Chauwei Yak

#TikTok ban Today looked like an unusually busy Saturday on the US Congress. Even my representative (NY-16) just sent out an email explaining how he voted on #Ukraine. #Israel, & #Taiwan foreign policy topics, and he was also one of 58 reps who voted against banning Tiktok (vs. 360 those voting in favor). If you have teenage children like I do, we would all agree how much we as parents hate TikTok given the massive disruptive power the app has had on quality family times together. For several years, we used to watch #PBS #NewsHour every night in our livingroom but have recently given up because my kids can't take their eyes off phones playing likes of TikTok. We now have trouble having the usual family conversations as a bipartisan PBS anchor debriefs today's worldwide events, because my children's attentions are sadly floated elsewhere. But perhaps it's because TikTok's short form videos are exceptionally good products. By observing binary decisions the user makes on multiple SHORTER contents, they built a better (and addictive) predictive power around your interests and hidden desires (telling from my own experience) quickly. From a technical perspective, it feels like a superior product than #Youtube, #Facebook, and other platforms who soon copied despite my universal hatred on them as a concerned suburban parent. When govt goes extreme length to ban an app within an ecosystem, I hope they have a sound reasoning behind. Multiple #OFAC sanctions by US Treasury typically carry such rationale and stood tests over time. But from a layman's perspective who has Chinese apps (Didi & Baidu Map) already installed, I scratch my head why TikTok had to be the center of this debate. Can they just not fathom that TikTok (vs. #Douyin in mainland) data servers can truly be located outside #CCP jurisdictions? I know children will instead open up Youtube Shorts anyway, so my problem stays. Perhaps the point of the legislative hearings has long been theatrical for domestic audiences' TV screens (including PBS NewsHour), but it was painful to watch Senator "Cotton" (R, Arkansas) ask TikTok's #Singaporean CEO multiple times whether he's a member of CCP or a Chinese national. CEO Chew supposedly is worth >$200mm, but I still felt bad for the man. Do you know how often I get asked if I am Chinese, and how annoying it is having to explain that not all Asians are Chinese!? It's not my fault they failed social studies class and never caught up after all. This line of grilling on the Hill reminded me of my favorite #Bloomberg oil industry chat rooms where mass participants point fingers at CCP, #IRGC, Putin, among others for all the misfortunes we have suffered. Yet they haven't heard #Sinopec, Reliance, or #SOMO. If they indeed represent average institutional investors we compete against, perhaps ACTIVE asset management should add far more value than academics give us credits for under the efficient market theory, especially in global/EM settings? Bring it on...

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Interesting to see two retired English judges, Lords Sumption and Collins, stepping down from the CFA in HK. My impression has been that the judges there are still trying to maintain some independence and rule of law in very difficult circumstances. Maybe it's now a lost battle and I can certainly understand Lord Collins' succinct statement that he's stepped down "because of the political situation in Hong Kong" but continues "to have the fullest confidence in the Court and the total independence of its members." But still I find it a sombre moment for what it symbolises on where we now are in terms of international tension, legal fragmentation and general degradation of the rule of law in many places. I don't say that by way of some sort of passive-aggressive criticism of either of them individually (either for staying till now or for going now). I also don't criticise the activists who've been pressing for NPJ withdrawal: indeed, I share the concerns about the NSL and other topics. But I find the NPJ issue genuinely complex and think the individual retired judges deserve some 'margin of appreciation' in reaching their own ethical views on whether it's better to engage or withdraw. Some footnotes: 1. There are some media implications that they must have been in it for the money (reportedly £40k for a month's sitting each year). That's a red herring given the amounts these two will have earned during their pre-judicial careers and are still capable of earning privately should they wish to, for example as arbitrators. 2. When the serving (as opposed to retired) UK judges resigned from the CFA in 2022, Sumption made the point, in explaining his decision to continue that "Democracy has never existed in Hong Kong, but the rule of law has and still does." I wonder which straws have finally broken the camel's back. The arrests a couple of days ago of those marking the Tiananmen massacre perhaps? I also don't know why these two retired UK judges have stepped down while three others (Neuberger, Hoffmann and Phillips) are apparently continuing (or, perhaps, still thinking about it). It will be interesting to see what Sumption has to say "in due course" (as he puts it). I also wonder if the UK government prompted today's decisions, as it evidently did with the 2022 resignations of serving judges, albeit that this was signalled by two ministers who are both now out of government (Truss and Raab) - https://lnkd.in/eWi5-D6j 3. And I wonder if the retired Canadian judge (McLachlin) and Australian judges (Gummow, French, Keane, Allsop) will stay. Three of them have been in position since before the crisis of the National Security Law etc, but two (Keane and Allsop) are very recent appointees - 2023 and 2024 respectively. https://lnkd.in/e3ndcupZ

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Summary:Zal Bilimoria is a solo GP at Refactor Capital and credits his former colleague, David Lee, for convincing him to continue as a solo GP. They have raised multiple funds and are focused on investing in companies solving societal challenges in biotech, climate and hard tech. Key takeaways: David Lee convinced Zal Bilimoria to continue as a solo GP, which was not a popular choice at that time. Refactor has invested in over 100 companies and has seen success with four unicorns. They have raised a fourth fund of $50 million and will continue to lead pre-seed and seed investments in areas such as battery technologies and cancer therapies. Counter arguments: As a solo GP, Bilimoria does not have the input and criticism of partners in decision-making. Refactor's focus on societal challenges may limit their potential for investing in other profitable areas. #venturecapital #vc #venture #startups #tech #fundraising

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The NIKKEI is up 35% in 12 months. Is it now "EXPENSIVE"? ❗ Not so fast ❗ In investing, the concept of "Rich" or "Cheap" is a RELATIVE ONE. 👉 An asset cannot be "expensive" or "good value" in a vacuum. The right question is: Rich or Cheap relative to WHAT? 1️⃣ A common approach is to look at rich/cheap relative to HISTORY 2️⃣ You can also look at rich/cheap relative to OTHER (similar) ASSETS 3️⃣ Then there is some notion of rich/cheap relative to some measure of VALUE. With single stocks a commonly used measure is the PE ratio, for example Another way to assess VALUE is to model an asset as a function of its key DRIVERS. In the case of equity indices, such as the NIKKEI, these drivers include: JPY currency (trade weighted), real and nominal rates, Japan/Global economic growth, inflation expectations, energy/commodity prices, China / EM stress, high yield credit spreads and the shape of the yield curve as a measure of long term economic growth expectations. 🔎 Using the Quant Insight multi factor macro model that cleans & normalises the macro data, orthogonalizes it and then runs a Principal Component Regression, we see that based on the recent drivers and relationships, the Nikkei is about 9% BELOW macro warranted value. 📉 The Nikkei has sold off, but the key information has not moved anywhere as much. So is there a regime shift taking place? There is no evidence to suggest a major break. 👉 Technology and data science can make life easier for investors by acting as a massive BANDWIDTH expander. 🔎 See instantly if a shift is information driven or not. In the case if the NIKKEI, it's interesting to see that the latest move lower is not information driven, not yet at any rate, and it looks cheap relative to the macro information set. #japan #nikkei #equities #investing #money #stocks

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China's data last week has the market fretting about the recovery being "too uneven". Following the data dump, I chatted to Bloomberg about the state and the fate of the Chinese economy. Stepping back for a little perspective, China's property crisis over the last two years is akin to their very own GFC. It took the US economy close to a decade to heal the wounds from such a deep debt crisis. It wouldn't be unusual for China to need just as long to heal hers. During this time, new growth engines have to come to the fore. To keep things ticking over until then, Beijing can only control what it has always been able to control: investment into manufacturing and infrastructure. For now, those government-led growth engines are affording some stability. I just wouldn't get over-excited about any new piece of stimulative policy to provide the silver bullet to China's growth malaise.

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It is a perennial chicken-and-egg issue - Do we bring in the investors or the IPOs first to energize the SGX? Second Minister of Finance, Chee Hong Tat, provides the solution that the government will support local based companies to IPO on the SGX. I have no doubt of the intentions of the government, but it speaks of a different scene on the ground. For the startup scene, I have a number of TRIVE's companies planning IPOs for exits in the coming years. And we spoke to a variety of M&A advisors for options of the SGX, HKSE and Nasdaq. It boils down to the same consideration - liquidity, valuation, ease of international investors buying into the stock and brand association. The portfolio companies will drop the consideration of the SGX and usually head for the Nasdaq listing, despite whatever grants, support that the government might provide. It is with good intentions of SVCA and Parliament to offer solutions to revitalize SGX. I for one, am a believer that we need a regional stock exchange that serves the upcoming SEA unicorns. Let's press on to develop deeper conversations.

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China’s wealth industry, which manages CN¥26.8 trillion (US$3.7 trillion) of wealth management products, is currently facing challenges due to sub-3% returns.  This situation is particularly disorienting for a nation of savers and their asset managers. One could earn a bit more from riskier and less-capitalised city commercial lenders, but the expected returns there were not much better, at an average of 3.28%. The trust industry is a cornerstone of the country’s shadow banking sector.  It offers bigger returns than regular bank deposits but can be fraught with risk; it is also under scrutiny.  This industry, which is valued at US$2.9 trillion, has shrunk by about 20% from its peak in 2017.  This is due to defaults on billions of dollars of investment products and regulatory clampdowns on the nation’s shadow-banking excesses.   In March 2024, big state-owned institutions were on average guiding 2.9% for their offerings, down from 3.3% at the onset of 2023. The 10-year sovereign note is at only 2.25%, the lowest on record. Of the CN¥15 trillion corporate bond market, about 87% offers sub-3% yield. The People’s Bank of China’s interest rate cuts have already compressed net interest margins to 1.7%, below the 1.8% threshold the industry deems necessary to maintain profitability. Only 15.6% of China’s middle class plan to invest more, a sharp drop from 43% at the height of the 2015 stock bubble, according to the central bank’s latest urban depositor survey.   The outlook for China's economy in 2024 is a mix of challenges and opportunities. The real GDP is forecasted to expand by 4.1% in 2024.  Some sources suggest a growth target of around 5%. Monetary and fiscal policy is expected to remain expansionary in 2024 to support recovery.  Policymakers have been more vocal with potential market support measures. The housing market, a key barometer of confidence, is going into its third year of slowdown.  Organic demand looks some way away from bottoming, while price expectations have turned more bearish.  The ongoing property downturn, persistent consumer confidence weakness, and related weak spending, and deteriorating external demand are some of the near-term downside risks. Terence Nunis Terence K. J. Nunis, Consultant Chief Executive Officer, Equinox GEMTZ

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As a venture capitalist, TRIVE's focus is on exits for my SouthEast Asian based portfolios, and IPOs are one of the main avenues to achieve an exit and a return on my investments. 5 of our startups are considering their IPO plans in the coming 3 years. After advisory from the M&A advisors and internal consideration, the NASDAQ is the choice for 4 of 5 of them. Only one decided on the local SGX as it is on a more traditional path. Nevermind if these startups are primarily operating in SEA and naturally should find familiarity with SGX to list. Unfortunately, they see better valuations, liquidity and brand recognition by listing on the NASDAQ. It has been a long-time complex issue to energize the SGX and to ask our SEA startups to call it home. It is a pity because Singapore is the prime location for private equity and venture capital fundraise for startups in the region. But SGX barely sees any of our SEA unicorns listed on it. I for one, am a believer of a regional bourse to support the aspirations of the startups. And I hope more deeper conversations with the Singapore government and our relevant associations will one day see the SGX building that vision. Thanks to See Kit Tang for a very insightful long-form article and allowing me to be a part of it to bring my thoughts to it. #venturecapital #sgx #ipo https://lnkd.in/g_kzvyGa

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EXCERPTS: Drug maker HutchMed (China), controlled by billionaire Li Ka-shing, has set up its first research facility in Hong Kong, drawn by rapid growth in the city’s biotech industry following the government’s blueprint for innovation and technology which charts out the development plan over the next decade. The company’s research facility at the Hong Kong Science and Technology Park (HKSTP) in Pak Shek Kok, will conduct drug discovery work in collaboration with hospitals and university medical schools, Su Weiguo, HutchMed’s CEO and chief scientific officer, said in an interview. HutchMed aims to establish a bigger presence in the city when the first wet laboratories at the much larger Hong Kong-Shenzhen Innovation and Technology Park in Lok Ma Chau, next to the city’s border, are ready for occupation in 2026. “It will all be success-driven,” he [Sun Dong, Hong Kong’s secretary for innovation, technology and industry] said. “In Shanghai, we have over 200 scientists working on drug discovery. If successful here, we could grow our Hong Kong operations much larger.” Scientists at HutchMed’s Hong Kong facility will work together with university researchers to “translate” preclinical results into clinical trials. COMMENTS: Sounds encouraging, especially building-up on the Hong Kong - Shenzhen border (and a 10 minute drive from our SZ office, 30 minutes from our HK office, train and taxi) as past ideas from the likes of Cyberport with software-tech were simply not convenient nor cost effective for super savvy PRC techies. PROS: tap the great talent from Mainland China so that it doesn't become big brothers property, a real drag for many scientists that are ambitious. CONS: (1) Hong Kong has been at this biotech innovation thingy for a while now with limited success, (2) HKEX was trying to create a Nasdaq-like listing environment (e.g. no revs, no earnings) but has yet to be realized.

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https://lnkd.in/ga7PkrVF Just like Asian Contagion 1.0 started with the butterfly-flapping of the USD Wrecking Ball causing a wave of SE Asian Currency Devaluations that eventually caused Russia to default, which then careened into a leveraged unwind at LTCM, you are witnessing Asian Contagion 2.0 finally materialize — also stemming originally from the USD Wrecking Ball exporting Inflation to RoW and causing unpredictable ripple effects. Everyone points to the Yen Carry Trade Unwind as the proximate cause of the Global Risk-Off right now, but you have to go much further back and think about root causes.

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【Temasek’s Bold $10 Billion Investment in India 🇮🇳】 -- A Strategic Move Amid China Slowdown In a move that underscores India’s growing significance on the global investment landscape, Singapore’s sovereign wealth fund, Temasek Holdings, has announced plans to invest $10 billion in India over the next three years. 🇨🇳 This ambitious investment comes at a time when the performance of #Chinese markets has been lackluster, underscoring #India’s importance as one of Temasek’s top two preferred markets globally, alongside the #US. 🇸🇬 Looking at Temasek's #trackrecord, it's impressive to note that they have already deployed around $37 billion in India over the past two decades.. 💡As of 2023, India now makes up 7% of Temasek’s global portfolio by underlying assets, up from 4% in 2020. In 2023 alone, they invested a record $3 billion in the country. What stands out to me is their perspective on India's market dynamics: "India has always commanded a premium due to its growth potential. By identifying and investing in the right businesses, consistently achieved returns that justify the higher valuations" "The capital markets and deal sizes in India have been steadily increasing, thanks to the expanding and maturing financial markets. The current high valuations are justified by the potential for above-average returns," Temasek’s #InvestmentStrategy in India will focus on several key areas, including technology, financial services, healthcare, and consumer goods. 🌡️ For instance, Temasek’s portfolio, Sheares Healthcare Group, healthcare investor, recently invested almost $2 billion in Manipal Health Enterprises Pvt. Ltd, Indian leading muli speciality hospital operator, with total stake of 59% (new 41%) at $4.9 billion valuation. This valuation is justified by Manipal’s strong financial performance, including 1) a revenue of around $488 million, 2) an EBITDA margin of 24% for FY 2023, 3) several millions patient as sticky customers and 4) potential for free cash flow generation. Later, they sold 8% stake to Abu Dhabi sovereign wealth fund, Mubadala while holding majority shares. Very successful story and foreseen investment. I reckon their increasing investment in India reaffirms the country's status as a pivotal destination for global investors. As someone keenly observing these developments, it's clear that India's market offers tremendous opportunities, and Temasek’s commitment only strengthens this outlook. Ravi Lambah Alex Lin #startup #Singapore #Investment

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I wrote about taxicabs and Uber in Hong Kong in 2011 and 2013, so I guess it's a good time to dig them up. Be aware long read ahead! 🚕 🚗 🚙 We know that taxicab licenses are controlled and regulated by the government in Hong Kong, and taxicabs can only charge metered fares. In reality, there are at least three off-the-book arrangements: ➡ "20% off discount taxicabs" (八折的): Taxi drivers willingly charge passengers 20% less than the metered fare, usually for longer journeys and during off-peak hours. Sometimes it's 30% off, and sometimes the fare for the cross-harbor tunnel is calculated separately. ➡ "Carpool taxicabs" (泥鯭的): Taxi drivers wait at agreed spots in the city (e.g., Mong Kok) to fill the taxi with strangers going in the same general direction (e.g., Tuen Mun), splitting the fare. ➡ "Taxi hailing" (電召的): Passengers call a taxi to pick them up. But during peak hours, this comes with a twist: passengers willingly pay more to the drivers. For example, at 7 am in Mid-Levels with bankers needing to rush back to the office at IFC, this is common (yes, I was part of the problem). These are basic price discoveries based on supply and demand. It is a compromised free market under government regulations. Since taxicab licenses are regulated and scarce, drivers usually do not own the licenses (and the car) but rather pay rent to drive. They earn an average of $500 to $700 per shift, which is a stunning 40% difference between a good driver (follows all the rules) and a bad driver (breaks rules, is picky about passengers). Economics tells us that good drivers would not survive, and the market would slowly be dominated by "bad" drivers. 🔸 So it's fair to say, bad taxicab drivers in Hong Kong is a product of high cost due to regulations. 🔸 💡 Here comes Uber. Uber drivers do not bear licensing costs, and price discovery is done brilliantly on the app with amazing technology. On average, Uber drivers earn $1,200 to $2,000 per shift of similar hours to taxicab drivers. Inevitably, since Uber drivers get paid more to provide better services, they now prevail. But taxicab regulations are necessary due to information costs. A foreign traveler could come to Hong Kong without knowing the fair price to commute from the airport to Central. We still see scammy taxicab drivers trying to overcharge tourists. However, we know that the regulations are outdated now. Uber and other hailing apps do a better job preventing scams and overcharges. It is much harder to trick the app than to doctor the meter. Uber resolves disputes much more efficiently than law enforcement units. Legalizing hailing services is bound to happen. The government may choose not to do it due to considerations beyond economics. It doesn't matter, however, as the system the government eventually chooses to enact will determine the social cost, yet economics says the public will always find the most efficient way (on top of the social cost) to get around the system.

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Thanks to Kavitha N. and DealStreetAsia for featuring Collyer Capital in this interesting piece about secondaries. Glad to have contributed to the discussion as the secondary toolkit, if used right and in full transparency, can really benefit all parties involved, particularly in #ASEAN. #CollyerCapital #CCPL #ASEAN #secondaries #liquidity #transparency

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On a PPP-basis, the yen is 'stupid-cheap' but Russell Clark, one the few true expert on Japan, makes the case that the real trade is short JGB, NOT long yen. In his latest LinkedIn post, he shares his observations from a recent trip to Japan. Clark notes that while the Japanese yen appears really cheap, being long on the yen has been a losing strategy since 2020. He attributes this to the changing political landscape, where Japan is no longer the political winner it once was. Clark also observes that prices in Japan have risen in yen terms, while wages have remained stagnant, as evidenced by a job advertisement offering the same hourly rate as 30 years ago. Despite the challenges, Clark sees signs of growth in Japan, particularly in the tourism sector. He believes that Japan's growth model now relies on tourism, and with Japanese prices rising to catch up with foreign prices, inflation seems to be entrenched and likely to accelerate. Based on his analysis, Clark suggests that long yen positions might be the new "widowmaker" trade, while the old "widowmaker" trade of shorting Japanese Government Bonds (JGBs) could be a winning strategy.

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A FT article has been trending about the Singapore stock market. This quote is exciting! "Another person quoted by the FT had “not seen an all-government and industry approach like this since Singapore first decided it wanted to foster a tech and venture capital industry in the late 2000s”. As investors in the private (primary) market, we would very much welcome a stronger and more vibrant Singapore equity market. Singapore and South East Asia has a robust VC (primary) market but the missing piece to complete the whole eco system is the ability for a robust equity (secondary) market. On a personal level, as a Singaporean who bought my first shares in my life in 1999 (Singtel!) and who has seen the local market struggle and fizzle off for the last decade, I really welcome a more active market. Yesterday in parliament, Deputy Prime Minister (DPM) Lawrence Wong was actually posed a very similar question about the local stock market. (the link is here to the article) https://lnkd.in/dGEtARw8 *While the government will continue to encourage companies incubated here to list on the SGX, Wong noted that GIC and Temasek “operate on a commercial basis and have a mandate to deliver good long-term returns for the benefit of Singapore and Singaporeans”. “They regularly engage their portfolio companies on options to create shareholder value, which may include a listing in Singapore,” he added. “However, the final listing decisions will have to be made by the companies themselves, based on their commercial objectives and growth plans.”* My take is that: Having a local stock exchange, local stocks that list on your local stock exchange as well as local investors are not mutually exclusive in this day and age. It is not something that can have an easy answer. #singapore #sgx #stocks #vc #pe #investing https://lnkd.in/d9qH8xJE

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📢 My take on new program trading rules in China, quoted in Reuters 📰 My quotes 👉 “Assessing traders should hinge on their market conduct and impact, not solely their strategy or labels,” said Kher Sheng Lee, Asia-Pacific co-head of AIMA. While we support measures to promote market stability, AIMA raised concerns about potential extra fees and increased reporting requirements for foreign participants. Read the full story: https://lnkd.in/gCwkEeQ5 #AIMA #China #ProgramTrading #RegulatoryReform #QuantFunds #Investment #MarketStability

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