from it, because I didn’t have anything else to offer.” [1] To borrow a phrase from Nassim Taleb's book "Skin in the Game". [2] Most of what I had written had been a personal reflection after reading Paul Graham's essay on "Before the Startup" (https://paulgraham.com) [3] From an interview with Daniel Day Lewis on his retirement from film-making. (https://www.rollingstone.com/tv-movies/tv-movie-features/daniel-day-lewis-son-ronan-anemone-interview-1235420815/)

In recent years, I send and receive nearly no birthday, Christmas or new year wishes. This is a sharp contrast to ten years ago whereby my phone will be inundated with text greetings during these festive periods. I am not being unsociable, I have not gotten dark, neither am I complaining. There is an unspoken peace that comes with a quiet morning on public holidays. Besides, most of these text messages are usually transactional agendas hiding behind a "how-are-you-doing-in-life" coffee chat. The truth is, social gatherings bore me these days. According to Mel Robbins, "When people come and go in your life, 99% of the time it’s not personal." Most of the time, this is attributed to proximity, timing and energy, which are pillars to social interaction. When you were little, you spent most of your time in the same neighborhood with friends who went to the same school, and did the same things. It is therefore not surprising that many of our fondest and purest memories are during our school-going days. When you hit the twenties and beyond everybody starts to embark on different timelines. Some are pursuing jobs, going to graduate school, or getting married. Others are moving out of the city or moving into the city. Everybody's proximity and timing are now different. Likewise, you can have camaraderie with somebody today and lose contact later when the energy is off. If you decide you are not drinking anymore, the energy's off. If you decide to get focused on fitness, the energy's off. If your political beliefs diverge, the energy's off. It is not personal, the energy is just off. For many years now, I had renounced posting on social media, keeping only my LinkedIn profile intact to upkeep a digital identity and writing content here. Some folks think I have gotten dark. For me, it is just a progressive realisation. Everyone has moved on and are located in different cities, or in various stages of their lives in which priorities are different. After two decades, the playbook has changed for everyone. As I get older, I am also increasingly less empathetic to people who add unnecessary drama to their lives. I have less patience to those who are consistently comparing their net worth to others, name-dropping in social circles, or make their circumstances and situation your responsibility to solve. And whenever an opinion is being asked, I find myself almost always agreeing. Don't get me wrong. I do enjoy the occasional healthy debate. But the anecdotal truth is that, nine out of ten times the person on the opposite end of the table isn't really looking for a genuine perspective. They are either trying to sell you something, get assurance on a certain point of view, or just to show off. I try to avoid settings like these. No amount of explaining or words will change a conclusion that someone has committed to keeping. I am not trying to be unfriendly, I am more selective about where I focus my energy on. These realisations are also not epiphanies distilled from working in a rat race over the years, they are simply moments of clarity.

I recently finished lecturing a couple of corporate finance and financial modeling courses curated for working professionals. The most common feedback was either that the pace was too fast or it was challenging to keep up with the accounting math. Coming from an engineering background where math is like an innate skillset, I try to keep the logic as simple as possible. Looking back, sometimes I wished someone had shared these with me earlier right from the start when I embarked on my investment banking career. In case you are looking for a plain layman's explanation, this article effectively summarizes everything you need to know about investment banking and corporate finance: (1) Decision-making All of corporate finance effectively comes down to decision making. And when it comes to decision making, there are essentially two questions to ask: - To invest or not to invest? - Where is the money coming from? (2) Investing decisions The decision to invest is all about cost-benefit i.e. do the future benefits of doing this outweigh the costs? Valuation (NPV) and returns (IRR) are the main yardsticks of how companies evaluate an investment. NPV (Net Present Value) measures the value of an asset based on its future cash flows, while IRR (Internal Rate of Return) gives the return on an investment based on an initial outlay and a future cash payout. However, one cannot make sense of the value of an asset or business without first considering where the money is coming from, which leads us to the next point. (3) Financing decisions There are only two ways you can fund a business--equity or debt. Lenders care about profits only to the extent it affects their ability to receive a repayment on the debt, but for equity investors profits are really what matters. Both equity and debt have strings attached. Equity requires you to share any future profits in the business. Debt requires you to ensure that the investment is made whole with an agreed fixed payment of sorts. Unlike equity, debt prioritizes wealth preservation. To do so, lenders will ask for all sorts of comfort and security over what businesses can offer to ensure that their capital will not be jeopardized. The banks call this collateral. They will also create boundaries around what borrowers can do and cannot do. These are called "red lines" or financial covenants. Crossing the lines gives the bank the right to ask for an early repayment on the debt. Using the analogy of a queue, debt holders stand in front and equity holders stand behind. Because of where they stand in queue, equity is almost always more costly than debt. This is a simple risk-reward logic and are also the irrefutable rules of the financial markets i.e. If I stand further behind the queue, I expect a bigger payout. NPV and IRR—the decision making tools in corporate finance—therefore involves weighing the cost of capital against the potential returns of investing in a certain project. (4) Relativity Nearly all of business valuation involves some form of comparison. Interest rates set by central banks all over the world are a widely accepted benchmark for a rate of return on capital with minimum risk. Therefore, any premium above the benchmark rate comes from how financing institutions are perceiving risk i.e. there is no reason why an investor would put their money on the line for a business if there was a similar and less risky alternative elsewhere. In other cases, rates of return are used to also drive and influence policy making. For example the widely accepted long-term target inflation rate of 2% came about from a meeting of central banks in New Zealand dating back to 1988[1]. According to one person, “The figure was plucked out of the air to influence the public’s expectations”. To quote Eugene Fama[2]: “I’d compare stock pickers to astrologers, but I don’t want to bad-mouth the astrologers.” Everyone who makes a living in finance thinks they know it all. But there are no correct answers, only comparisons which arise from differing points of views. (5) Storytelling According to archaeologists, cave paintings that date thousands of years ago indicate storytelling was an important aspect of how humans communicate and evolve. Listening to stories causes the brain to release oxytocin which is associated with empathy and cooperation. People are drawn to stories because they can relate to them. Stories shape our beliefs, and beliefs drives the way we make decisions. For what it’s worth, story telling has become an important part of finance. The narrative helps investors make up their minds about whether a business is good or bad[3]. Since no one can accurately predict how things in the future are going to turn out, history becomes a convenient fallback, society rewards good storytellers, and people being humans, do love to listen to a good story. (6) Simplicity Finance doesn't need to be complicated. Even stuff such as financial modeling and complex structures such as leverage buyouts (LBOs) isn't as complicated as bankers make them out to be. Take for instance, LBOs similar to buying a house on a mortgage--the bulk of the purchase is typically funded with a huge bank loan comprising between 60-80% of the property price. The difference lies in how the debt is serviced. With buying a house, the cash flows come from rental income. In a LBO, cash flows come from operating the business. Assuming the value of the asset remains the same, the value of ownership (equity) naturally increases as debt gets paid down, enabling the home owner (or equity holder) to realize its return on investment. That’s all there is to it. When you think about it, a lot of what goes on in corporate finance are actually very relatable to what we do in daily life. It pays to remember that most of what we learn about how financial markets work and and business valuation were originated from the West, largely because the US and the dollar led the charge on how capital is being raised since the history of corporate finance as we know it. Since then, a number of things have changed. The world became more globalized, investors at all levels have better access and knowledge to putting money to work, information is now more pervasive with technology and social media. There is also a huge supply of capital seeking new avenues for returns. A number of global events that took place over the last few decades had also dramatically shaped the way we apply the frameworks of corporate finance such as estimating growth, calculating risk premiums, deriving cost of capital and using valuation multiples. As a practitioner, it is important to take these nuances into our approach when looking at businesses. Here are some real life examples: One billion people. How do you forecast cash flows in the world’s fastest growing economy? In early 2000, China opened up, embarking on huge market reforms that put it on the global economic map. It became one of the hottest investment destination and everyone wanted a piece of the pie. I was fortunate to have witnessed first hand how businesses had successfully produced insanely affordable smartphones, put them in the hands of even the poorest people and connecting everyone in the country. China also leapfrogged the entire credit card economy, going from cash to cashless transactions. Putting the two together meant that one billion people now had the power to spend on just about anything at the convenience of their fingertips. Double digit growth is not out-performance, it is the norm. If you truly understand and appreciate this, trying to project cash flows and using DCF in China at that point of time will fiercely challenge your understanding of local market dynamics and the assumptions around growth rates to derive the value of a Chinese company. “Mature market” risk premium. Given the state of world affairs, are countries such as the US still a “mature market”? The financial crisis in 2008 that kicked off the collapse of Lehman Brothers and subsequently the dissolution of pure-play investment banks, also led to the over-printing of money in the US. Since then, liquidity has been the go-to playbook for solving any financial crisis. For a long time now, the US market has always been positioned as the baseline for what constitutes a mature market, along with other high-performing financial capitals of the world. Today, whether the US will continue to honor its USD 30+ trillion debt obligations will not only test the strength of the US dollar and the credibility of its treasury bonds, but ultimately also our textbook definition of what makes up a “mature and stable market”. If the LIBOR, the London Interbank Offered Rate (which at one point of time had been used as the benchmark for setting interest rates all over the world) can be abolished[4], we must accept the very possibility that our understanding of what defines a stable market return could already be outdated. AT1 bonds. Geopolitics continue to have a big influence on financial markets, so does debt still stand in front of equity? The default on the now defunct Credit Suisse’s AT1 bonds in early 2023 also raises disturbing questions on our conventional understanding of how debt and equity works. For example, is debt financing really less risky when an important strategic shareholder owns part of a business? When countries start to weaponize economic and financial policy through bailouts, tariffs and sanctions, do companies and investors continue to apply the weighted average cost of capital ("WACC") to quantify and justify their decisions? Exorbitant valuation multiples Investors are paying exorbitant multiples for AI companies. Elsewhere in the world, an investor is paying 100 times on sales for Zhipu, a large-model AI company that recently debuted on the HK exchange but has no earnings yet. There is no decent financial model that could justify a company being valued at 100x sales. But as Lee Kai Fu[5] once said of the AI bubble in these companies, “If you believe there is 2x, 3x, 5x growth for the next three years, it is going to justify that valuation at some point. The bubble is merely that it has gotten ahead of itself, not the likelihood of growth in the future.” The all-time historical high of a price-to-sales ratio for the S&P 500 and the NASDAQ was approximately 3.4x and 7x respectively. Even tech darling Nvidia only touched 30-40x at its recent peak. That makes it highly irrational to think that any business could be valued at 100x price-to-sales. Put that into your model. ——— There are no correct answers to the questions above. One thing that is for sure is that there are definitely are a lot more events taking place in the world that has transformed the way we look at businesses. In short, the rules that we used to learn in books, the rules that govern how financial markets supposedly work, are different from what happens in the real world, and it will continue to stay that way. Finance teaches us that value - especially intrinsic value - is the sum of the present value of all future cash flows. Reality however often tells another story. It is necessary to still know how the math works on paper, but acknowledging and understanding this difference is perhaps the most important lesson in corporate finance. [1] "Of Kiwis and Currencies: How a 2% Inflation Target Became Global Economic Gospel" - The New York Times. [2] Lunch with Eugene Fama - The Financial Times. [3] In my opinion, relying on IRRs, MOCs and DPIs to assess and determine the performance of a company or a fund manager violates one of the cardinal rules of investing: History is not the best indicator of the future. Also, good bankers do not always make good investors, good investors do not always make good operators of businesses and managing capital is fundamentally different from running a business. An investor is only as good as his last trade. [4] In 2012, it was first discovered that banks were colluding to manipulate the benchmark interest rates to profit from trading and mask the troubles that banks were facing following the 2008 financial crisis. It was fully phased out in the middle of 2023. [5] "Sinovation Ventures Lee Kai Fu on The China-US AI Race" - Bloomberg.

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. All of this exceitement... but 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. Nightfall at Singapore's inaugural F1 event in 2008 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 which was reduced to 7 days this year, and more recently to a three-day quarantine + four-day monitoring, inbound travelers now just need to do a "0+3"---no quarantine but just a 3-day monitoring period. That is 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, Hong Kong 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." With all the anticipation of high profile events, it seems like Singapore has played its cards well and somehow gotten ahead of the game. According to SCMP the HKEx said, "Singapore may have the edge at the moment, but Hong Kong has more longer-term advantages to attract capital and talent." Notwithstanding COVID restrictions, high accommodation costs, stifling space and population exodus, Hong Kong still has some advantages as compared to Singapore especially when it comes to leveraging the resources of its neighbour -- China. Besides, conference and event go-ers are generally indifferent to Hong Kong and SIngapore as long as they are invited to the party with 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 Hong Kong 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 did not make significant headway in lifting the restrictions until later that same year. And then in 2022 after the spring break, Hong Kong relapsed into partial shutdown again for over a month. 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. This is similar in the case of energy stability in Europe which had always been considered a given until they were forced to take sides against the backdrop of the Russia-Ukraine war. Even the economies halfway around the globe aren't insulated from this with food supply being disrupted due to Ukraine being one of the world's largest exporter of grains. The point is: Everything you know today can change in an instant. Just like the conference go-ers in Singapore, the companies and workers that have relocated to the city can easily find themselves moving back to Hong Kong very quickly once normality has been restored. The race is long and change is the only constant. Sometimes you are in front and sometimes you are behind. Your competitive edge today can disappear quickly tomorrow simply just because the tide has moved. All things - no matter how good or bad they may seem to be today - can change very quickly.

So I finally got down to trying out the driverless taxis in Shenzhen. Autonomous driving isn’t new in China, but large-scale deployment is still in its early stages. So it is no surprise that these cars are a common sight in Nanshan, Shenzhen--a district often dubbed as China’s ‘Silicon Valley’ for its concentration of rising tech stars and its well developed infrastructure.. Ordering a driverless vehicle is similar to using a Didi so there is no real learning curve here. The robotaxi that I got was a Gen-Y L4 SUV from Pony AI. Gen-7 refers to the software version installed on the car (which happens to be the latest) while L4 refers to the SAE standards of autonomous driving which currently is one notch below the highest level. Once your ride is confirmed, the app immediately prompts you to make your way to the pick-up point. Pick-ups are limited to designated locations, so passengers must walk to a nearby point. A quick app verification takes place when the car arrives.. Unlike the traditional cars where you have to manually open the doors, the door in this case is unlocked via Bluetooth. Upon getting into the car, a virtual assistant greets you and reminds you to fasten your seatbelt. Unlike traditional taxis, there’s no driver to verify your booking— you just press ‘start’ on the rear dashboard. The car locks automatically and pulls away smoothly, much like a human driver. Inside the car, there are various options for customizing your ride from adjusting the temperature of the aircon, adjusting the seats and playing music. No need to ask the "driver" to do all that although I suspect one of the upgrades in newer versions will incorporate voice control. User interface in the passenger back seat. On the driver's dashboard, you can also view a 3D schematic of the surroundings on a digital screen. Using sensors and GPS data, the robotaxi maps its surroundings in real time. The driver dashboard. During the 15-minute ride, the car executed a careful three-point turn on a narrow road, avoiding an oncoming truck and jaywalking pedestrians. It overtook vehicles smoothly, handled blind spots, and navigated a busy right turn while yielding to pedestrians and delivery riders at a zebra crossing. All this while, no driver or passer-by stopped to stare at the vehicle I was in despite the fact that there was no one in the driving seat. It almost felt as if a driverless car on the road was commonplace in everyday life. "Look, no hands!" At one busy junction, I even saw another car applying the emergency brakes just to avoid colliding with a pedestrian who had suddenly dashed out of nowhere onto the road to beat the yellow light. There were no angry horns, no winding down of windows to a driver that would unleash a mouthful of hell, and no road rage. Maybe no one had flinched except for me. It was only seconds later that I realized that the car didn't even have a human driver in it. And everyone around was just going about their own business, treating the robotaxi like another normal vehicle. Other than that, most of my trip had been relatively uneventful, especially without the occasional banter of a talkative taxi driver. When I had reached my destination, the car made sure to come to a full stop, disabled the door locks and reminded me to look out for oncoming traffic when I got out. And then it went off on its own, just like any ordinary taxi. Given the complexities and unpredictability of traffic on the roads, the entire process was actually overall well-executed. Interestingly, the entire ride came up to only CNY 20 (CNY 10 if you include the 'welcome' voucher). You can see how this roughly compares with the same ride with a conventional Didi. The case for replacing the driver at the wheel based on these economics seems very viable. Unlike a human driver, autonomous driving has more than one pair of watchful eyes on the road and does not suffer from fatigue. Blind spots are significantly reduced, thereby minimizing the probability of road accidents. Also with the continuous acquisition of traffic data, the algorithms should get increasingly familiar with the roads and learn from its surroundings. There is no need to train a new driver on his first day at work. All it takes is a software upgrade and a new car is ready to go. Of course, there is also the social narrative which involves potentially displacing the entire gig economy of nearly ten million ride-hailing drivers and their livelihoods. Given that we are now already at L4, this trend seems inevitable. But there are also real limitations as to how far technology can go. For starters, if you are heading to the airport with a load of baggage, you now have no one to help you with loading it into the boot. Not that this is a deal breaker but it would be nice to have an extra pair of hands. For the disabled community, getting on and off an autonomous car can pose a serious challenge especially if they are getting around on their own. Ultimately, we will probably still need some real drivers on the road--the same way banks still require counter staff to process certain transactions that cannot be done either at the ATM or through digital banking. As time passes, human drivers will likely be a minority rather than the norm. Nevertheless, I am looking forward to seeing more driverless cars on our roads soon.

In 1990, a psychologist quoted in the New York Times  reported that people “ turn on the TV when they feel sad, lonely, upset or worried, and they need to distract themselves from their troubles. ” Another psychologist also said: “People who watch too much television from childhood grow up with a deprived fantasy life. For them, watching television substitutes for their own imagination.” How the phenomenon above has impacted our lifestyles and wellbeing is not new. Way back in the 1930s, a sociologist named Herbert Blumer published a paper titled “ Movies and Conduct ”. The observations from the research suggested that content shown on television and in the movies shape not only how young people interact socially, but also their attitudes to life and also how they choose to groom themselves. Although it was done decades ago, it isn't that different from how social media impacts our behavior and thinking today. Naturally, the adverse side-effects from watching too much TV made people start to moderate and minimize their "TV time". But did we stop watching the television and reading the news? Watching the television (much like browsing the Web on our mobile devices today) has been a significant part in our lives for a long time. In any interior design mock-up, the TV is almost always part of the living room. For many people, it might even be considered odd not to have one in the house. Not only was the TV an important part of the decor, it also enabled us to receive up-to-date information and news from around the world. And if you think about it, the time spent facing the screen in the old days isn't very different from we are indulging in Facebook, Instagram, Twitter, and Tik Tok in present day. With the Internet, those same feelings of deprivation, loneliness and worry are simply just manifested in different ways. In a similar way, the online ads that show up on our mobile devices technically aren’t that different from the conventional paper advertisements and billboards that we see on the sidewalks and highways. Every advert out there - online or offline - is reaching out to you and saying something, in hopes that they’ll eventually change your mind and perception on something: “don’t use their product, use ours, we are better.”, “do this, don’t do that.”, “Do the right thing, invest in your wellbeing.”, “Vote for us, make the right choice” . Can you blame the companies for putting out the advertisements that led you to buy their product? Were you under duress to act? Did you not have a choice? Newspapers have been around since the 17th century, and television since the 1920s. In the same way, Facebook, Instagram, Twitter and many other apps are probably also going to stay around for a very long time. Like it or not, these will become the norm for how anyone with a decent Internet connection will stay connected with the rest of the world. Along with that, our thoughts, our perspectives and bias on various topics will also continue to be shaped by them, the same way TV, movies and print advertisements have shaped civilisation since the early 1900s. Media, in its various forms, new or old, will always be a tool for commercial and political propaganda. We can choose to extricate from this dilemma by renouncing all social media, but one thing for sure is that we are ultimately responsible for how we let them influence the way we think.

To understand and decide whether bitcoin is a good store of value, let's consider other classes of assets such as real estate and commodities. Take for instance real estate . I remember hearing folks talk about property being a good store of value and something that has that ability to stand the test of time. In some ways that is probably true. Real estate has not only been able to hold its value but is also an instrument that has proven to deliver returns through generating rental income or appreciate in value steadily over time. Within Asia, real estate has not only demonstrated resilience through the up and down cycles, but also been a beneficiary of the economic prosperity of the regional economic titans such as China, Japan, Korea, as well as Southeast Asia. A rising tide lifts all boats. That trend still holds true to a certain extent today. Property is still pretty much the go-to choice for many investors flushed with cash and those in search of a relatively safe-haven especially during a recession . People continue to trade and invest in real estate because fundamentally, they know that a roof over the head is a basic foundation of life at least based on Maslow's hierarchy of needs. Residential property is also somewhat a good proxy to the overall global economic cycle. A resilient jobs economy encourages home ownership, driving up property values. Although its initial investment outlay can be high, real estate is also relatively liquid . Liquidity in valuation, is a metric that tends to be overlooked. In layman terms, this loosely translates to how easy it is for an asset to change hands. You can list your second-hand car for a million dollars on Carousell , but at the end of the day, it's still worth nothing if it can't be sold. The price of a share in a company is only as real as how much others are willing to pay for it, not how much you want to sell it for. Furthermore, liquidity is also driven by the availability of buyers and sellers, and also shaped by the perception of the broader market. All things considered, we can assume that property, as an asset class, remains still highly regarded amongst investors as the go-to asset class for investment. Now let's consider lab-grown diamonds. " A diamond is valuable only because people say it is, not because of its clarity or cut. " Jewelers and advertising companies around the world have done an extremely successful job in positioning the diamond at the apex of all precious stones. But the raw material for diamond is carbon - one of the most commonly available elements found on earth, ranked many times above gold, silver and platinum. Yet despite being available in relatively large quantities, consumers continue to pay absurd amounts of money for a small rock mounted on a ring or co-joined in a necklace. To add to the paradox, lab-grown diamonds are significantly cheaper than their natural counterparts, even though they share the exact same properties and make. In fact, according to this website : If you buy a lab-created diamond, you’d have a beautiful stone, yet no jeweler will buy it back . So, what can we learn about the value of bitcoin from real estate and precious stones? There's much talk of late about bitcoin being a store of value . I know very little about the world of bitcoin and cryptocurrencies - only limited to the banter that I read on Twitter and the news. Is bitcoin a good store of value? Just like property, gold and other precious stones, bitcoin can be considered somewhat a safe haven asset as much as others deem it to be. In this case, the erosion in value (and faith) of the dollar could be one of the key catalysts behind the value of bitcoin. Investors buy bitcoin and other cryptocurrencies because they have lost faith in fiat currency. Traders of bitcoin expect that one day, the guy over the counter of a McDonalds or convenience store will accept a bitcoin or cryptocurrency-equivalent as a valid form of payment in exchange for goods and services. Far out as it might sound, but for a billionaire or any large investor sitting on heaps of cash, this translates to a possible devaluation of their cash holdings. i.e. cash as we know it today, might one day be no longer king if crypto-currencies were to take over. I think that crypto-exchanges were created largely because of this reason. Crypto-currency platforms are only viable and commercial if there is a sizeable market for trading. This implies that there has to be a significantly large pool of investors willing to kickstart the initiative and make the market so to speak. This is similar to early stock exchanges which were created to provide an avenue for companies to raise capital, and also an alternative gateway for investors looking to put their money to work. While people are comfortable with buying and selling shares, there is still a huge inertia is driving a paradigm shift in financial markets to accept bitcoin, inertia likened to re-inventing the wheel. There's a reason why successive versions of Microsoft Windows in its early days were so slow and buggy. We can blame the limitations of hardware and software but the reality is that having to re-write a software for the world from scratch is simply too lengthy and costly. Why demolish and re-build something that is already selling even with some occasional bugs and flaws? Far easier it is to patch the errors than to re-invent the wheel. So our existing financial system is not perfect. Market players are rigging interest rates, manipulating currencies and stocks, and laundering money. But the reality is that the paper currency since its inception a thousand years ago still works as a go-to medium for the exchange of goods and services. To revamp today's highly complex financial system using bitcoin or any crypto-alternative would simply take too much work involving several iterations of monetary reforms, even an astronomical " reset " on the global system, sending us all back to the barter economy. Just as how asset values move in cycle with the economy, bitcoin will probably follow the same trajectory. However we belittle cash, there are many commodities and asset classes out there which still serve as good alternatives to what we define as a "store of value". Bitcoin at the moment is only but just one of them.

The last few weeks had been a huge tailspin for me. I attribute it to the multitude of challenges compounded upon each other - first, the physical distancing barrier, then the business-cultural aspect of it and then the technicalities of the underlying business. To add on, while investment and banking is not unfamiliar to me, the work of public relations and investor relations remains uncharted territory. Perhaps the biggest difference is that the mindset that one takes into any job, any role, any engagement. Never take on a job purely because of money . This might be one of the most important starting points in terms of getting the right mindset. Money is of course important but the experience of taking on the engagement should enable you to grow as a person, forge new relationships, learn new things that you never knew before, and naturally add to your professional credentials. To add on: Never switch jobs solely because the pay on the other side is higher. The "intangible assets" that you give up from making that move might cost you a lot more in the future. Never wear your designation / rank like a "political shield" or a "badge of honor", and let it get in the way of what you should be saying and doing. Most of the people that I know like to flaunt their status of being a VP, Director or being in C-suite roles. That kind of ego wears off fast when things go bad. The ability to be hands-on and execute will eventually outlive ego. Never stop moving or learning. Towards the ending scenes in the movie, The Martian , Matt Damon (as Mark Watney the astronaut) talks to a class at NASA saying: "At some point, everything's gonna go south on you and you're going to say, this is it. This is how I end. Now you can either accept that, or you can get to work. That's all it is. You just begin. You do the math. You solve one problem and you solve the next one, and then the next. And If you solve enough problems, you get to come home." He didn't survive the journey back home by squatting in space, flaunting his celebrity status as an astronaut and griping about how people back on earth could have done better in trying to rescue him. Whether it is a Fortune 500 company, a small medium enterprise or a start up, the foundational principle of any organization is just to "get things done." A true entrepreneur - whether running his/her own business or working in someone else's organization - doesn't care about pride or rank. He/she just cares about getting the job done and getting paid for it. Unfortunately, most people out there aren't entrepreneurs, so excuses such as not being paid enough or avoiding assignments outside their work scope becomes the common excuse. And for all the people out there who think that they are "too senior" to be hands-on or doing grunt work: I still take a lot of pride in being able to build a three-statement financial model from scratch. I consistently do this during the classes that I teach at SMU and remind everyone that it is really not that difficult . If you refrain from revisiting the basics every now and then just because you think you are "too senior" to be working on models, you are going to regret it much later on in life with that kind of mentality. Keep telling yourself that you are too good or qualified for any job or you should be getting more credit for your work and you'll also find yourself in a lot of trouble when you get older.

As an investment banker I used to work very long hours (and I still do) and we were almost always allowed to be reimbursed for dinner and transport expenses if we worked past a certain time (usually 9:00pm). Some times I would claim for these expenses, but other times I would not. And people found that puzzling. As I grew older and stayed longer in the office, I discovered that some of the most simple pleasures at the end of a hard day’s work was simply just to take a 10-minute stroll away from the office or use the public commute back home, enjoying the outdoor air in the process. Taking the taxi on the other hand constantly nauseated me because of the enclosure and motion. It was partly because of that, I did not usually claim for any transportation reimbursement. Likewise for meals and per diem allowances: Unless absolutely necessary such as dining with professional parties such as clients as part of the job, I would then claim for these meals. But I know of people who would go the full length to obtain all recoverable expenses as long as it was within the organisation’s HR policy. There’s nothing technically wrong with that. The rules that were set that way by the folks up there are also the same rules that are part of broader staff retention strategy, that is: To keep employees happy and contented so that they know they are well fed and taken care off. It was only in my later years in banking that I realised making these claims were also a deeper cultivation of a subtle employee-mentality . By attempting to ‘milk’ the system and extract the maximum benefits, one subjects himself/herself to the dependency on the little privileged comforts of life. There’s nothing wrong with that, in fact I believe the banks wanted you to do that. In Nassim Taleb’s words: “Someone who has been employed for a while is giving you strong evidence of submission. Evidence of submission is displayed by the employee’s going through years depriving himself of his personal freedom for nine hours every day, his ritualistic and punctual arrival at an office, his denying himself his own schedule, and his not having beaten up anyone on the way back home after a bad day. He is an obedient, housebroken dog.” So should one day I am unable to afford the ‘luxury’ of going home in a cab or rely on someone to pay for my meals, I would never feel insecure.

"Un-investable" is all about the perception of risk. Earlier this year in Singapore, I was having a conversation with someone from a bank about the creditworthiness of large state-owned-entities in China. Surprisingly, he actually saw this as a “high risk” business. If the counter-party had been one of the more familiar titans of the finance industry, that sentiment would have been very different. Apparently many still think that the business environment in China is still rampant with corruption and fraud. These same risks that investors are concerned about exist in many other countries as well, including the developed ones. Just take a look at 1MDB, Wirecard and Theranos. A company sergeant major during my national service days once said, “Soldiers all around the world behave in the same way once they put on their helmets and the uniform.” The helmet reminds everyone that: at the very core, we are essentially the same. Similarly, a blue-collared production line worker sitting in China, Philippines, Italy, the US or anywhere else in the world operates, say a machine, in more or less the same way. Because he is human, he experiences both good days and bad days. And on bad days, the quality of his work might be sub-standard. But at the end of every work day, he tries to get off punctually, goes back to his family, and starts his routine again the next day. You might attribute any quality defects to the fact that the product was manufactured in a relatively low cost location i.e. if something is lousy, it is easy to dismiss that it is cheap and “made in XXX”. After all we have been conditioned to conveniently draw trivial correlations between price and quality. Without this bias otherwise, you could have just as easily blamed it on the merchant who sold you the product. But corruption, fraud and quality control are smaller problems in the bigger context of things these days---Earlier this year, JPMorgan allegedly issued an “ un-investable ” call on China equities as a reflection of its unpredictability and geopolitical risks. All businesses need to embrace policy. Companies that end up on the wrong side of propaganda run the risk of getting cancelled , as can be seen from H&M’s business in China . But being cancelled goes against our ideologies and learnings of the free market, which is: identifying an environment with favourable supply-demand dynamics and taking scientifically calculated risks in raising capital to make money. State intervention is non-existent. For most places in the world, the market economy is the truth. In China, the authority is the truth. There’s no right or wrong. Most of us have simply been brought up imbued with the ideologies of an open economy that we become averse to a scenario in which autocratic intervention could make or break a business. We fear what we do not know or what we cannot control. And because of this, many companies write this off or cast a huge premium on country risk. Think for a moment how different the risk models and perceptions towards raising money (such as the weighted average cost of capital) would be for a domestic investor or owner of a Chinese company vs a foreign company. The assumptions driving the decision to invest should ideally be localized and go beyond the scientific calculations that we have been taught. Instead we consistently fall back on conventional wisdom (which are mostly capitalist-centered) defining what constitutes a 'mature' or 'stable' market return. For example, a common risk management strategy in the West involves diversification i.e. as long as we have enough eggs in the basket, we can always afford a few bad ones. In China, risk management is less of a game involving statistics but more about developing, embracing the ecosystem, staying in alignment with policies, and in the process, minimising (or sometimes even zero-rizing) the incidence of 'bad eggs'. This is inherently a very different way of doing business and ultimately a very different perspective of risk. In a slightly similar parallel, while modern Western medicine adopts a targeted approach towards treating afflictions and eliminating the ‘bad parts’, Chinese medicine tends to be more holistic, treating the entire system, including the patterns of symptoms. Because the fundamental perceptions and understanding of risks are different, many investors struggle with using scientific methods to quantify returns. Shan Weijian summarized this aptly in an interview last year : "Investment is a risky business, and China as a market, is not for the faint-hearted." On closer look, most of the policies are probably not meant to be autocratic or unreasonable. They exist to maintain a certain social stability, encourage economic activity and safeguard certain national interests - as with any sovereign state. Of course the whole inner workings of global trade are made up of many complex moving parts. But at the end of the day, these are just the rules of the game, and risk is just a measure of how well you think you can play that game. Starting a business in the US almost seems like fortune favours the bold . In China it feels more like: You better do as you are told . A very different image of entrepreneurship and doing business is portrayed in the West. Many of these are frequently sensationalised with stories of school dropouts creating billion dollar businesses, founders working out of a garage, cavalier businessmen who buck the trend, sidelining authority to grab resources on a level playing field, and numerous books celebrating corporate bravery. My first-hand experience in appreciating this difference was about 18 years ago when I embarked on the NUS Overseas College program in Shanghai. The idea of the program back then was to replicate in China, the “success stories” of entrepreneurship in the US - championing research & innovation and commercialising it. China at that point of time was less interested in leading the charge on technology and chose to prioritise large scale infrastructure investment and market reforms around reining in foreign investment. Some of the best businesses at that time weren’t centred around tech but the seemingly more boring and less sexy sectors. It was a very different economy and no one in the cohort had the slightest clue of how to adapt the program objectives to such a market. We were all learning along the way (摸着石头过河) from attending business meetings, fraternizing with colleagues, all the way down to getting visas and negotiating the rent on the apartment. We would later on also learn that the strategy of navigating in China (which probably still applies today), wasn’t so much about being the smartest guy in the room but more about handshakes and being able to connect the dots. Ideas and intelligence are nothing without endorsement. As such, individuals and high achievers who are used to thriving in a merit-based world and expect to use their minds to blow everyone off their seats will often find themselves stumbling in such an environment. Also, all the most important decisions are made centrally. There is almost always either a single decision maker or a small trusted circle of influence (almost mirroring the CCP style of governing) or if you like, using different share classes in a more western centric context. Language is culture and culture is language. Being effectively bilingual might be sufficient, but being able to speak the language does not automatically imply that you can assimilate into the culture. As with many cultures, there are almost always subtle undertones in both casual and professional banter between people, which is why as effective as Zoom and video meetings go, nothing can truly replace the relationships built with in-person meetings. Most of us would later on in our jobs apply these valuable learnings when we took on regional roles or help overseas and local companies in their expansion within China. Starting and running a business wasn’t the same as how most of the world saw it being done in the case of Facebook, Google, Apple or Amazon. The venture capital ecosystem in China didn’t really take off until maybe 10 years ago and the check sizes weren’t that large as well. Most of the time, it takes years for a company to grow, often staying in plain sight, having the right handshakes, playing by the rules of the game, and perhaps more importantly, having very very deep pockets. As you are reading this, the geopolitical and macroeconomic landscape is still constantly evolving, and we are still learning. There is certainly much more transparency today as compared to before, but the perspective of risk will continue to be an ongoing education process, and many investors and corporates seeking to do business in one of the largest economic powerhouses in the world will eventually need to find a way to balance expectations and reality.

A copy of the bible can often be found in the drawer of the bedside cabinet in most hotels. Like most travelers, I casually ignore this, partly because I don't have any affinity for the bible, but also because I tend to overlook and treat it as part of the hotel room fittings (apologies to the folks at Gideon International ). So as I was searching for some writing material in my Marriott hotel room in Shanghai, instead of a bible, I stumbled upon a book titled " Spirit to Serve - Our Stories" . The book basically showcased the lives and experiences of various hotel employees from all over the world, each summarized with a caption and a 1 to 2 page writeup. I am not usually fond of reading corporate marketing material but ended up flipping through the pages. Inside were interesting stories about Marriott's employees - from hotel managers, room attendants, concierge staff, chefs to butlers and bellboys / bellmen. One of those stories included a head bartender who moved from Cambodia to Washington DC more than 30 years ago and he described how many memorable friendships were forged with the returning guests. There was also a story about a mother of four and how she juggled work at the hotel and family time at home. I found many of these stories intriguing and ended up going through most of them. Towards the end of the book, I came across this afterword which I thought was quite meaningful and that it should have been placed right up front: The Twelve Rules of Success Continually challenge your team to do better. Take good care of your employees, and they'll take good care of your customers, and the customers will come back. Celebrate your people's successes, not your own. Know what you're good at and mine those competencies for all you're worth. Do it and do it now. Err on the side of taking action. Communicate. Listen to your customers, associates and competitors. See and be seen. Get out of your office, walk around, make yourself visible and accessible. Success is in the details. It's more important to hire people with the right qualities than with specific experience. Customer needs may vary, but their bias for quality never does. Eliminate the cause of a mistake. Don't just clean it up. View every problem as an opportunity to grow. I have stayed at my hotel in Hong Kong for nearly three years now. Truth be told, the guest-facing staff hasn't changed that much. In fact, most of them recognise me, even if I had gone on an overseas trip for a long time and haven't been back for weeks. I know this because they always pass me my courier packages as soon as they see me step in through the main lobby entrance. In fact, some time back, I heard that it is quite common to see hotel employees working with the same hotel for more than twenty years. I don't think many of them are paid top dollar, and the skills for the service industry are somewhat transferrable. On the contrary, for many white-collared jobs, it is relatively more commonplace to see people moving around only after a few years. So it got me thinking: Assuming we say that Marriott is a successful brand / corporation, if it's not about the money, then what keeps these people working at the same place for years and even decades? Is there a hidden incentive scheme that I am unaware of? Or is it the familiarity of the environment? The social support that comes with forging familial relationships with colleagues? A genuine sense of satisfaction from a customer service role? A good line manager? Or is it mostly just a lack of better options out there? For corporations that are religiously fixated on pursuing performance and the bottom-line results, have they sacrificed some aspects of their corporate branding and employee loyalty in the process of being successful? "Today's analysts will be tomorrow's managers. Today's managers will be tomorrow's Vice Presidents. Today's Vice Presidents will be tomorrow's CEOs and business owners."

In the last couple of years, Hong Kong had remained relatively “closed” to the rest of the world. Once a vibrant city home to conferences and events, I think the city is bearing the brunt on the psychological and commercial front from reduced travel globally. No one is making plans to get in, unless it was home. This was favorable from the perspective of a traveller as accommodation prices once considered to be incredibly high for Hong Kong, had plummeted significantly. I had never given much consideration towards the amount of rent paid only until recently. As most of the world opens up, the return of overseas travel has led to steadily increasing airfares and hotel rates. When I returned to Hong Kong this year, I discovered that the lease on my place had gone up by about 30%. Last year had been a tough period for Hong Kong. 14-day quarantines, tourist inflows from China taking a hit while businesses and residents were relocating away. So this year, with the anticipation of the world re-opening up, I foresee that prices will continue to increase into next year. When I graduated from university, I had been one of the lucky ones that did not have to worry about paying the rent on my apartment. After amassing enough savings over 3 to 4 years, I made that decision to buy an apartment rather than renting one. Renting had never really been a consideration for me, maybe because being a resident in my own country, home ownership was the de facto option. Or at least it was so until I moved to Hong Kong last year. From an economical standpoint, owning a place and servicing the mortgage payments work pretty much in the same way as rent with a few key differences. Both rent and mortgage service are cash expenses, but the behavioural psychology behind paying the mortgage every month can be quite different from rent. With regular mortgage payments, one takes some comfort in home ownership , knowing that your equity position generally improves with every month of debt repaid (assuming the value of your home doesn’t go down). Property has generally been accepted to be a good store of value. While interest rates on a home loan can be as brutal as paying rent, with rent, cash out flow is basically a one way street. A sunk expense with no return on investment. Rents remain much more sensitive to sudden price spikes driven by abrupt changes in supply and demand. Interest rates can be volatile but are insulated against market forces as the mortgage payments are largely priced and sized on your income. To add on, it can be difficult to call a rented place home, especially if you do not have long term visibility of staying in that city. This uncertainty leads to a great deal of inertia when it comes to upgrading your living conditions. Therefore, to an immigrant, the bottom line is everything i.e. the less I pay in rent, the more I bring home in cash. While I consider myself middle-class and one of the more fortunate and relatively better-placed immigrants, I can totally feel what it is like to be an outsider alone in a foreign country earning a living, setting aside as much as possible every month with the end goal of going home one day.