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.

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/

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.

"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?

There’s nothing you should regret in life - all the good things that you have today are a result of everything that has happened. Consistency has a compounding effect. You usually don’t see the results until a very long time later. Never look down on anyone because of what they do. Complain less, stop victimising yourself and move on. General knowledge, financial literacy and personal health are ultimately your own responsibilities. When traveling, take the cheapest and happiest mode of transport available. Never kick someone when they are down. Learn to give and receive compliment and feedback. Don’t ever get cocky. Ego and wealth are like items on a balance sheet. Here today and possibly gone tomorrow. Being hands-on is the simplest and purest form of leadership. Find the courage to disagree. Own your mistakes. Run your own race. Don’t ever believe that you can second guess the stock market. Pay it forward by learning to teach and mentor younger people. It is not where you work that is your source of economic power - it is your health and attitude. The media is curated by people who are biased. Everyone has a bias. Be critical and discerning, don’t believe everything you read and hear. In this day and age, a healthy digital footprint is important. Anyone who tells you otherwise is smoking you. When someone says ‘just trust me’, you really should think twice. Invest in a tailored shirt, and a good suit. Don’t cheap out on ties and a good pair of shoes. Dressing well shows that you take your business seriously. Candidates with decorated CVs and impeccable credentials do not always make the best workers. Never believe someone who says that they are purely helping you out of goodwill and have nothing to profit or gain from doing so. Be a jack of all trades and a master of at least one or two. Even in the most helpless of situations, it is absolutely critical to have a healthy sense of optimism. Treat investors’ money as your own. A fantastic career not only enables you to pay your bills but also pushes your limits, builds character and helps you to grow as a person. Never compromise on quality. Focus on creating a great product rather than calibrate quality to price. Never limit yourself by the stereotypes placed on you by others. Bell curves and rankings are just part of a game played by people with their own agendas. Just because you lack the vintage of a good school or a “bulge bracket” doesn’t give you an excuse to underperform. Not everyone who is older than you is wiser than you. Wisdom is acquired through working on the day to day chores, not age. Contrary to conventional wisdom, people don’t really change that much. There is a difference between keeping still and not doing anything. Make sure you are on the right side. You can’t see where you are going if you keep covering your eyes on the way down a rollercoaster ride. Never allow social media to define your identity or create a false sense of security. Life is not measured in terms of likes and followers. Everyone is entitled to their point of view, but only the people with skin in the game get to make decisions. Most people who are looking for your opinion usually don’t want you to disagree with them. There is no such thing as ‘I have no choice’. You always have the right to decide. Age should never be used as an excuse for not being up to date or learning new stuff. Usually, no one is incompetent. Everyone is good at something. Some people are just placed in the wrong places at the wrong time. If you can’t get to keep your money, there is no point in proving that you are right.

Footfall has improved since circuit breaker in June. It's nowhere near pre-COVID levels but still it's better than none. Everyone is masked up except for those who are eating or having a coffee like me. The tables are now more widely spaced - which I'd always thought it should be that way. On the face of it, everyone seems to be getting used to the new normal. It's good to see some activity in the malls. It implies that the office crowd is back and that in turn drives the F&B businesses. It keeps people employed and keeps the economy running. Generally speaking, this crisis is somewhat different from the 2008 financial crisis. In theory, some jobs should only be more directly impacted than others, particularly those in the travel and tourism sectors. And savings from non essential travel should technically allow businesses to sustain operating expenses and maintain headcount. That said, as companies today have largely regional / global operations, and are significantly reliant on travel, the entire economy takes a hit. The lack of inter-city commute provides a good 'excuse' for many decision makers to withhold aggressive marketing and expansion plans, creating a further drag on revenues across the entire value chain. I imagine that the uncertainty can be unnerving. For now, let's all sit tight and I'll check back again in another three months.

We had visited a cafe nearby on an afternoon. The store was full and as a result, we had to wait behind the glass doors at the entrance. When a staff finally came up to us, all he did was beckon at the sign that was hung at the door, saying "FULL HOUSE". No greetings, no words of " sorry we are full, please wait. " He just went " tap-tap-tap" on the sign at the glass door and walked away. We left. At Starbucks, I almost always see tables with dirty cups, wet tables and used serviettes. The tables typically remain uncleared for a long time until a customer comes along looking for a seat. In one incident, I was even told that tissue paper costs $0.30 when I asked for the tables to be cleaned before I sat down. And when it is getting late, many times, the staff would often rearrange the chairs and tables loudly, sending a subtle unwelcoming message to all their customers: " Get out, we are closed ". On another weekday evening, I made a reservation at a fairly busy restaurant. The guy taking the reservations told me it was probably going to be at least a 15-minute wait and took down my number to call me when he got a table. Seeing that it was really crowded, we decided to take a walk around nearby and give him the benefit of time, coming back 30 minutes later. And when we showed up, he said rather triumphantly and self-conceitedly, " See, I told you, 15-minutes ". I wasn't expecting to be seated but I guess a better respond would be, " Sorry, we are really packed today and I promise to try my best. " Last week, I was browsing online for a set of Marshall speakers. I stumbled upon the website of a distributor, found the product catalogue, as well as their email contact. I decided to write and ask for the stock availability before making the trip down to the outlet. However, all I got back from the business development manager was an email reply to enquire directly from their website. I ended up getting those speakers elsewhere. Maybe it’s just me and I'm particular about the little things or we are just held hostage by poor service and there’s pretty much nothing that we can do about it. Singapore has no resources, limited land and a limited indigenous workforce. But what we lack in physical commodities, we make up for in service . For many years, we have pride ourselves in being the epitome of a world-class service-oriented economy. We constantly promote our quality onboard our flagship airline. We rave about having the best airport in the world, and by all measurable terms, we claim to provide top-notch service in everything we do. Every foreigner who visits Singapore tells me it's a clean place, people are nice and good, etc. This had been my impression way back until 2004 when I made my first trip alone overseas and stayed in China for a year. I realized that good service exists in many cities in Asia. It is not unique only in developed cities but even in the emerging ones, not just in their airports but it percolates through every segment of the economy, big and small. But why is our service deteriorating? I can only narrow this down to the fact that those in the services and non-PMET industries generally don't enjoy what they do . Article from TodayOnline - January 2015 It's a zero-sum culture. From my conversations with friends, co-workers and clients, I get the impression that many companies in Singapore have a somewhat 'zero-sum' business culture, i.e. For an employer, once a deal has been made to hire someone, the company has a selfish interest to squeeze as much as they can out from the employee. This means lowballing salaries, scrimping on travel and employee benefits, and even pushing staff to work beyond stipulated hours. What do employees do in turn? They find every possible means to skive, cut corners and slack off. Everyone lives paycheck to paycheck, look forward to Fridays and hate the Monday blues. They stop loving what they do and stop enjoying going to work. It just becomes a job, doing it just for the money. This percolates across the value chain in the business ecosystem. Clients often try to "suck dry" their vendors / suppliers, milking them as much time as possible. There's no more professional decency, no mutual respect for personal time and resources, just emotionless transactional exchanges. After many years, this behaviour morphs into a toxic environment whereby two parties in any business transaction will always seek to take advantage of the other. I'm not saying that all companies are like that. But the relentless and fast pursuit for profits today can be a dangerous thing at the expense of culture. From laying the tarmac on the road, sweeping the sidewalks, making coffee behind the counters, to people pushing papers in the offices - every job is still a job . How do we instill a healthy respect and a sense of pride for the people who do what they do regardless of rank and file?

The world was a very different place in 2006. We were two years out of the SARS crisis, I had finished my final exam papers, and completed presenting my engineering thesis involving a weather forecast mobile app running on a 2G cellular network. Shortly after and to much surprise, I came across a French IT consulting firm on LinkedIn. The firm at that point of time, was being engaged by Philips TV to develop a software prototype. The job opening was a software engineer role that needed to be filled urgently. After a couple of conversations with the team and some deliberation on my part, I took up the offer and showed up to work while the rest of my peers were still in the middle of their graduation trips around the world. The product prototype being developed then was meant to be used for all of Philips' clients in the hospitality and healthcare sectors. My work desk looked like this: My work desk at my first job ever I was a fast learner and picked up stuff quickly by working closely with the Chief Engineer. I had gotten proficient at writing code, good enough for demonstration to the Philips CEO during his visit to Singapore. But I ended up leaving less than six months into my role. I needed to get out. My motivation was driven by: The fear of being stuck in an engineering job, working from 9am to 5pm everyday for the rest of my life , and perhaps more importantly: The want of earning more money by getting into a banking job. That was primarily how banking and the world of corporate finance appeared to me then. I was told fresh graduates were taking home 8,000 dollars a month. No other career offered that kind of money, definitely not in my field of study. But I was not lucky. My grades were less than mediocre and I had been in the 'wrong' field of study - engineering . I wasn't cut out for investment banking . I didn't even know what a Bloomberg terminal was, how to calculate a series of discounted cash flows, or the definition of enterprise value . I didn’t get my 8,000 per month dream job but with some luck and the help of a school senior, I eventually managed to join the valuations team of one of the large accounting firms. My cover letter in 2006 Trial by fire. I will never forget my first day of work. The office was on the 23 floor on Hong Leong Building just next to the iconic Lau Pa Sat in Raffles Place. As I walked from the lifts and through the swinging glass doors, I saw my new colleagues, probably twenty-something of them, looking smart, well-dressed, some with ties, all seated behind their cubicled desks. I wasn't given a desk of my own. Apparently the firm had over-hired due to the overwhelming number of assignments, and the only space they could put me up to sit was a narrow corridor next to the printer where two other new colleagues sat and shared a long table. One of them was a graduate from the prestigious Yale University, the other was an audit senior of five years who had been seconded to the corporate finance team. All eyes were on me as I turned left and walked to my space. Despite being a fresh graduate like most of everyone else, I had finished my studies a year later than all my engineering peers, thanks to an additional year that I spent overseas in Shanghai. This made me two years older than the guys who had graduated from accountancy and four years older than their female peers. In short, I was the " uncle" of all the analysts in the team. And for the longest time, no one could understand why I had chosen to take a 33% pay cut from my job in Philips to venture into the unknown from a zone of comfort and familiarity. Many times, I even had to clarify where I worked at previously: "Not Phillip Capital the securities house - Philips , the electronics company..." It was also much later into my role that one of my colleagues revealed to me that they were all wondering why I had come to " steal their jobs " as an engineer. So, it was with the combination of a bit of dumb luck, a vacant junior position created by the timely departures of a few analysts, and sheer persistence that landed me into a corporate finance role. Truth be told, I was incredibly scared during my probationary six months. I had come from a working culture that involved going to an office in a techno-park to write code five days a week, to a place that required retrieving stock prices on Bloomberg while discussing which companies were raising capital, or running a sale process to a consortium of private equity investors. The closest I would ever get to writing code was visual basic in Microsoft Excel. Other than that, I was a fish out of water. I was so afraid that my line managers would deem me unsuitable for the job and ask me to leave. However, what they did do was make a bet that I would voluntarily leave within those six months. This incident was later unwittingly and awkwardly revealed by a stranger who crashed one of our team drinks. I remembered him saying: "Hey! You lost your bet. He's still here!!" It was just one of those things people in banking like to do. It sounds condescending and insensitive, but you pretty much got to have thick skin in order to survive. Investment banking isn't just about getting through the gruelling late nights and delivering on the number crunching. It was also about the harsh and toxic environment that one has to be prepared to put up with for many years to come. No shortcuts, no straight paths. Today, I get a lot of questions on how to break into a corporate finance career whenever I teach at the Singapore Management University. "I don't have any accounting or finance background, how do I get in?" Ironic as it seems, most of the people asking me these questions have better credentials and working knowledge about the field of investment banking than I had during my time. My attempt to learn about the workings of financial markets was through punting in stocks during the bull market, which peaked shortly in 2007 and went bust later towards the end of 2008. I dabbled into the markets not to make money, but more so to experience first-hand how it was like to invest, trade or punt . It sounds unusual given younger people today are more investment savvy and have even more access to investment and trading platforms. Unfortunately, I don't have a straight answer for how to get into an investment banking role. I guess the willingness to work hard beyond the stipulated 8 or 9 hours a day was definitely a plus, but beyond that, it had been challenging to also prove how you could get the job done eventually or the value you brought to the team. For most of my peers it was mostly due to the fact that they were familiar with navigating the culture , having done similar internships before. In my case, it was probably my posturing as the go-to-coffee-boy for all the work that no one wanted to do. Mostly, I attribute most of this to being at the right place , right time and meeting with the right people (天时地利人和). That said, everyone has a different trajectory. In 2006, I had found myself then in a somewhat employees' market in which banks had been actively poaching from the accounting firms, creating a vortex of hiring, and I had been lucky to get dragged into the process. Revisiting "the want of money" Bankers during those hey-days were also raking in deals (most notably from the many S-chip listings) and taking home multi-year bonuses. I recalled hearing someone from one of the local banks earning thirty six months of bonuses. Even if his base pay was mediocre, the absolute quantum still sounded crazy. At that point of time, it was even common for bankers who got less than a year's pay in bonuses to jump ship just because they felt they weren't compensated enough. What a crazy world. To contextualise this to a working person with an average pay, just imagine: Bankers typically earned in a year, the equivalent of what everyone else outside of investment banking makes in 3 to 4 years. It also implies that after working for 7 to 10 years in investment banking, you could possibly retire for the rest of your life. It makes everyone else's job look like a joke. And yet there are still those in the industry who continue to complain about working the long hours and being under-paid. Fast forward 10+ years on, the frenzy of hiring and huge bonus payouts have significantly subsided. But the brutality of the work environment probably hasn't changed. Many fresh graduates today continue to worship the altar of corporate finance, chasing the money and prestige of being accepted into the bulge brackets . It is important to realise that there are many careers out there which pay decently well (but may not pay as " fast and furious "), if you stick it out consistently. It is obscene that bankers are paid so much for the work they do compared to most other careers. "It's unacceptable that chocolate makes you fat, but I've eaten my share..." Therefore easy for me to say " do whatever makes you happy " or " be open to other well deserving jobs " when I have personally gone through and benefited from the system. No guarantees At the end of the day, everyone has to make peace with whatever career you have landed into. Many of my engineering-schooled friends are doing very well today, even having not gone into banking roles. Some are in sales, business development, entrepreneurs, etc. After all, not everyone who lands an investment banking career is guaranteed to make lots of money and the promise of working on exciting deals. Most of the day-to-day work in investment banking tends to be iterative (and sometimes even borderline mundane). These include stuff such as research, spreading numbers and window-dressing a company's profile. As a junior or mid-level banker, you'd be lucky to get involved in and be a spectator in deal negotiations. Be realistic, you won't get to be portrayed a hero or a rockstar deal-maker. This is not the movies. However, you will be paid well and most likely be a target of envy for most of your peers who are probably earning only a fraction of your salary. By the time you reach director or managing director level, chances are that you will feel the mighty burden of revenue targets and also deal with the complex politics that come as part of the job. Hopefully during this time, you stay grounded and haven't gotten too used to a lavish lifestyle that will put you in golden handcuffs for the rest of your life. More important than the prestige that comes with investment banking, you really have to love what you do. The dots really do connect backwards . It is not so much about simply earning the big bucks, but whether you also appreciate the dynamics of the job and find a way to sustain yourself in that line of work for an extended period of time. As I look back on my cover letter dated in 2006, I recall of how starry-eyed I was when I applied for a role in investment banking. I had been lucky, yet, at the same time, it also reminds me of how far along I had come. I had applied for the money, saved some, spent some, invested some and lost most of it. I'd gained knowledge of the subject matter, technical skills and the experience, including the network of people, intangible resources built over the years, and spat out by the system. But. No regrets.

Zoom's share price was up 40% last week. " If we can work well together online now, perhaps it will permanently reduce the need for business travel [1] " ZM shares peaked at an all time high last week Work-from-home protocols, tele-commuting, webinars and virtual meetings may permanently alter business travel, which accounts for a significant portion of aviation revenues. Zoom isn't the only winner here. Given the restrictions on daily commuting, technology has become an enabler of businesses and lifestyles. Many tech-related stocks ranging from cloud computing, e-commerce to data security have benefited greatly as a result of this migration to the digital realm. Early investors in Zoom and other tech stocks were lucky. But one might wonder if it still makes sense to even buy its shares. At its peak, Zoom traded at more than 2,000 price-to-earnings, implying a dividend yield of 0.05% . “Our ability to keep people around the world connected, coupled with our strong execution, led to revenue growth of 355% year-over-year" - Zoom's recent earnings call Clearly investors are not buying technology stocks for their dividends. Everyone who has a positive rating on the sector is valuing it based off the scenario that we won't be returning to our offices soon. Not at least within the next 12 months. A few months ago, people had already been speculating about a second wave. This has since emerged in several major cities - South Korea, Hong Kong and Japan. The effect of the virus is also festering down south in Australia where it is currently winter. Governments are holding their breath in anticipation of a third wave towards the year end. For now, it doesn't look like the nightmare of travel bans and city lockdowns are easing anytime soon. This virus could linger around for a few years and you could be using Zoom for a longer time than you think. Using Zoom underscores the innate desire to engage in a face-to-face setting. Apple has tried to do this with FaceTime in the peer-to-peer context. Skype has video calls. Polycom even offers an immersive platform which is targeted at large corporates with the budget to invest in virtual-presence-type meetings. Doing so allows their professionals based in multiple cities to communicate in real-time without the need to fly to a single location. While these paid-for-service features have not been cheap, corporates weigh the trade-off between the cost of a business class air ticket vis-a-vis the cost of an enterprise-grade platform. Video conferencing is not state-of-the-art tech. But Zoom was caught in the right place at the right time. In a world without safe distancing and masks, demand for real-time video communications and webinar broadcasts might never have evolved into the defacto standard today. Unlike Polycom, Zoom had somehow managed to make tele-presence accessible easily and quickly for everyone across all budgets during a time where the world needs it the most . Albeit the initial security issues that surfaced as a result of its popularity, the app continues to serve its main purpose of facilitating conversations between people and it connects seamlessly. Most importantly: it just works . Apple's WWDC in 2011 Take a look at Apple. The technical specifications of its products are not superior to the Microsoft or Android counterparts. In fact, Apple products are pricey . But loyal fans of Apple (including me) continue to buy the iPhones and Macbooks, happy to settle for a less than top-notch hardware. Maybe it's Apple's iCloud ecosystem, or the make of the phone. Or maybe there's something enigmatic and addictive about its minimalistic design that appeals to a certain group of users. And just like how people are drawn to the allure of Apple's simplicity, if there's anything that Zoom has gotten right, it is probably the ease of installation and use. More important than usability, the majority of governments and organizations around the world have also mandated extended periods of work-from-home procedures and no physical client meetings. Very draconian you say, but who can afford the socio-economic risk of a second lockdown? So what happens when the show is over? After this pandemic is over (either through herd immunity or via a vaccine), I am guessing that most people would still use Zoom in their day to day work, but the real question is how many will continue to pay for its enterprise grade functionalities? Keeping in mind our natural instincts to engage someone else in person, and also because as humans, we will probably start to forget the pain of the initial lockdowns. People around the world will likely ditch the newly formed "work-from-home status quo" and revert to air travel, physical meetings and mass events. But in the current day where airline stocks continue to battle for survival and media reporting new cases daily, it might be easy to rationalize why Zoom can trade at 2,000 times earnings. Investors and stock watchers can be restless and impatient people. In 2013 , CEO of Apple, Tim Cook, told the media that " Some really great stuff [was] coming in the fall and across all of 2014 [2] ". This was equivalent to saying: " We've got nothing for you this year, but stay tuned next year! ". Analysts and investors listening to the briefing were unimpressed and Apple's share price took a mild beating. "Surprise me" Like the ubiquitous smart phone, video-conferencing tools are not cutting edge technology. It remains to be seen if Zoom can really deliver on growth through innovation, transformation and create sustainable value for its customers in the same way Apple had done with the iPhone. [1] https://www.aviationbusinessme.com/private-aviation/21353-zoom-co-could-permanently-reduce-business-travel-demand [2] https://techcrunch.com/2013/04/23/apple-ceo-tim-cook-hypes-the-fall-downplays-the-summer-on-new-hardware/

Before emails became the norm at the workplace, people worked around the boundaries of the 9-to-6 work hour regime. The generally accepted convention was that: If you'd tried to reach someone after hours, there would be no one there to pick up the phone, because everyone at the office had gone home. The only way you could try to reach out to that person again was to call back the following morning. The telephone or face-to-face meetings were socially and professionally accepted protocols. First emails then the personal computer. In addition to receiving just a verbal confirmation, we then had the ability to communicate and access a wider variety of information media - lengthy text messages, pictures and sometimes videos (bandwidth permitting). This transformation gave way to many opportunities for individuals and businesses to communicate: digital e- receipts containing information that would allow us to reduce the back-and-forth phone calls, allowing us to make collective decisions in a much quicker way. Although the speed at which we conducted business increased significantly, we were still constrained by the boundaries of normal working hours as personal computers were largely used in the office and people left their workstations at the end of the day. Laptops and WiFi. We used to access the Internet by plugging one of these cards into the side of our laptops. That enabled us to surf the net wherever that was an Internet access point - at school, at work, in the cafe, at public places, etc. More importantly, with Internet on the move, we could now send and receive emails virtually anywhere. Having access to emails at home implied that people were able to continue to respond even after the stipulated working hours. Implied is the operative word here because there are no real obligations to reply a client or your boss after working hours. But think about the potential consequences that come along with this: A competitor might beat you at responding to a potential sales lead while you were " out of the office ". You might have missed that long awaited promotion at the workplace just because you failed to scratch the itch in your boss' brain on an idea for a new product launch at 1am in the morning. So, now we have started to over-step the boundaries. In the past your performance was judged based on your presence and delivery at the workplace. Today, in the digital world, you are omni-present and being judged all of the time. Responsive-ness (or in this case the lack of it) translates to missed opportunities, lower sales, and lower bonuses. This vicious cycle and frenzy of responding to emails after office hours gets propagated over the years, and clients/bosses grew accustomed to the instant gratification of having an almost immediate response from a vendor/colleague. Just think about the number of times you had felt uneasy just because a friend or a colleague didn't reply to your email "immediately". Instant gratification. Emails and instant messaging are now so cheap (and virtually free) that we are communicating and replying every minute on a daily basis. The compulsive need to reply every message. Today, my whatsapp and wechat sometimes looks like this: I used to have a compulsive need to reply to every message that comes in. The habit stemmed from years of working in a corporate finance role where every deliverable was expected to be served in double-quick real time. It was to the extent that even the mere sound of the notification (both email and whatsapp) gave me butterflies in my stomach. Half the time, it was an email coming in from someone expecting work to be done. The process was hard-wired and programmed into my nerves and I'd lived the majority of my work life (>10 years) on that instinct. It was unhealthy. Today, I am glad that I have grown out of this toxic mindset, which has obviously resulted in the consistent backlog of messages in my phone. I also do not feel any guilt for not replying someone on a timely basis. My whatsapp chat list is like my email inbox. I reply only if the matter requires my urgent attention (in which case, the person would have most likely called me), or when it is convenient for me. The "red light of death" on a Blackberry phone Email takes a back seat. The introduction of Whatsapp, Wechat, Line, etc have blurred the lines between our social and professional circles. It is the defacto go-to channel for getting things done - at home of at the office. Email is just for keeping things on the record . As COVID-19 continues to keep people at home, these communication tools will increasingly be the norm with Zoom being the latest addition to the family. It is going to feel somewhat awkward in navigating a world where nearly all business dealings are done away from the office and in an entirely virtual domain or even from home. No more visits to posh looking offices in the city area or meetings in gigantic boardrooms overlooking the waterfront bay. "It is great to meet you on Zoom. By the way, the background behind me is my study where I spend nearly most of my waking hours. This is my new suit. I'm not wearing long pants by the way. In fact, I'm probably not wearing any pants at all." It might end up becoming a new way of life. Digitization and technology makes all things possible. An example is the signing of official paper documents. Physical copies and in-person signatures might have been mandatory in the past but in today's context many companies have come to accept e-signatures as the standard. Today, we speak of work-from-home ("WFH") as if it is a separate and alternative business continuity procedure. But in years to come, the physical dimensions of what defines the office and what defines the home will be so blurred that the term WFH will no longer be relevant. The phrases: " I'm working at the office today " or " I'm working from home today ", will hold no meaning. It'll just be: "I'm working" and you will be deemed to be working ALL the time.

Most analysts and associates that I know tend to get very caught up in the math and precision of calculating the discount rate when it comes to doing discounted cash flow valuation. I have a healthy respect for the work and research that has gone into developing the industry standard for the discount rate or WACC ( weighted average cost of capital ) - which is extensively used by most people in the world of finance. However, in reality, I don't see why any investor should dwell too much on the accuracy and precision of the discount rate - especially when it comes to valuing deals in emerging markets. Warren Buffet summarizes this aptly: "Volatility is not a measure of risk. And the problem is that the people who have written and taught about volatility -- or, I mean, taught about risk -- do not know how to measure risk. And the nice about beta, is that it's nice and mathematical, and wrong in terms of measuring risk. It's a measure of volatility, but past volatility does not determine the risk of investing." The discount rate (or weighted average cost of capital), reflects returns expected by all the stakeholders in the business. Debt holders get their returns in the form of interest and principal, while equity holders (shareholders) get their returns through dividends or whenever they sell their shares in the company. The model behind quantifying risk and returns are incredibly correlated with share price movements as public markets provide the most visible and transparent form of valuation. The theory is: The share price of a company generally moves in tandem with the overall market. The riskier the company, the more the prices deviate from the benchmark indices. Risk in this case is driven by the industry dynamics as well as the amount of debt the company holds. More debt means more risk and therefore more share price deviation. The beta in the capital asset pricing model tries to quantify this. There are a number of factors that go into the calculation of the beta: Choice of company and market benchmark to compute the data points Relevance of the company being selected for the comparison Sample duration (1 year or 5 years?) R-squared of the dataset Assuming that you can accurately triangulate the above datasets, the outcome of the analysis is still inherently based entirely on historical data, which we already know, cannot be used as an accurate basis for predicting the future. The industry-standard for deriving the discount rate involves comparisons with market benchmarks such as government bond rates, indices and comparable companies. In layman terms, what this means is: "If I invest in a similar bond or financial instrument and get a X% return, why should I invest in you for the same?" The discount rate for companies are priced at a premium because they are perceived to have higher risk than a certain market benchmark . In most cases, this is pre-defined as the expected returns from putting capital to work in a mature and diversified financial market with the following attributes: Little or no history of defaults on sovereign bonds; Triple-A rated by credit agencies A stable political governance framework (a possibly contentious assumption under today's incumbent president) and; The existence of a highly liquid and transparent equity capital market. The price movements in the markets are also dominated by different investor profiles: Hong Kong has been traditionally seen as the capital markets gateway for companies with significant exposure to Greater China , while Singapore is noted for its position as a "safe haven" for wealthy asset managers hungry for yields, making the listing of real estate investment trusts ('REITS') hugely popular with the its exchange . Likewise, the companies listed on the ASX, TYO and KRX are also largely shaped by the their home country's trade and industry dynamics. The resulting beta calculated from each of these markets will be to a certain extent, driven by the largest companies listed on the respective exchanges. Most firms continue to use the US market as the benchmark. Research states that this is approximately 5.23%. Is a "mature market" in Asia - one which has stable financial and geopolitical regime - be compared and likened to the US? Can we equitably also say that the returns for investing in a mature Asian market are also 5.23%? Take Hong Kong for example: It is a key and unarguably mature financial center in Asia, constantly perceived as a gateway to China. In the last couple of years, the city has also been caught in the epicentre of social unrests stemming largely from geopolitical factors. How does one marry the two to derive the equity risk premium in a market such as HK? Can we appropriately coin HK as a stable equity market? For a foreign business looking to enter Asia/China, would you use the mature market risk premium as the basis for your budgeting calculations? Risk is ultimately a game of probability and uncertainty, and not volatility. Uncertainties are driven by external factors such as geopolitical events; while internal factors refer to the company's business plan which drives the visibility of future cash flows. In a period of significant uncertainties, the application of the discount rate becomes less relevant. Additionally, every investor out there has different appetite for risk, and these are shaped by their degree of understanding and comfort levels in the business and the market it operates in. Every investor who receives a pitchbook of a company profile knows that the valuation number in the deck is whatever the banker wants to portray in order to win the mandate. The discount rate is irrelevant. A smart investor knows that validating the DCF valuation presented by the banker takes more than just a meeting but a deep dive into the operating drivers and free cash flows . Rather than spend time dissecting and defending the WACC, you are better off analyzing the company's underlying fundamentals. Most business meetings involving pricing comes down mostly to market multiples: P/E ratios, EBITDA multiples, EV/Sales. These ratios are intuitive, easily applied and comparable across geographies and businesses. It may not be rocket-science accurate but at least everyone sitting in the boardroom has sufficient understanding of the literature to make a decision. In some cases, valuation can also be totally irrational. Investors will acquire a business 'at all costs' to gain a foothold into the lucrative markets of Asia regardless of what the discount rate shows. It makes the WACC calculation sound like a bunch of pig latin but that's the reality of asset pricing, especially in emerging markets. There are still many merits to understanding a company's cost of capital (read also my article on DCF and LBO). Cost of capital is important in capital budgeting and knowing the limits of your borrowing capacity. Unless the most important stakeholder in the room (which most of the time happens to be your client) asks for a scientific breakdown of the WACC, you'll find that most of the time, the discussions around valuation are going to be on cash flows and market multiples.

In the early days of graduating, a lot of people were surprised why I went into banking from engineering. It had been a huge move, and to a certain extent, looked suicidal as well given I had no prior knowledge to finance. I was far more handicapped than any fresh graduate today that was seeking entry into an investment bank. After 14 years today, no one saw this degree as an awkward handicap. In fact, most people that I meet today thought that the study of engineering gave me the necessary foundation to build my knowledge in the world of banking. It was hard to imagine that I had went this far without receiving any formal education in accounting. And because of that, I think the way I looked at financial statements was fundamentally very different. Most of the valuation stuff I learned on the job made a lot of logical sense to me. Although I am admittedly a poor student when it came to grades, I credit a lot of the mindset that I have today a result of rigorous training and analytical skills acquired during those 4 years in engineering school. I chanced upon this video I took way back in 2003 (about 17 years now). It was a project in our third year of engineering whereby students had to get into groups to build a remote controlled car literally from scratch . You were being graded on not only the basic functionality of your car—whether it moves according to how you programmed the remote—but also any additional features. For example, we added a module that would automatically turn on the headlights of the car under low light, using a light sensor chip. The ironic part about the project was: while we had managed to program the direction pads correctly including the addition of some interesting features to the car, the live demonstration lasted no more than five minutes. The car ran on a single 9-Volt 6LR61  battery then. It was a rechargeable battery. And every time we ran the tests and used up the cell, we had to go back to the lab to get it replaced. It costed $12 for each replacement. To make matters worse, we added a finishing touch before the final evaluation, constructing the entire chassis using steel scrap bought from the streets at Sungei Road , effectively doubling its weight. Within thirty seconds from switching it up, the car gave it all just to roll forward-left, forward-right, flash its headlights once and then the battery collapsed. It was a classic amateur engineer's mistake. The weight of the car was simply too much. We must have easily replaced 4 to 5 batteries that day. Engineers may not be the most commercial of people - not at first. But they learn fast and are resourceful. People give us too little credit for being practical people. When I started out my very first job (2 weeks after my last exam paper in the final year of university), I managed to snag a job working alongside the Chief Engineer at Philips Institutional TV. My main task at that point of time was to build a working prototype of how the software interface would look like on their TVs. As we were nearing completion, the Chief Engineer asked me, "Does it work?" and I replied, "Yes". And he would say, "We are engineers, if we say it work, it better work!". By the way, we passed the remote-controlled car module eventually with a B+.

Google has allowed staff to stay home for the rest of the year. Facebook has also allowed staff to permanently work from home. Is it because the companies are adapting to a new modus operandi or is this a subtle exercise to start furloughing staff? Tech companies probably have the best advantage in being able to pivot into this work paradigm amidst the pandemic. Most companies are also going digital and some even have business continuity procedures in place. But a large part of what makes going to the office so meaningful are its perks - the experiential factors such as having a decent and professional business-front for clients (meng mian 门面), a place to facilitate employee welfare and thoughtful engagement. Besides, have you ever tried to troubleshoot a problem on the computer with someone else through the phone? The time it takes as compared to an in-person interaction is almost always lengthier and more frustrating. So in the near term, you can say goodbye to those sleeping pods, luxurious pantries and fridges lined with free snacks, drinks and sometimes beer. Clients, visitors and employees are not going to be able to experience that feeling of taking the escalator up to the 3rd floor at the very classy looking Marina One Towers and be greeted by the uniformed concierge. Are the flexi-hours long overdue? For some time now, we have been talking about encouraging work-life-balance and flexible working arrangements beyond the "9-to-5" regime, especially given how inter-connected we are with using Whatsapp, Wechat and now increasingly, Zoom, Hangouts, Webex, Microsoft Meetings... the list goes on. It seems like the circuit-breaker and lockdowns resulting from the pandemic has compelled businesses to evaluate this more seriously - not from a working preference perspective but out of necessity, given the draconian rules around social distancing in some cities. I prefer the office setting - I enjoy my daily (and sometimes weekend) commute to the office using the subway (when in Singapore), and the morning leisurely walks from Anfu Road (when in Shanghai). Before starting my own business, part of the office experience included interactions with colleagues in other departments within the same building, some times we would even brush shoulders in lifts or hang out over lunch and coffee. The cityscape and its people energizes me. I feel more productive and focused whenever I am at the office, whether alone or with colleagues. I enjoy sitting with my cup of coffee and overlooking the view outside. Can we really afford to leave all of this behind? If so, does it also imply that we are willing to accept emptier malls and offices as part of a new way of life? When the dust has settled, there will be increasingly blurred lines between work and home. Face to face meet ups will never be eradicated, but flexible work arrangements will be a permanent thing. If any, video and communication technology accelerates breaking the ice in a first meeting by encouraging more upfront interaction, albeit digitally. Studies have also demonstrated that, as humans - at the very basic level - we yearn for tangible interaction because it gives us comfort and re-assurance. Lifestyles at home over the last two months have definitely also changed to adapt with the circuit breaker measures. Similarly, offices will also be increasingly "re-defined" beyond the traditional cubicle and four walls. We have seen this already happening with Small Office Home Office ("SOHO") setups and more recently, the increased popularity of co-working spaces. The office used to be a place that is defined by large executive rooms with full length glass windows, fixed sitting configurations and sometimes the iconic 'Bloomberg-styled' twin computer monitors at our desks. Office is also where the action takes place - small group discussions over coffee with colleagues, board meetings, team lunches, town halls and inter-department networking. Going back home is basically a retreat into the "untouchable" sanctuary of one's personal space. In the last 4-5 years, we had successfully blurred the boundaries between work and home, by allowing Whatsapp / WeChat to also invade our personal time. As more work-for-home policies are being implemented, not only have we been 24-7 digitally available, but now also deemed to be also physically available while at home. I am not saying this is necessarily a good or bad thing, but: Such a paradigm shift in lifestyle will require employer and employee to exercise self-discipline and discretion to maintain or improve the levels of productivity previously seen in our traditional work environment. Work spaces will also gradually converge with residential and lifestyle spaces. And those who prefer not to work from home may also find themselves hanging out more frequently at cafes that have stable Wifi, a good working beverage like coffee and appropriate distancing measures in place. I agree that the reopening plans for the economy " will not be a return to life before COVID-19 ". But neither do I see us retreating entirely into the digital realm. Take a step back into memory lane and read the May Day rally speech by PM Lee in 2003 : "Life will not be the same again" Life was indeed not the same with additional precautions being taken, but we have certainly been through a similar situation and that did not deter us from going out. At some point of time, with appropriate flattening of the curve, more accurate testing and a stable infection rate, society will return back to normal.

It's exactly day 34 since the circuit breaker as I am writing this. Much of my daily life has been largely revolved around the four walls at the home and the view of the outside from my window. The streets are noticeably quieter, and the reality of the circuit breaker becomes even more obvious when you step out to buy food - Instead of the usual hustle and bustle of people sitting around, the counters of the Burger King outlet near my place is lined with bags of burgers and queues of delivery drivers and residents waiting to collect their orders. Instead of enjoying my meal at the outlet, I now have to deal with the mess I make at the table at home. I've also probably had more burgers than I should have in a week. But after 34 days at home, it's hard to have much variety (at least from my perspective). Live to eat or eat to live? So I missed the good old days where we ate out. Who doesn't. I like my Japanese noodles served hot in a bowl. I enjoy the ambience of the shop, the view of the chefs in the kitchen preparing my noodles and the staff 'yelling' occasionally as the orders are taken. The taste of ramen cannot be matched by the authenticity of eating it in Japan itself, but a lot of the shops in Singapore have done a good job of trying to replicate it. Unfortunately, this is not going to be possible, at least until June 1, maybe even longer? Who knows? Because part of having a good ramen is the dining experience, I had so far refrained from ordering any takeout until recently. With the number of COVID cases reported globally not abating in most parts of the world, there's always an overhanging doubt: will this eventually be a "new normal" in the way we eat? The whole eat-at-home experience also led me to realize that as introverted as you may be, dining - at the end of the day - is a very communal thing. Like it or not, without the company of good friends and/or family, eating is just eating. This is true not only for Asian civilizations but also many European cultures for example in Spain when the dinners last past midnight. Yes, dining can be considered a privilege, but unless society descends into anarchy or another pandemic decides to wipe out the bulk of our food supplies, humans still live to eat . Understanding this gives me a little bit of comfort that at some point of time, restaurants and food outlets will eventually come back to life once the pandemic has subsided. And I think the same applies with many other aspects of life and businesses as we previously knew it - air travel, tourism, conferences and meetings. Can Zoom and other virtual meetings replace the way companies transact with each other? Would you take a tour of the glaciers at the comfort of your computer without having to set foot on Greenland? Because the existence of the virus is effectively challenging the very innate want of human beings to go out, interact, trade, etc. At some point of time, I believe people will figure out how to make this happen - perhaps not so much by adapting businesses to the new normal - but by figuring out how we can both contain the virus, as well as, put in place new mechanisms / procedures that will enable all of us to step out and enjoy the sun again. PS: The takeout ramen was good.

I love Shenzhen. Shenzhen Futian Port 深圳福田口岸 I like its wide city roads that are peppered with electric taxis. There are virtually so many electric cars on the street that if one pulls up just next to you at the junction you wouldn’t even realise it’s there. The street layouts, traffic lights and well-paved roads resemble something taken straight out of a Lego model. Well paved roads And there are dozens of cafes that serve up a good coffee as well as numerous shops offering spicy Hunan, Sichuan and Chongqing cuisine. Nanshan district, which is home to China’s tech giants and hundreds of budding tech unicorns has a coastline that somewhat resembles Singapore’s East Coast Park. Commonly known as China’s Silicon Valley, Nanshan is characterised by lush trees and shrubs neatly placed on both sides of its roads. Futian district, Shenzhen Further down the road east towards the Futian district, pockets of greenery weave between towering skyscrapers and mid-century modern styled office buildings. And on some evenings, you can even enjoy the fancy laser light shows against the city skyline with the iconic Ping An Financial Center in the background. Shenzhen light show with Ping An Financial Center in the background Despite its urban backdrop, you can still find traces of history and heritage in the back alleys of the old towns (城中村). This co-existence of old and new is what makes the city unique in its own way, in some ways similar to Shanghai’s Xujiahui district, or Singapore’s Tiong Bahru estate. If not for the Internet restrictions and WeChat Pay / Alipay, the neighbourhoods do not even feel like China but more like an adapted version of Hong Kong. Huanggang cun (皇岗村) in Shenzhen amidst the Futian city skyline This is just Shenzhen. In close proximity are at least seven other cities in the Greater Bay Area with a similar profile. Each with its own distinctive heritage, each bubbling with its own economic engine, each liveable in its own way, each with the potential to displace Hong Kong as the new regional powerhouse, if not for Hong Kong’s legacy infrastructure and position as an international financial hub. Some might even say this is the dark side of the Greater Bay Area initiative. Source: BBC If you are a frequent traveler to Hong Kong or reside in the city like me, there is a noticeable quietness in Central, which is traditionally home to all the big banks and funds. Even being in Singapore recently, there is an observable contrast to Singapore’s Marina Bay city centre. Standing at the lobby of the Marina Bay Financial Center, you can even feel the difference in energy level and vibe. Singapore's Marina Bay city skyline Part of the quietness in Hong Kong is also attributed to the out flows of travellers across the border. Hundred thousands of people flock to Shenzhen on a daily basis from Hong Kong. Coffee for one is significantly cheaper in Shenzhen. It’s on average RMB 28 vs HKD 45 for a flat white depending on where you get your daily grind. At some cafes such as Manner Coffee, flat whites are going for only RMB 18, and the quality of coffee is no less than decent. Eating in Shenzhen is generally much cheaper as well, not to mention the good variety of both Asian and Western cuisines. Chinese food (all kinds) is undoubtedly more authentic in Shenzhen, no question here. Also, you can get cheap food and groceries delivered to the doorstep at basically any time of the day. The gig economy is extremely vibrant. Meituan is incredibly accessible and affordable compared to Deliveroo or Foodpanda in Hong Kong. Those who struggle with the high rents and suffocating spaces in Hong Kong are finding it attractive to stay in Shenzhen while continuing to work in Hong Kong, putting up with the 1+ hour commute. Bloomberg even has a report on this. Truth be told, Shenzhen is even more accessible than you can imagine. There are abundant car pools, buses, even the East Rail Line (东铁线) on the Hong Kong MTR goes directly to Lok Ma Chau and Lo Wu in under 60 minutes. If you are impatient, there is always the 15-minute high speed rail option departing from the West Kowloon station in Hong.Kong. The East Rail Platform at Admiralty I have tried them all and the journey (even passing through immigration with a passport) is seamless, despite the crowds and rush hour. Hong Kong should in theory, benefit economically from this flow of people within the Greater Bay Area. But this has been disproportionate, with more people traveling out of Hong Kong in recent years to spend on entertainment and retail across the border. Once known as the “promised land” for doing business in China, Hong Kong has been haemorrhaging capital and resources. The big bucks and high life that people used to be drawn to 10 to 20 years ago do not exist anymore. There are lingering doubts as to whether it is still possible to make good returns from investing in China using Hong Kong as a springboard. Affluent residents are spending meticulously, but are also more careful about flaunting their wealth. I think the music started to slow in 2019 with the protests, followed by COVID restrictions which really broke the camel’s back. Decades of growth and reputation unwound in just a couple of years. These are indeed delicate times. The firms that used to be paying top dollar have moved out or relocated their bases elsewhere. If people are not earning the top dollars, they simply won’t be spending, whether it is dining out, partying or buying property. And no consumption simply means no economic growth. No wonder Thailand and Philippines are jealous about Taylor Swift’s exclusive performance in Singapore, which quite inadvertently channelled tourist arrivals, entertainment and retail activity away to the little red dot. More than just its Canto-pop concerts, Hong Kong needs a “Taylor Swift event” to bring back the buzz and hype to the city. [Photo credits: mine]

In 2015, following the completion of a USD 2 billion cross-border deal, I was invited on a Saturday morning to share some of the learning points and takeaways from that transaction in an academic setting. As point person on the deal, I was responsible for steering most of the conversations that took place. This included translating, proposing negotiation strategies, facilitating the discussions and at times managing emotions on both sides of the table. I vividly remember on one of the nights (I think it was probably around 1am), sitting in the client's office finalizing the deal documents when we received a competing bid on the deal. It was a turning point whereby we had to decide whether to jettison everything. On hindsight having completed that deal, I felt that the most important aspect in that whole process was: " If both sides are motivated to get the deal done, it will be done. " Everything else doesn't really matter. Seven years on, the complexities in deal execution still never cease to amaze me, that is probably why investment banking had been such an interesting career. Here are some additional learnings that I've consolidated below: (1) An issue only needs to be dealt with as long as the biggest stakeholder and/or someone important thinks so. (2) All transaction processes have unprecedented bumps and disagreements of sorts from fees to valuation, but a good negotiator knows how to play both sides of the game . (3) The drafting of most agreements is effectively a process of managing risk , less so of governing commercial interests, especially when everyone is convinced that the pie is big enough to be shared equitably. People only start to fall back on and scrutinize these documents when shit hits the fan. They are really just a formalised set of what-ifs and everyone hopes they won't ever have to re-look at these contracts when stuff blows up. (4) Following on the above, the essence and spirit of most agreements are in reality like guidelines . If no real harm is caused, any violation could simply warrant a slap on the wrist. The contract basically gives either party the legal right to punish the other party if real harm has been done. At the very bottomline, it’s all about whether interests are being thrown into jeopardy and the money, really. (5) MOUs and term sheets - while legally non-binding in nature - are important. They are an essential framework to help guide the drafting of the final legal documents. When done properly, they eliminate ambiguity and misunderstandings, enabling both parties to save a lot of time in the documentation phase (which ironically, is not in the interests of lawyers who are billed on time). That said, there will inevitably be blind spots in the negotiations. The proverbial devil is always in the details . (6) Engage a lawyer that: doesn’t think like a lawyer can dumb down complex legal concepts is able to articulate the consequences of certain nuances within the agreements can provide constructive solutions to resolve conflicts (7) Home-ground advantage has a cost. When you are holding the pen on drafting, expect to incur higher costs - both on expenses and time. That said, you do have some upper hand when it comes down to dictating the overall flow and structure of the agreements. (8) On the point of flow and structure, depending on which side of the table you are sitting, the drafting of nearly all documents generally comes down to two approaches: “ You can do everything , except for the following... ” “ You cannot do anything , except for the following... ” (9) Some lawyers provide maps (legal opinions), some lawyers will be your guide and chaperon you for the journey (legal advice). You will need to decide whether you need a map or a guide. Legal opinions don’t protect against anything, it serves only as an ‘expert opinion’ on outlining the risks and enforceability of key aspects in the transaction. Decision makers who cannot navigate the nuances in a cross-border deal or have no meaningful way of controlling the risks in a deal fall back on the ‘tightness’ of a legal opinion. Good legal advice on the other hand will tell you where the pot-holes are, the hidden corners, why you should take certain routes instead of short cuts, etc. It goes a step further, implementing the mechanisms to clearly define and safeguard relevant risks and commercial interests. (10) The closing phase of any documentation process is almost as important as the drafting and negotiation phase.