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. It was 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, etc. 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.

Singapore Airlines posted record net profits for its full year ending 2023 results - "the highest in its 76-year history". This shouldn't be surprising given the effects of inflation over multiple decades and the fact that people tend to be more well-travelled these days, both for leisure and business. Still, it is a spectacular achievement on all fronts, for both the company and shareholders, considering how air travel had been severely impacted by the pandemic. Doomed for bankruptcy. Just think about it: Not very long ago, most airlines had been doomed for bankruptcy when COVID-19 brought air travel to a standstill. People were even mocking at the idea of ordering takeaway cabin food at home, selling SQ-branded merchandise and even flights-to-nowhere . All these seemingly whimsical initiatives were targeted at keeping customers engaged and satisfying the insatiable demands of wanderlust travelers, but most of all, I think it was meant to generate some cash flow, if any. Those flights-to-nowhere were subsequently scrapped due to environmental criticisms from the public but that didn't stop SQ from offering customers a unique dining experience aboard the A350 aircraft (on the ground of course). When the going gets tough, it's not only the bootstrapping start-up companies with the least bargaining power who have to creatively pull ideas out of their a**es. Big companies need to do this as well. When the world surprises the hell out of you and leaves you at the mercy of cash flows, anything and everything goes. Apparently what doesn't kill you makes you stronger. Looking back on the last three years, it might be easy to conclude that there is a simple recipe for surviving the pandemic: Stick around long enough, don't die in the process, and things will get better. But simply sticking around understates the numerous organisational and technical complexities that firms have to go through. In the case of SIA, this means re-allocation of manpower resources, deciding which planes to put in long term storage and the costs involved in such an operation (both the tangible and opportunity costs), as well as the means to raise sufficient capital to tide a possibly longer than expected winter . When you are neck-deep in a sticky situation it can sometimes be difficult to see how the longer term picture can play out. Check out these depressing headlines from 2020: Even ECB President Christine Lagarde then in mid 2020 said that the pandemic was probably "past the lowest point" and cautioned that any rebound would be “ uneven ”, “ incomplete ” and “ transformational ” - hinting that some industries such as air travel and entertainment might never recover. Everyone at that point of time certainly has a view on how things could pan out but when the central bank says something, you listen. Timing is everything. Yet even as the effects of the pandemic started to ease, very few companies emerge well from this period of crisis. This is not about hiring competent management to fix operational inefficiencies but the ability to weather a sudden economic shock. Moments like these test the effectiveness of a company's business continuity plan. Fortunately for Singapore Airlines, it also has a unique political and financial backing from state-run Temasek Holdings which not many other firms have. To some extent, SQ is Singapore and Singapore is SQ. This leads to another less obvious factor that has contributed to SQ's record profits. Six months was all that stood between SQ and its closest competitor, Cathay Pacific . That window was sufficient to give any well deserving airline a good head start in cannibalising market share along major competing sectors. If you compare SQ's FY2023 financial performance with the pre-pandemic periods in 2018 and 2019 , operating expenses including staff and fuel costs were almost at the same levels, implying that SQ had likely returned to nearly full operational status. CX on the other hand struggled with mobilising its fleet and dealing with the stubborn re-opening of Mainland China, one of its major revenue contributing segments. When life returned to normal, the dislocation in the supply and demand of air tickets, coupled with the tactical re-opening of Singapore borders six months earlier than Hong Kong / China, was probably what gave SQ the additional bump in profits. Had the Singapore government been slightly slower in its re-opening, we might have missed the boat on capturing tourist arrivals, the perennial fintech festival and numerous MICE events targeting business travelers and conference-goers especially towards the year end. Of course nothing is permanent. Supply pressures will eventually abate which should ease demand and bring down air fares. Unless Cathay Pacific screws it up big time, consumers being consumers will always seek out a variety of airlines to choose from. The key is whether SQ can continue to keep costs under control or will it get complacent from here on. No one likes to be caught with their pants down when a financial crisis hits, but there is no saying for sure when the next one will happen. In an interview with Charlie Rose in 2013, Mike Moritz said of Sequoia Capital: " I think we've -- we've always been afraid of going out of business. ...and so we've worked hard on trying to figure out how we make Sequoia Capital endure. And I think that's been the reason why we've been able to do what we've been able to do. Because we've assumed that tomorrow isn't like yesterday. We can't afford to rest on our laurels. We can't be complacent. We can't assume that yesterday's success translates into tomorrow's good fortune. "

It feels weird to say I'm traveling 'back' to Hong Kong after a business trip. I have spent the majority of my time here for the last 2+ years and there's a certain feeling of familiarity. Yet it feels nothing like going back home in Singapore. It's not a bad thing, just different. Beijing International Airport Whenever I travel, I often think about what it would be like to live in the visiting city. Not for a few days, but for months, and even years. Universities nowadays offer abundant opportunities for students to do this in the form of student exchange programs. It's an invaluable experience of learning to be independent and making more friends. Yet there is a subtle difference. With exchange programs, there is always a finish line. Exchange programs are pretty much like extended holidays with a simple commitment to set aside some hours for study, take an exam at the end of it all, and then go back to the comfort of home with an album full of instagram-able stories. Most who work overseas don't have a clear finish line, unless of course you have been sent there on a secondment with a visible plan of returning after a certain number of years. Unlike school, there is a commitment to deliver and perform in a largely unfamiliar environment. And if your familial and social support is back at home, there is sometimes also little to look forward to at the end of the day. The various circumstances, both external and internal, faced by those who venture abroad, are what makes them more tough and resilient, each in their own ways. People who have been born, bred and work in their home environment, or have assimilated into the indigenous fabric of society with their families may find this difficult to understand. This year marks my third year in Hong Kong. The experience of relocating in the capacity of a working professional, as I sometimes describe to colleagues and friends, comes down essentially to four things: Getting used to living apart from loved ones for an extended period of time Learning to use a second language as the lingua franca Embracing culture - both in the social and business setting Adapting to a new corporate environment or business function Some people adjust very quickly. Young folks and fresh graduates in particular, are almost like sponges , soaking everything up around them when thrown into a foreign place. When you relocate as an experienced hire, the slate is not empty and the "soaking" tends to be a bit slower. But in any case, anyone who has lived overseas for an extended period of time inevitably goes through at least one or more of the above. Each overlapping the other, each influencing the other. Everyone navigates this differently. Whether you are a budding professional or a seasoned hand, whether you are living overseas or starting work in a new environment, one of the most effective ways to get the most out of living in any foreign environment is to fully imbue yourself in the local life. In short: The faster you acclimatise to all aspects of your surroundings, the easier life becomes. " Comfort of home " is the term most people use to describe the country that they were born in. I might live out of a thirty-square-metre space without a kitchen stove or windows that open, but when traveling back from Beijing, Hong Kong is pretty much as good a home as is Singapore. 入港两周年 PS: This week officially marks two years of me residing in Hong Kong.

"This is the nature of capitalism, get over it." - Kevin O'Leary Even after spending nearly two decades being in finance, I don't think I appreciate how capital markets really work. It's not about the math behind how stocks are being valued but rather the behavioural science (or art) behind how they are priced. The housing market crash and financial bailouts in 2008 gave way to a crisis of confidence in the global financial system. A few banks had gone under and jobs were lost, but what followed shortly was also a re-configured mindset towards greed and risk taking. The printing of money to arrest economic decline made a lot of people lose faith in traditional financial markets. As a result, cryptocurrencies such as bitcoin became increasingly popular as investors started to look for an alternative store of wealth. Cryptocurrency and digital assets were meant to be a good thing as they were meant to be digitally secure and essentially "un-fraudable ". But human nature would eventually catch up. Bet on anything In 2022, a series of unfortunate events led to the downfall of SBF , which had been the poster boy for advocating cryptocurrency. FTX, once touted as one of the world's largest crypto exchange used to be valued at more than the NASDAQ . The firm's bankruptcy was a rude wake up call for crytocurrency enthusiast and investors. Look, I'm not dismissing the credibility of crypto assets and bitcoin. But think about it: All the digital tokens that changed hands on the platform had to start from somewhere--cold hard cash from the existing fiat system. Those who trade cryptocurrency ultimately believe that at some point of time in the future, those tokens can be exchanged for cash, ideally at a higher value. This is not very different from trading of stocks, listed options and contracts for difference. This is a secondary market trade . Money in a secondary market trade doesn't flow to the company for expanding its business, innovation or research. It just circulates among investors, punters and speculators, creating a lot of liquidity for those who make money from this flow. Anyone can make a bet on anything and the secondary market is the world's largest legalised gambling den. It is far easier to sit on the sidelines and make bets on which is the winning horse than to build a something real. You can make a bet on the possibility of a business milestones, profit targets, the release of a new product--basically almost any event trigger. And people further make bets on those bets through structuring warrants, put and call options, CFDs, products that don't require people to come up with capital, just enough cash to buffer any unexpected losses. It's just comes down to finding enough buyers and sellers on both ends of the trade, effectively making the market. As long as those in the game keep the ball rolling and no one gets hurt, prices will continue to hold up. All market crashes are primarily due to a crisis of confidence and a whole lot of people just wanting to get out of the trade. Telling stories " Entrepreneurs must be powerful storytellers to win early stage support " A paper written by IESE in 2023 talks about the dark side of entrepreneurship whereby both founders and their investors inadvertently drum up the value of their business even with the best intentions of fundraising and getting a business going. The pressure can sometimes lead to well-meaning people falling victim to an unhealthy culture of hype and overpromising. Assume that a company receives a huge order from an important customer which potentially leads to a significant increase in its revenue. It doesn't have sufficient manufacturing capacity so it raises money from investors in which the proceeds are used to buy or build a new factory, thereby solving for production capacity. Investors do the cost-benefit analysis and math behind this story and decide how much to put in. With this new factory in place, the business is now able to solve for its revenue backlog, translating to more profits for all stakeholders which consequently increases the value of the business. This story, if told properly can be sensationalized into positioning the company as a winner in the market and everybody likes winners. Bankers sell lofty dreams about the future of the business in order to further drive the company's perceived value. Product deliveries and execution start taking the backseat. This is how modern-day capital markets management looks like for many companies. Share prices driven by narratives rather than fundamentals. More people are telling stories than building businesses. And if everyone is telling stories then who is telling the truth? Cryptocurrency and financial derivatives do not build products. Aside from contributing to liquidity in the markets (which once again, benefits mostly the intermediaries), there is no value created in the real economy. There aren't enough merchants around the world today that would accept bitcoins or tokens in exchange for goods and services, and cryptocurrency isn't backed by an underlying business. Many bank accounts still do not support wallets that you can transact virtual assets on a day-to-day basis. You can't even take out a loan using cryptocurrency as collateral. And so regulators around the world are still wrapping their heads around how they should deal with this asset class. Call it an "educated guess" or decorate it with probabilistic calculations backed by detailed analysis. The truth is in today's market, the movement of share prices are no longer driven simply by fundamentals. Buying a stock or crypto is effectively a speculative trade. There will always be winners, losers on both sides, and people in the middle profiting from it. As long as there is sufficient regulation and no one creates an economic hole too big that it swallows the entire house, the show will go on. People will continue to gamble, this is the nature of capitalism. No one calls fraud when things are smooth sailing and the pie is large enough to be shared. It just takes one bad egg, one wilful misstep, to screw everything up.

Tectonic level changes "Do you know how big is a billion ? Just imagine every person tossing a coin at you at the same time." This was how one of my flatmates used to whimsically describe the scale, the 'massive-ness' of China and its potential market opportunity when I used to live in Shanghai. Some weeks back, Mark Mobius, a seasoned investor renowned for his bullishness on emerging markets and China said that he " cannot get his money out ". Mr Mobius' experience might have just come down to a technical glitch in his personal bank account but the media obviously loves to blow this out of proportion to create headlines. Capital controls have been existent since China's opening up and market reforms decades ago. Companies and investors who were first movers into the country know and understand this. There are many ways in which flows of capital are designed, structured and moved in and out of China - the VIE model, SAFE registration, and designated cash pools. That said, earlier this year, regulators in China also published an article guiding the application and use of long-term foreign debt in China. Among other finer details, it states that the process has become more substantive rather than procedural--more explicit approval is required for companies in China wanting to bring in foreign debt. In simple terms, there are no more “ FYIs ” when it comes to moving money in and out of China. To complicate things further, the SOFR rate which sets the benchmark for most USD-denominated lending had risen dramatically over the last twelve months, in quite the opposite direction to the China’s benchmark lending rate . The macroeconomic forces at play—both global and local—seem to be discouraging the flow of foreign capital to and from the country. There is a nagging feeling that the narrative on China, in spite of its huge market, has been changing at the tectonic level. The new playbook. For years, fund managers have profited from arbitraging risk premiums between emerging and mature markets of the world. The principles of investing are simple: Money should go to where it has the lowest risk (note that familiarity with markets drives risk as well) The lower the odds of something happening, the higher the expected return i.e. Tails drive everything . Therefore, the playbook reads: Borrow USD to invest in the emerging markets of China and the rest of Asia. Lately that playbook has somewhat changed: Emerging from a pandemic-induced recession, one would expect the central banks to maintain its low interest rate policy to drive economic growth. But the they had been slow in addressing the rapid bloating in asset prices which subsequently peaked in 2022. China, on the other hand, which had been closed out from the rest of the world due to geopolitical tensions decided to go in the opposite direction. Short-term dollar-based deposit rates today have elevated to roughly five percent, which meant investors get a relatively decent return for not doing anything . Not very long ago, a five percent return was the benchmark for investing in a 'stable market' and not doing anything with your money yields anywhere from 0.3% to 0.5%. Under this new playbook, many fund managers are finding it incredibly difficult to justify their dollar-based investments in emerging markets. For China, there is an added wrinkle of politics at play. Last year, the Chinese government announced slashing the compensation for senior executives at Chinese investment banks. State-run financial firms and regulators were not spared either as part of the reforms highlighted at the recent two sessions. Even Bao Fan , the deal-making rock star of many tech darlings in China and chief of brokerage firm, China Renaissance, went missing only to re-surface some weeks later with news that he was assisting the authorities with investigations. The anti-corruption narrative obviously doesn’t go down well against the already gloomy broader macroeconomic backdrop and simply reinforces China as an “ un-investable ” market. Faith. Some believe that all of this started in Shanghai after Jack Ma's controversial speech in 2020 and also part of China's push for common prosperity. Either way, all of this seems to be the un-intended consequence of doing well or achieving outsized returns. If you are facing high cost of funds and still have to contend with limited returns in a regime that is unpredictable, largely state-controlled and “ anti-greed ”, it can be really challenging to convince asset allocators to put more money there. The billion-people story which used to be a highlight also doesn't sell as well as before. Embracing policy is a choice for investors offshore but a necessity for firms operating in China. That said, ultimately one just needs to be a believer--a believer in the policies and directions set forth by the incumbent few who are in power, and possibly a lot of faith , something which happens to be incredibly difficult to come by these days.

At twenty, you don’t get the life you deserve, you are just the product of the environment you were lucky or unlucky to have. Then, as you get older, and enter your thirties, forties, and beyond, you notice how much agency you actually had on your life. Maybe you moved abroad, learned another language, another culture, another mindset, and became an entirely different person. Maybe you decided you had nothing to lose, and invested all your meager savings into the bet of a lifetime, and it worked out. Maybe you changed all your habits, and realized that you could be much healthier, smarter, stronger than you thought, if you simply maintain a better diet, a better training, a better sleep, a better routine. Maybe you fell in love, and realized that a great marriage was about so much more than physical attraction and intellectual compatibility: if you find yourself walking alongside with a kind, thoughtful, honest person who loves you back, you actually won the lottery. Maybe you met some great people during your journey, shared with them parts of your journey, overcame difficult challenges together, finally understood the real meaning of “friendship,” and that some people are worth trusting and making sacrifices for. Maybe you also had health issues, lost a few precious people that you loved, understood the fragility of life and the pain that comes with truly loving someone else, but also finally gained enough wisdom to appreciate the simple things in life, that are free and in abundance. It’s a long journey. The best and the worst things will happen to you. You can choose to act like a victim, or you can choose to respect yourself and be more resilient, mentally stronger, overall better. In the end, you will look back, you will connect the dots, and it will all make sense, that you got exactly what you deserved. Note: Read the above off X (Twitter), Orange Book

After two years, I thought it was timely that I should spend some time to consolidate and reflect on the takeaways, the hits and the misses at the end of the year. At the point of writing this, nothing actually came to mind. So I ended up spending the new year in a relatively low key fashion. There was no celebration, booze, chugging of beers, fanciful dinners or gatherings to speak of. All I did was head up to the open-air rooftop of my hotel at approximately 23:50 in anticipation of the fireworks overlooking the Hong Kong city skyline. Even after the clock struck 00:00, there was also no massive display of fireworks, not in Hong Kong, not from where I stood. On the roof of Harbour Grand hotel on New Year's Day. This was how I enjoyed crossing into the new year--the serenity of breathing in the cool fifteen degrees outdoor air, and the peaceful anticipation of a quiet morning the following day. Some might even call it a short reprieve from the shit-storm of work awaiting in the first week of the new year. During my investment banking days as a junior analyst, a VP once asked me about what I did for my weekends. I gave the politically-correct answer of telling him that I was too busy catching up on work to be able to plan for anything else. It was true anyway. Whenever anyone asked me about my banking days, I always told them that we worked seven day weeks, had after dinner drinks at 9pm, went back up to work around 11pm, got off past midnight and then back into the office the next day at 930am. That routine changed slightly as we grew into our jobs with travel increasingly becoming a part of it but the hours never really changed. Aside from the mandatory two-week compliance leave that we were entitled to, there was hardly any downtime, and hardly a moment to "switch off". This daily cycle can put a toll on you, both physically and mentally. I recalled one of my colleagues popping pills to regulate this blood pressure because he was getting increasingly affected by the incessant badgering, the non-stop phone calls and the never-ending refreshing of pitchbooks and financial models. " No matter how caught up we are at work, we must learn how to block things out when it is time to rest. Otherwise, you won't last in the job. " - was what the VP said to me. Stress doesn't discriminate between blue-collar and white collar jobs, it doesn't care for how much you earn either. It could take the form of overtime hours, a nasty boss, an unreasonable client, unhealthy working environment, etc. Everyone deals with the vicissitudes at work differently. Some say this deprivation of normality over long periods of working in a high pressure environment leads to the dramatic overcompensation of splurging on extravagant stuff. That is probably true for some people. But despite what the rest of the world says and thinks, I think one of the positive side effects from an investment banking job isn't just about the money, but also the fact that one can take on tremendous pressure under nearly any situation and still maintain some form of sanity and human decency on the job. However, there are those who have made it through and gone to work for the corporate isde or buy side, but they never really left the job. You can graduate with flying colors from an investment banking role and still stay rooted in a toxic mentality. These are the same people who measure success through lofty titles, name dropping and the size of their paychecks. You can always detect these people based on what they choose to talk about with you. Are they genuinely interested in your life or simply just trying to find out whether you had a bigger bonus than them last year. Just recently, I re-connected with an ex-colleague over WeChat. To my surprise, after a few text exchanges, he started asking where I was now, if it paid well, as well as other stuff related to corporate designations and how he was working with some important people in the inner circles. I did not write him again. And so, there will always be nasty people to meet and unpleasant experiences, but there is also the mindset we take with us to deal with it. We can continue to complain about working on weekends, how much of a pile of work awaits us on Mondays, how we are not commensurately comp-ed to our peers, how much we are sacrificing personal, social and family time for work, or how sucky the markets are. Endless worries. Life will forever be a struggle, but to some extent, we are almost always in control of the decisions we make and always have the choice of deciding how we want to let the little things shape us and the way we move forward.

For many, it is that time of the year again for festivities and holidays. It is also the time of the year for the white-collared community to take stock of the hits and misses for the year i.e. performance appraisals. Simon Sinek says that " you can’t incentivize performance, you can only incentivize behavior ". But what happens to an organization if you reward the right behaviour and fail to deliver on results? Embracing the philosophy of ' survival of the fittest' might be a company's best mission statement for staying afloat, but should they reward good behaviour at the expense of performance? Goldman Sachs has a 'culling' ritual annualy whereby it terminates the lowest-performing five percent of its workforce. This sounds brutal but this practice is probably one of the main reasons why the investment bank has successfully kept its edge over the rest of its competitors. In the book "Dream Big", Jim Collins also talks about private equity firm 3G Capital's corporate culture: "The very best people crave meritocracy, and mediocre people fear it." Generally speaking those who are guilty of cruising their way to passive retirement in the organization should be eliminated for the greater commercial good of the company. Yet this is not always so. Large companies often have blind spots and loopholes within their hierarchy for lazy people to hide away. At times, it can also more costly to replace a long-serving employee who has been too familiar with keeping up with the firm's day to day operations. But trimming the fat is a crucial aspect for staying alive. And in all of these scenarios, the firm pays the ultimate price in terms of profitability and efficiency. For those on the lower percentile of the bell curve, it can be easy to feel victimised when you don't get credited or rewarded for your effort and work. Performance appraisals have never been straightforward and there are many softer dynamics at play at the workplace. It could be a certain line manager deliberately picking on you due to one missed deadline, that phone call or message that you did not reply on time, or even just optically not trying hard enough. Sometimes the way things work or don’t work within the company is not entirely your fault. The larger the company, the more complex and inter-connected these workings are, and some problems are just un-fixable. The reality is everyone is entitled to their opinion. Just remember that the ones who have real skin in the game (those who have something to really lose when things go bad) have the absolute right to ask questions and demand for results - even if they sound unreasonable. Don’t beat yourself up too much. But remember, as an employee, also don't be too quick to give yourself more credit than you deserve for your achievements at the workplace.

"In the end, I am a teacher; that is really how I see myself." – Jorge Paulo Lemann[ 1 ] When we think about teaching , instructional delivery is the defacto thing that comes to mind. This is probably the most familiar setting in which a professor or a lecturer pulls up a set of powerpoint slides and speaks to the class. Giving a two-day lecture on financial modelling has always been an enjoyable session for me - the interaction, debates and sharing of anecdotes. One of the biggest highlights personally is to see someone complete his/her Excel financial model (plugging the ending cash from the cash flow statement into the balance sheet) for the very first time. Doing up a financial model might be considered rudimentary for seasoned bankers but a ginormous task for someone who is either not trained in corporate finance or struggling to put together an investment thesis at the workplace. But my teaching engagements go beyond the classroom. At the work place, I am also the go-to person when it comes to troubleshooting excel files and powerpoint, explaining a financial model to an analyst or investor, or when someone needs a slightly older person to be present in the room or to do the presentation in English, etc. Aside from that, I've also been a listening ear to many of our colleagues at the office, from the senior and mid-level folks all the way to the rank and file. I've even been called to help in a situation whereby someone had called our front desk complaining about an imposter who offered him a job at our company. In August, we closed a landmark financing transaction with a highly reputable investment firm. The process was lengthy - mostly because we had very sucky lawyers - but also because it involved a deal structure that no one else had done before. Parts of the term sheet were tricky and the closing was even more convoluted. One of the analysts in my team had the 'privilege' of assisting me on the deal. Joke was that I had brought her aboard a pirate ship [ 2 ], unleashing an incredible amount of documentation in the process, spanning at least seven inter-connected agreements. The deal was eventually closed and some weeks later, she resigned for better opportunities and left this note: Over that same period (with a separate team), I had also been simultaneously running another workstream involving the accreditation of the firm's first-ever ESG financing framework as part of a syndication loan deal. The negotiation process had been tough because the ratings team sitting in Europe didn't have a clue on the workings of how pharmaceutical companies and hospitals in China worked under the public healthcare system. By the time we eventually obtained the certification, I counted at least a hundred email exchanges. In these situations, I find the process of teaching taking on a more practical aspect because the discourse is no longer within the harmless confines of the classroom whereby I can talk freely in hypotheses. My actions and words have real commercial repercussions on the deal, and often come with bearing the responsibility for the outcome. Middle-to-senior management roles--much like my typical classroom lectures on financial modelling--are often like stage performances. As long as you don't screw it up big time, a few slip ups are perfectly normal, but the show has to go on. Look, most of the time, you work for money and are subject to the obnoxious KPIs placed on you because of your position. But every once in awhile, your job gives you the unique opportunity to make a difference. That difference is sometimes not purely measured in revenue dollars or cost savings for the firm, or the bonus at the end of the year. Sometimes it is about the intangible impact on the people around you--fixing the alignment on a powerpoint slide, troubleshooting a financial model, or simply giving counsel to someone junior in the negotiations of a transaction. It is often said that we can't let our jobs define us. But how we do our jobs, and behave with our colleagues and clients ultimately determines the kind of person we are. [1] As quoted by Jorge Paulo Lemann from Jim Collins https://www.jimcollins.com/article_topics/articles/Dream-Big.html [2] Literally translated from the Chinese saying dai shang zhei chuan "带上贼船"

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 3-day quarantine + 4-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 , "Singapore may have the edge at the moment, but Hong Kong has more longer-term advantages to attract capital and talent" [quoted from the HKEx] Nothwithstanding COVID restrictions, high accommodation costs, stilfing 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 and the race is long. 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.

I always had interesting conversations around the assumption and concept of terminal value (TV) in the valuation and financial modelling classes. The above formula on estimating the terminal value of a company is an extension of the Gordon Growth Model - an economic model developed by Myron Gordon , a professor from the University of Toronto, a key assumption being that a company lasts forever . The ecosystem of companies and their life-cycles today are very different from 40-50 years ago. Take for instance Nokia--the phone company only had a seven-year life cycle. Research In Motion, the company behind the Blackberry lasted for no more than two decades. General Electric is probably one of the closest example of how a company can last for many decades before being dismantled into three separate segments in 2021. But I think most companies today don't enjoy that kind of legacy. Many corporate decisions are made based on five and ten year plans. Although some founders have a longer term view of how they envision the business to be, these are mostly aspirational, some might even say crazy. To make a call on a business over a 20-year horizon is almost unfathomable to the human mind. Most of us can't handle outcomes lasting beyond a few decades. To tie up the loose ends in when it comes to valuing businesses, economists simplify this using mathematics. But in the process, they disregard the ups and downs of businesses, which is a practical consideration for fund managers who need to allocate capital under a finite time. After all, the terminal value is ultimately driven by being able to liquidate the underlying asset at the right time. The perpetual growth model also ignores the effects from secondary markets--investors and individuals who are prone to speculating on a company's price tag. This opens up an alternative scenario whereby an alternate scenario exists to allow investors to flip their positions to another party for a quick profit. The key here is communicating the right narrative to potential buyers. Because of this, telling stories become even more important especially when it comes to visualizing how a company performs beyond the typical five-ten year timeframe. After all, calculations involving terminal value have shown that 60-80% of a firm's total value is attributed on the discount factor rate and assumptions around the perpetual growth rate, This seems very paradoxical given that we spend a significant time rigorously validating the company's revenue and free cash flows over the initial forecast period, only to chuck most of the terminal value into a mathematical black box . The 2% growth rate which has been widely applied in terminal value calculation were originated in New Zealan d at a meeting with various central banks in 1989. According to the then central bank chief this was “ a chance remark " and that the figure was " plucked out of the air to influence the public’s expectations ”. The US would later incorporate this into their policy goals to balance economic growth, wages and unemployment among other things. However, if you try and communicate this with someone sitting in China or parts of emerging Asia, no one would have a clue what you were talking about. Most people in Asia simply don't care about what the long-term growth rate assumption is for arriving at a company's terminal value. During my earlier days in banking, we would get into healthy debates around the weighted average cost of capital ( WACC) and the terminal value . Some of those discussions were also deemed as a test of your corporate finance knowledge. But most of the time, it was because a credible fair value estimate was required as part of the report deliverable. In the real world, there is no such thing as a fair value . There are no right answers for arriving at the WACC. There are only astute decision makers and those who are afraid to get caught on the wrong side of the outcome. Calculating the cost of capital or terminal growth rate with precision is only crucial either from a financial reporting point of view or only if you expect someone important to be challenging these assumptions specifically. When it comes to estimating the discount rate for valuing a business, perhaps the more appropriate question is: What kind of returns are you expecting ? It sounds like "plucking" a number from thin air, which is technically not incorrect when you think about it. If you are an investor considering whether to put money in a early stage start-up, this could be anywhere north of 35% to compensate for the high probability of failure. For private equity firms, rates of return could be between 25-35% whereas large institutional investors might expect 9-15% with public equities with a nearly zero tolerance for failure. Simply put: The discount rate is mostly investor-driven - which if you think about it, very similar to the CAPM (Capital Asset Pricing Model). The only difference with the CAPM is that it reflects the assumption that investors to be fully diversified in the equities market. Investors who use their own yardstick for the discount rate and can't get to the valuation they want, generally try to re-validate the cash flow projections or find alternate ways to grow the business in order to make a case for the investment. So don't get too caught up with economic and valuation models. They are only meant to be guidelines for operating in the real world. And as the dynamics of the real world change, so must our understanding and application of corporate finance.

It has been a relatively productive two weeks in Singapore. Most of the conversations I have had ranged from my life in Hong Kong to opinions involving the current state of affairs in China. A few common themes consistently came up and I thought it might be a good idea to summarise them here. China will open up eventually. There is no denying that supply chains, the over-leveraged property sector and the broader economy has been impacted over the last two years. This has likely resulted in a slowdown of the economy (though hard to scientifically verify if any of the public disclosed figures can be relied on). There's a lot of noise involving the recent protests, possibility of further lockdowns, and speculation over when travel will open up. But no one really knows. The concern over handling foreign infections is understandable given that China has over a billion people. Just imagine the toll on healthcare infrastructure if a billion people went to the hospital at the same time. That being said, we can be sure that China will eventually open up. The country's interest for doing business with the rest of the world remains intact. There is no way to prove this and unfortunately waiting too long also means higher costs for businesses. Changing population demographics. A changing demographics and mindset is shaping the new world economy. Persistently high youth unemployment rates is posing a longer term problem for the economy. The tang ping 躺平phenomenon has obviously been one of the catalysts. But the contraction of jobs supply is partly also due to the crackdown on big tech and edu-tech over the last year, the imploding of the property sector, and the more recent cost-cutting measures observed in various household tech giants such as JD.com and Sea . There is also less profit-driven motivation (or greed depending on how you look at it) to excel in life. Call it the successful result of pushing for common prosperity (共同富裕) or simply renouncing the lofty desires in life (看破红尘). Young people are increasingly comfortable with getting by doing the minimum. This is a generational paradigm shift that is taking place not only in China, but many parts of middle-class Asia as well. The beliefs and values of those born before the 1980s have been mostly shaped by the need to have a good education in order to secure a well paying job. Having gone through the dot-com boom and bust, the Asian financial crisis and globalization. Hard work has been taken to be the 'holy grail' for being successful - success in life being largely defined as having a high paying job, even at the expense of sacrificing personal time and working long hours. Hard work correlates to wealth, which buys a roof over the head and some financial stability. And the results have been evident over the last 5-10 years as seen in higher income levels. Economists in Asia have previously also touted the emergence of Asia's middle class, in which the rising affluent population (especially the Chinese) were expected to spend more on lifestyle and luxury. In a recent weekend coffee catch up with a friend, he mentioned an interesting observation: Setting aside the affordability of buying a home, it is actually a lot easier for young people today to get by. In Japan, Korea and China for example, there are tons of convenience stores for getting decent hot food and supplies. There are shops like Uniqlo and MUJI for clothes, and "dollar stores" such as Daiso and JHC for incredibly cheap household stuff. If you are willing to forgo the luxurious brands, you technically don't have to dig very deep into your wallet to live comfortably. It is actually very easy for people to 躺平 and give up on the ”high life". From a capitalism point of view, this is obviously bad for the country because growth has traditionally been associated with increased spending, and not about being contented with living the simple life . And while US and the rest of the world are hiking rates to fight inflation, China by contrast is doing the opposite. By cutting domestic rates, the Chinese government is probably adopting the age-old "inflation targeting" monetary policy to rejuvenate economic growth and avoid stagflation. A new new normal. The narrative on the outcome of China's recent party congress meeting is obviously extremely divided, you either love it or hate it. Some of the peers I spoke with see XJP's next 10-year rule as an iron-fisted style of governance. While it might appear as if too much power is in the hands of one person, this continuity also implies a certain stability in policies, which can be a good thing in today's volatile markets. The so-called 'strong fisted' ruling also means that privately owned enterprises who work more closely with state-owned-enterprises could be seen as a more 'friendly' party aligned with national policies under the current regime. "I believe China is currently in the range of 3 to 5 percent growth, and headed rapidly to zero" - Politico.com In 2016, when the term " new normal " was first introduced at China's 13th Five Year plan, there were several opinions hinting that one of the world's largest economic engine was rapidly grinding to a halt, including the possibility of a catastrophic outcome. But an article published in Fortune put this into perspective: " The slower growth rate is a sign that China’s enormous economy has passed the startup stage and is beginning to mature. While this is certainly a new environment for investors to wrap their hands around, it doesn’t equate to economic Armageddon. " China and most of the global economy continued to thrive in the three years that followed, right up to the pandemic in early 2020 which took the whole world down. What doesn't kill you makes you stronger. Maybe that could also be what the world needs right now: To be less pessimistic and gradually learn to embrace a second new normal of a controlled (or regulated) market economy rather than a free market economy that is jacked up on steroids.

When FTX imploded, some of the largest investors including OTPP and Temasek Holdings issued public statements to disclose their full write-downs of the investment. Unfortunately these two entities fall under relatively more heavy scrutiny not because they are huge, but more so because of their source of funds. These are either the state coffers or life savings of relatively financially unsavvy civil servants and decent few who make an honest living out of making a real contribution back to society. To know that millions of dollars have been lost due to the apparent oversight of a few fund managers is unacceptable. At the end of the day, someone has to be held accountable. This is not to say that privately managed funds that have raised money from accredited and sophisticated investors can get away with calling caveat emptor . Regulators and the financial system exist to protect the interests of those who may not be equipped with the analytical skills to make sound investment decisions i.e. stupid money . Stupid money doesn't necessarily refer to mom and pop money. It could be a hundred million dollar fund moving ahead with the decision to invest largely based on the fact that a well known name in the market like a Temasek or BlackRock is backing the deal. The underlying notion is that: if a large financial institution managing billions of dollars is putting money in this company, the due diligence is probably airtight. These institutions are also supposedly staffed with the brightest minds hailing from the best business schools . The investment process has probably also gone through numerous rounds of review under the scrutiny of multiple eyes. So what can go wrong? This is apparently not what it seems as highlighted in an article published by the FT recently, highlighting that in due diligence processes: "The hands-on work usually fell to the youngest lawyers, consultants and bankers. Today’s 20-somethings have no meaningful downturn experience so were less experienced at judging the adequacy of controls and clauses that only matter when money starts to run out." And so it somehow feels that even at the largest and most prestigious institutions, the decision to move ahead with a deal does not involve the knocking of experienced heads at the conference room table, instead it all comes down to endorsement . The endorsement of branding, track record and taking comfort that a 'rocket scientist' has crunched the numbers. That's essentially what today's capital markets has come down to. Talk to anyone in equity sales. Chances are that he or she will be an excellent story-teller. Don't bore them with the mechanics, and the nuts and bolts of the transaction, they'll almost always refer you to the deal team. Those in sales tend to have a condescending attitude towards execution work and often a lack of appreciation for details and protracted deal processes. In the world of equity markets, you (investors) have been conditioned to make that decision to invest almost solely on subscribing to the "equity story". Buying a share in a business equates to buying a bet on its future, and not its past. Sure enough you can "diligence" the historical numbers, ask about existing customers, next year's revenue, cost structure, profitability, cash flows, etc. But at the end of the day, chances are that owners of the business will insist on being valued based on its outlook. I have even seen some companies who turn away potential investors that ask too many questions. What kind of crazy world is that? But stupid money seems to be important, a lot of stupid money is born out from FOMO and FOMO is exactly what drives people to do stupid things. There is nothing wrong with a fundamentally sound business with a good equity story. Ultimately, we just need to remember that a significant part of what supports the valuation narrative hinges on sufficient stupid money being in the system i.e. liquidity. And liquidity is a big part of what drives financial markets. For what initial public offerings are worth, they essentially represent the final destination for all stupid money, the final equity takeout representing the finishing line for all early investors in the business. This refers to those who had come in at the seed stage all the way to pre-IPO backers and cornerstone investors. It is basically whole lineup of "smart" institutional money waiting for their payday. This is the unspoken dark side of all IPOs. The smart money needs enough stupid money to get out. Can you imagine any decent institutional investor taking out a huge block of primary shares of a to-be-listed business that has an incredibly low free float? Portfolio managers also frequently turn down follow-on offerings of companies that have a low daily trading volume. The main idea here is that should there be a need to sell down their stake one day, they need to get comfort that those shares can be sold in the shortest amount of time within the open market. Liquidity basically gives investors the ability to transfer risk quickly to another party. So the next time you hear fund managers talking about "sufficient liquidity", what they are really saying is that they want to see enough stupid money circulating in the system for the investment to make sense.

The Hong Kong International Airport isn't what it used to be in the old days. There are no crowds, only a handful of shops are open and the lounges are practically empty. HKIA used to be a humdrum of both business and leisure travelers. I used to look forward to relaxing in the lounges—especially the Cathay ones—as they usually have a free flow of warm food, drinks, snacks, etc. The Pier at HKIA was the go-to for hot showers, Aesop scented shampoo and body wash. After freshening up, I would settle into a bowl of wanton noodles from the noodle bar, an extra serving of chilli, paired with either champagne or a can of Asahi beer. Sometimes I would get a scoop of Haāgen Das vanilla ice-cream from the counter, head over to the coffee bar to get a double shot espresso and pour it over to make an affogato . Then I would either work at the open bar or just get some shut-eye on the couch. I could spend an entire day in transit at HKIA (people think I am crazy to do this). Before COVID-19, I would even travel out of the airport into the city to meet with friends. Macau was also accessible straight from HKIA via a one-hour or so ferry ride. This was the Hong Kong that I was familiar with, at least from the perspective of an airport commuter. You can understand why I am slightly sad and disappointed when I saw the nearly empty aisles along the departure gates at HK airport. Aside from the crowd, nothing much about the facade has changed except for some additional seating areas with charging points. These installations beside the travellator are new Hong Kong struggles to conform with the cross-border travel policies set in China (which is totally understandable). At the same time, the city faces the pressure to open up like the rest of the world, especially Singapore, its closest competitor. But like walking on a tightrope, business and investor confidence in the city is gradually diminishing over the last few years. Whether this relates to the pandemic, influence of geopolitics, or the draw of more spacious living conditions, companies can always find a reason to jettison Hong Kong for Singapore. It might be odd for me to speak as a Singaporean, but I actually am rooting for a Hong Kong comeback, in a healthy competitive way. Hong Kong not only serves as the gateway, but also somewhat like the last mile solution for doing business in China. Despite it being part of China, it's British colonial legacy and history is what gives the city its unique quality—the ability to bring together the resources from both the East and West. When you think about it, this is actually very similar to Singapore. Singapore has Southeast Asia, but the size of the market in the region dims significantly to China. The melting pot of diverse languages and cultures makes doing business relatively more cumbersome and difficult to navigate. China on the other hand at least embraces putonghua which is at least homogeneous nationwide. You could hire a Chinese-speaking foreigner and ‘parachute’ him/her anywhere in China with some comfort in the knowledge that they can at the very least communicate with the locals. But you can't do this in Southeast Asia. While English is the lingua Franca in ASEAN, every city in Southeast Asia has its own language. To master the Indonesian market you not only need a native from Indonesia who understands not only the language but the customs. Likewise for Vietnam, the Philippines and Thailand. But to succeed in each market independently, we need to dedicate resources specific to each country. Besides, to win in Southeast Asia, you can't afford to focus just on one country. Even the biggest and most successful startups in the region have expanded their footprint beyond their home country. After Indonesia, GoTo has set its sights on Singapore, Malaysia and the Philippines. Despite making a name of itself in Malaysia, Grab has expanded into other key markets such as Singapore, Indonesia and Vietnam. Yet, even as successful as these startups go, Southeast Asia as a region still falls behind significantly in size to China. Over one billion people in China over the last few decades have been reading more, spending more, investing more, and consuming more. And in recent years, the flurry of venture capital and private equity money into Southeast Asia, lifting overall valuations, has just made it increasingly difficult to find a rich exit in a crowded market. Everyone is waiting eagerly for COVID restrictions in China to open up and for trade flows to resume. Guess which city will be the biggest beneficiary of that? It is perhaps simply just all a matter of time. “Make Hong Kong great again.”

I recently rewatched SBF being interviewed on the David Rubenstein show . The following question was being asked: " Why do so many young people seem so attracted to crypto... it seems like young people are particularly are very interested in it. Why is that? " And SBF replied: " If you're...you know... twenty-one years old, and trying to get access to markets... you want to be able to trade, to invest. You can sign up for an account on crypto-exchange and get full market access. If you try to get that same level of access in equities, in commodities, you can't get it. You're going to end up with heavily mediated access that has like pretty limited amounts of real interactive-ness, limited amounts of liquidity, limited amounts of size, limited amounts of market data. And so for a natively digital generation looking to take more control of their finances, actually being able to do it with crypto is a big big difference. " I was studying David Rubenstein's expression in relation to that response and I wasn't sure if it was skepticism or that he was cringing inside. So much of what had been said hints at a mindset of wanting more, more of everything in unlimited quantities. It also says something about the inadequacies seemingly experienced by the younger people--that they don't get the same opportunities and access as their predecessors. For example, why is having "limited amounts" of liquidity a bad thing for the younger digital generation? Whatever happened to spending within your means ? People who are twenty-something years old shouldn't be trying to " get access to markets " and unlimited access to money. They should be trying to acquire hard skills and real-world working experience. Providing an unrestricted platform to unlock more liquidity so that young people can trade crypto-assets doesn't seem very prudent to get them properly educated with the dynamics of earning and spending money. The real problem with financial markets today is that, everyone forgets the origins and first principles of banking. Banks were created to extend financing to businesses in order to help them grow. Underpinning that model is the principle of leverage--borrow 'cheap' money to invest in companies with high returns. Using leverage to magnify returns is still a healthy investing principle until tne investor gets carried away with speculating with returns. Today, a large part of leverage is consistently mis-used as a product created for institutions to profit from greedy customers with poor financial standing. Stock exchanges enable businesses to raise capital so that they use the money to grow their businesses. The platform provides a unified and visible way for those future profits to be returned to shareholders. It was not meant for punters to speculate (initially). It was greed that got everyone carried away in the frenzy of trading based on telling stories, and bankers were happy to profit from facilitating those transactions. For what the FTX fiasco is worth, it has further reinforced that despite how far and sophisticated we have come in terms of building an efficient capital markets, our understanding of risk-reward are now severely distorted. Platforms--crypto or not--that offer investors the so-called unlimited liquidity to have "more control over finances" simply appeals to greed. It removes having skin in the game and transfers this risk onto the financial ecosystem buoyed by multiple layers of story-telling. [ Read part I ]

This is not a post about I told you so . It is about trying to understand how easily we can get carried away with mimetic desire and FOMO . About three years ago, someone asked me what I had thought about crypto-currency. I knew very little about it. I think I still know very little about it today. After all, this is an asset class that only came into more prominent existence over the last decade. Do I think an investment into crypto or bitcoin take off? I do not know. But perhaps, more important than what I think is actually what others think of it. And that is exactly what brought FTX down. Cryptocurrency, bitcoin, NFT, and all things in the metaverse, work the same way as stocks, bonds and paper money. The case with FTX is simply a bank run in the world of cryptocurrency. People who held these assets just lost faith in them. This is the unavoidable reality: Most of our material possessions are only as valuable as how others think it to be. That's all there is to it. FTX was at one point of time the second largest crypto-exchange in the world . So why doesn't a large financial firm like this get the same bailout treatment enjoyed by Bear Stearns, Wells Fargo or AIG? Similar to the downfall of Credit Suisse , why aren't the middle eastern investors stepping in to evaluate and put in more capital? The same group of people who decided in 2008 that Lehman Brothers should be taken out to the streets and shot in the head are basically the similar set of people who decide whether FTX should be saved. It's a systemic risk. If the fallout doesn't result in jeopardizing the greater good or threaten social-economic stability, we can afford for a few investors to lose money. But see, no one wants to hold that hot potato. When people say that they want to “ evaluate the situation " [1] before taking action, they are not waiting for the favourable outcome of a due diligence exercise. What they really want to know is whether there is sufficient faith in the market to ensure that the assets in the business can be monetised at some point of time in the future. This brings forth another argument: All virtual and digital assets are valuable only to the extent that they can be monetised . If bitcoin and cryptocurrencies are truly valuable as what their advocates say they are, shouldn't these be freely used in our daily transactions? If your company tomorrow decides that all employees shall be paid in ethereum or some other form of cryptocurrency, would you be amenable? And how does this compare to employees who are willing to accept discounted shares or stock options as an alternative form of wages? At the very core of it, it is simply because we all believe that, for better or worse, shares of a company (privately held or listed) can be readily sold in the future. There are even platforms today that facilitate the monetization of employee share options in privately held start ups. And so, digital assets, such as like cryptocurrencies, are essentially a derivative product. Just as the value of a share in a company is fundamentally derived from its intrinsic value, based on the future performance of its underlying business. But perhaps more importantly, shares in a business can be exchanged for cash. Cash, be it the dollar, euro, yen or renminbi, is fundamentally a derivative product. The value of cash is based on the fact that people can use it to exchange for goods and services, knowing full well that the counter-party on the other end of the table can use that money to do the same. Notwithstanding the multitude of currencies, the foreign exchange market is also a tried and tested system that so far works with traders all over the world. This is a USD 7 trillion market per day that works 24-7. Just loosely applying a 0.1% spread on this gives a USD 2.6 trillion annual wallet share - just on the FX business alone. Given the above, it is easy to see why there is so much resistance towards changing the status quo. The biggest stakeholders in the room are the institutions that hold the most amounts of cash. Maybe the 'new generation' of investors who have experienced the devaluation of cash due to the ridiculous printing of money into the system, want some credibility restored to the markets. I can also understand that inflation (and hyper-inflation in certain countries) eroding the savings of many individuals also partially makes the case for cryptocurrencies. But ironically, it also seems that a huge part of getting crypto adopted into the mainstream has gotten carried away by the greed of a few individuals. It's not that I don't believe in digital assets. Maybe it is just that I don't want it badly enough. [1] In an email, OKX commented on the FTX opportunity, saying that “at this point we are just evaluating the situation before we consider any participation from our side,” https://blockworks.co/news/ftx-bailout-candidate-list-is-shrinking-by-the-hour/

In 2017, I had the opportunity to travel to Riyadh for the inaugural Future Investment Initiative (FII) conference. FII was the country's inaugural flagship event, orchestrated to bring in some of the largest and wealthiest investors, companies and celebrities from around the world. The crown prince spared no expense hosting this multi-day event which was aimed at roping in foreign investment and elevating the Kingdom to the global stage. It was an effective way to market a country. The event was broadcast across nearly all the business news outlets that it was coined “ Davos in the desert ” by CNBC. There are many similar versions of the FII. The APEC summit, China's Boao Forum, and the Saint Petersburg International Economic Forum. In addition to rubbing shoulders with the who's who in the upper echelons of the business world, it was also an opportunity for attendees to get acquainted with the local environment and find out what the city has to offer as a destination for investment. Hong Kong had always been synonymous with some of the largest financial conferences in the region. Coined as the "gateway" to China, the city boasts of a highly efficient transport infrastructure, conducive for business travelers from all over the world to stop by for a few days of meetings. No one needs to plan ahead to be in Hong Kong. Hundreds of flights arrive and depart the city every day. An efficient customs clearance and a high-speed train connecting the airport to the city centre in 20 minutes, means that one can get in the morning and fly out at night. Work aside, there was always something to do in town: Bars, cultural festivals, concerts, business conferences, good food and shopping. Hong Kong is so cosmopolitan that there would almost always be an occasion for business meetings in the city. Almost every company with a meaningful global presence in Asia has an outpost in Hong Kong. At one point of time the city was even leading the charge in technology, convening the " most brilliant minds in international tech " at the annual RISE conference , a must-go event for any company that wants to make a serious impact to the tech scene in Asia. But there is less reason to get into Hong Kong today. Aside from the fact that many companies and conferences have shifted away, a string of covid testing procedures awaits visitors upon arrival at the airport. Compared to the past, getting into Hong Kong today has become a meticulously curated trip for many travelers. Despite efforts by the new HK chief executive to address the current state of affairs in the city at the recent inaugural policy address , people seemed to have somewhat lost confidence in what the future holds. To stem the further outflow of companies and talent, the government had also in recent months very publicly unveiled a high-level banking summit to host the titans of finance back in its city center. Despite this initiative, inbound quarantine measures and restrictive health monitoring continue to weigh. I can understand why Riyadh might need an event like the FII to showcase itself to the world, but I never expected or imagined that Hong Kong would need to do the same. The fact that the city now has to bring out the big guns to advertise itself reveals how much the economic environment had deteriorated over the last few years. But aside from the recent exodus of companies and talent, the debt and equities market in Hong Kong has basically also dried up . It used to be commonplace for investors to get rich in Hong Kong's capital markets. The city has enjoyed much success in being the go-to destination for businesses and equities market largely attributed to its proximity to China. The sheer size of the Chinese market and depth of liquidity in Hong Kong drives a tremendous amount of brokerage, trading and research coverage, which in turn drums up more investor awareness and draws in more capital for companies. As such, the Hong Kong Exchange has had an impressive track record of being home to numerous companies across many industries that offer the possibility of making shareholders incredibly wealthy through a dramatic increase in their market values. This is unlike its close neighbour Singapore, which is traditionally known for its sleepy equities market more suited to those searching for stable returns and wealth preservation. In order to maintain its leading role as an IPO destination for Asia, the Hong Kong exchange had also initiated waiving revenue requirement for tech IPOs in an effort to revive the IPO market. But we are treading a fine line here: Once we start lowering benchmarks and compromising on the quality of companies such as waiving revenue requirements (in the case of tech IPOs), things can start to get dangerous if investors question the credibility of companies that list in Hong Kong. And if we are not careful, this shift could end up being permanent and structural. Singapore is the classic example of how efforts in positioning itself as a listing hub has proved relatively futile. Its tie-up with NASDAQ and Tel Aviv has been questionable, none of which has produced any tangible results. Even, the newly launched SPAC framework, which was very likely meant to be an avenue for venture capital firms and early tech investors to cash out, has yet to bear any fruits with only three listings to date. This of which could be partially attributed to a soft global equities market. It's a slippery slope for Hong Kong from here. It never really needed to sell itself as a prime destination or lower its standards in order to attract the influx of capital and large companies. Maybe not until recently and only time will tell if the right decisions have been made to steer the city amidst the uncertain winds of change.

August is shaping up to be one of my busiest months. On top of three webinars every weekend, I have a couple of two-day on-campus classes. I think Zoom fatigue is real and the offline classes provide a huge reprieve. However, the valuation and financial modelling classes always made me think about how I could enhance my existing content and in-class experience in each successive session. I don't claim to be the best and most experienced on the street, but I think where I am different is my perspective of looking at financial modelling and business valuation. Perhaps that is the unique value-add I bring to the table. I thoroughly enjoyed the 2-hour talking session last night on Zoom and was possibly the youngest panellist. We spoke and shared our views on what to expect in the next 6-12 months, personal experiences and opinions on valuation and investing, amongst others. We also discussed the current situation around the pandemic and how people and companies should remain flexible and adaptable for the uncertainties that lie ahead. Learning on the job. During my corporate finance days, I tend to be the junior 'play-maker'. I don’t crave to be in the limelight. I'm happy to just sit in and meetings and watch the show. Occasionally, I get the ball, I pass, someone scores a goal, sometimes I score. Everyone gets paid at the end of the day. Everyone wins. I'm happy. Tired, yes - but happy. So I had spent most of the early chapters of my career being the nice guy, helping out where-ever I can, whenever I can. On one occasion as an analyst, a VP had requested some help for work to be done for an RFP due on Monday. An email was sent out to the analyst pool on a Friday and I was the only sucker that said yes. Sounds like a common Friday evening horror story? I ended up burning my weekend doing up the presentation deck. In fact, many weekends were like that. It was a sacrificial rites of passage as an analyst in investment banking. Someone put this in perspective for me: You're basically trading time for money . I still enjoyed what I did. I disliked the mundane work, but just wanted to show up and be a team player. As time passed, I increasingly became the go-to guy for a lot of what we knew as JIT (just-in-time) projects. It could be a comps table that needed refreshing an hour before a client meeting., a model that needed updating before a meeting, or a pitch-book that required assembly in 24 hours. I had proven to be one of the most efficient and effective analysts in the team. I took pride in what I did, and I still do today. But in the frenzy and rush of producing all the work, I had unwittingly lost sight of the " bigger-picture " investment banking business model - I just did what I was told and dedicated very little bandwidth to develop myself more professionally in other aspects. As the days passed into years, my professional growth became increasingly stunted and fuelled by the mindless monotony of spreadsheeting and churning pitch books. Compensation. In negotiating any compensation, one must first ask the difficult question: What value do I bring to the table? Every institution has large gears and small gears. When you graduate from school and someone hands you a $10k paycheck, you are expected to be the most powerful sponge on earth. Your job is to soak up anything and everything as fast as possible. You are the " smallest gear " in the entire system required to produce the highest torque - that’s your leverage . That leverage has a premium and that is what companies are paying for. When you eventually evolve into middle and senior management, you become the large gear . You are measured based on your ability to drive as many smaller gears as possible. A large and heavy gear which does not drive anything is both costly and redundant, and will inevitably be scrapped. Therefore in starting up any business or pursuing any career, one needs to first understand your role within the firm - are you a small gear or a large gear? If you can't make a difference to the organization you work for and its clients, there is really very little that you can ask for commercially. Don’t get me wrong and under-price yourself. Shoot for the sky if you can. But remember that if you ask for high fees or draw a high salary, you must deliver . And don’t get cocky. More importantly, don’t ever be complacent. 羊毛出在羊身上 Everything has a cost, nothing comes for free. It was much later in my investment banking years, and after starting a business, that I truly appreciated what revenue model and cost structure really means. As an employee, your salary is a cost to the organization, and your main job is to bring in revenue for the firm. Everything else that you do in that process is ancillary to that main task. Beyond salaries, the firm incurs other overheads such as rent, administrative expenses, entertainment costs, etc - all of which are important in supporting the operating infrastructure of the business. The firm's most critical focus is to be profitable. To do that, it needs to grow revenues as much as possible, and it depends on the best employees and sales people to achieve that goal. Usually, the people who are most instrumental to that growth will be rewarded, but in larger organisations, there is always bound to be some dislocation of credit. Don't get too quickly disgruntled when you get paid a lesser bonus than expected. Unless you run your own enterprise, your remuneration is never perfectly correlated or proportional to the firm's profits. You are just an employee , a cost center, and not a shareholder. Understanding this corporate dynamics early on in your career makes you more sensitive to not only the firm’s P&L, but also the need to intelligently source for sales and develop yourself personally. Over the years, when I started my own business and spoke with more people outside the banking industry, I increasingly appreciated the costs of customer acquisition and the value of relationship building. Your work experience gets increasingly diluted and worthless if you choose to sit behind a desk doing endless powerpoint pitches and spreadsheets. In banking, the one thing that many junior analysts (and even associates) fail to realise is the importance of doing small talk with professional parties, engaging colleagues from other departments within the bank, and even client interaction. Every individual is different. Some like to go deep into numbers, others like to hear the big picture. Some like bragging about their achievements while others just want to complain and vent their frustrations to an external party. Regardless of the shapes and sizes that people come in, the interactions - whether direct or indirect - are ultimately contributory to helping the firm bring home the beef that pays the salaries and bonuses. You can choose to systematically and independently acquire technical skills from a corporate finance manual, but there are no handbooks for learning the ropes of business from the "s chool of hard knocks" . So don't get too frustrated if you aren't hitting home runs by showing off your beautiful presentation or financial model to your bosses or clients. Sometimes, your greatest value is in just showing up or being a small cog in a big system. Being commercial. The investment banking food chain From a statistical point of view, not every one will make managing director in an investment bank. This is not abnormal. In an ideal world, the funnel is straight, and 100% of all analysts would make associate, 100% of all associates would make VP and VPs to MDs. But the reality is that attrition happens at every rung. Making Partner or MD isn’t the pinnacle of your career. I used to think that MDs were the creme de la creme in the investment banking world. But the truth is, many of them are just successful in navigating corporate politics and hierarchy within the firm. MDs are really just highly paid salesmen within the bank. MDs exist only because the banks believe that their relationships with senior industry people and clients can be monetised at some point of time. Their KPIs are based on the bank's revenues and not on whether they make your life easier. It is also because of this that most cultures in investment banks appear to be toxic. Don't take it personally, it's all just comes down to sales and the bottomline . As someone lower down the rung of the ladder, if you focus too much on pleasing your bosses and co-workers as part of climbing the corporate ladder, you'll find yourself rudely awakened ten years later into a miserable job. So, everyone - junior or senior - needs to learn to be commercial , and that means understanding how the business of your firm works and who the real customers are. Above all, be smart, be a good listener and nurture good analytical skills. Learn more to solve problems rather than pleasing people.

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."

"There's nothing for you in Singapore." During the initial years of starting IJK, we had contemplated re-locating me from Singapore to Shanghai. It would have been a huge move. It had also been a natural and strategic option. China was a huge market and we thought we had what it took to succeed in that market. But China has been relatively outside my comfort zone, not only in terms of the language but more so because the resources that I had mustered over the last ten years at that point of time were all within Southeast Asia - The connections, relationships and appreciation of the culturally diverse landscape. In short, I felt that I knew relatively better how to navigate in Southeast Asia as compared to China. But China as an economy was the largest in Asia compared to the playing field in Southeast Asia. It was hard and impossible to ignore. I made that decision not to re-locate, staying put in Singapore while spending the next four years shuttling in and out Shanghai and many other cities, making stopovers in Hong Kong. By early 2020, our startup journey had taken us to Moscow, Saint Petersburg, Seoul, Riyadh, Astana, Budapest...the list goes on. As for the adventures we had over those 4 years, those stories are for another day. I never posted any of those trips on social media. We had travelled to many exotic places and I got to know many people whom I would have not met if we never started this business. More importantly for me, I succeeded in breaking away from the comfort zone I was in as an investment banker, the typical grunt of an employee. While I had picked up most of my accounting knowledge, financial modelling and structuring skills in a formal professional setting, I really only learned how to set up meetings, present ideas and sell when I became a business owner. These are lifelong skills that cannot be taught and follow you around for a long time. Look, the point here is not about the fancy globetrotting or the invaluable lessons learned. There is also no success story to tell. At the risk of being overly blunt and transactional: The business acquaintances and relationships acquired only make sense if you can convert them into fees at some point of time. The cash flows (if any), only sustain you for a finite period, and then you have to look for the next elephant to bag, and the next, and so on and so forth. The truth is we paid for many of these business expenses without getting anything in return. Many people choose to interpret and believe what they see on the outside. It’s not as good as it sounds. There is no glamour in running your own business. It is more like living life in a constant state of uncertainty. And when you are in a constant state of uncertainty, it gets difficult to plan for anything long term. Then at the end of 2020, in a twist of an opportunity, I made the decision to relocate to Hong Kong, taking that uncertainty into a whole new dimension. Over these last two years, many friends have asked me how I cope with living overseas for an extended period of time away from home. All I can say is that it is not as easy as one might think, even for those who are accustomed to frequent traveling for business. When I think about it, the people who travel and live overseas for work generally comes down to three buckets : Those who relocate early on in their lives either for study or upon graduation; Those in their mid-careers who relocate for work as a temporary arrangement and; Those in their mid-careers who relocate indefinitely. I have many friends in the first bucket . They had gone over mostly upon graduation and have called those cities home. Those I know have stayed overseas for easily more than ten years. They had built their social ecosystems and familial support there and did not have to uproot anything back home or had little to nothing to give up. For them, life started overseas . Those in the second bucket are slightly older and had more work experience. They had gone overseas midway into their careers or got seconded as part of a project. In nearly all of the cases I knew, there was always clear visibility in terms of when they were going back home, be it two years, three years or five years. There was always an end goal . Something to look forward to so to speak. Then there are those in the third bucket . I know of very few people who are in this bucket and they are mostly in C-suite positions. I sometimes wonder how they do it. How they manage their families at home is a miracle in itself. You can only truly empathize with this if you are in this bucket. The thing is: When you already have a life back home, relocating overseas for work indefinitely is much harder than it sounds on paper and what you hear from others. A lot of people take it for granted because they either feel that the remuneration package makes up for that inconvenience or they simply just think they are adaptable enough. But when you take a step back and really evaluate the circumstances that could potentially impact you - the distance, the unfamiliar environment, the lack of social and familial support, there is always a chance that you over-estimate yourself. Money can only go so far in compensating the inconvenience and logistics of relocating overseas, but how does one psychologically prepare for and cope for the change to a new environment?