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

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

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

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

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

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 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?

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.