PREMIA POINT OF VIEW

PREMIA POINT OF VIEW

David Lai , CFA

Partner, Co-Chief Investment Officer

Valuation of WeWork plummeted - Time for stocks instead of PE
Oct 14, 2019


Investing in PE seems to be the most common practice among institutions and high net worth investors in the past few years, whilst innovative companies listed in the exchange are the forgotten child in a certain way.  WeWork, the largest and hottest tech startup at all times, might become a nightmare for some of the PE investors.   Its valuation began from the USD 1 million seeding round in 2011 and then ballooned to USD 47 billion in early this year.  The company successfully pulled the largest venture funding of USD 10 billion from the well-known Softbank's Vision Fund.    Everything changed once the company was preparing the IPO with the founder ousted as CEO whilst the valuation might drop more than 75% to USD 10 billion only.  WeWork is a perfect example that highlights the risk involved in PE investing.  Inflatable valuation, low transparency, unsophisticated management and rapid-changing industry landscape have largely been neglected by investors chasing for abnormally high return.  Maybe it's time for investors to reconsider the secondary market in which a number of innovative companies with proven track record are selling at a deep discount to most of the private deals.  

David Lai , CFA

Partner, Co-Chief Investment Officer

Booming Public Cloud Market in Asia Pacific
Oct 10, 2019


IDC forecasts the spending on public cloud services and infrastructure in Asia Pacific will reach USD 26 billion in 2019, an increase of 47.1% over last year.  The adoption of cloud computing is largely driven by the needs in improving the business agility and speed, access to new functionality and autonomy in sourcing specific IT solutions of business units.   The overall market is expected to grow at a CAGR of 33.9% to USD 76 billion in 2023.  Infrastructure as a Service (IaaS) remains the major category of cloud technology, accounting for more than half throughout the forecast period, followed by Software as a Service (SaaS) and Platform as a Service (PaaS).   With higher coverage of cloud services and infrastructure, the digital transformation plan including integrating big data and artificial intelligence for any organization will become feasible.  

Alex Chu

Portfolio Manager

September Update: ETF Fund Flows in 2019
Oct 9, 2019

As the governments and central banks around the world started another round of stimulus measures and rate cuts, investors risk appetite returned and piled in risky assets. Equity ETFs reversed sharply from the largest outflow YTD in August to the largest inflow YTD in September and avoided two consecutive months of outflows. Equity ETFs have had three such reversals in 2019. The first one happened in February reversal, and Equity continued to rise until April. For the second one in May, Equity failed to follow through. By looking only at the Fixed Income flows, this time looked more like February as the Fixed Income flows didn’t exceed Equity like in June. Fixed Income flows increased slightly from August. Investors were buying high yield bonds while selling longer-term treasury bonds. Commodity ETFs had a four-straight month of inflows as assets in gold ETFs were reaching a new high. 


David Lai , CFA

Partner, Co-Chief Investment Officer

Asia Dominates Robot Installation Globally
Oct 8, 2019


International Federation of Robotics (IFR) reported the annual sales of industrial robots reached a record sales of USD 16.5bn in 2018 with total installations of 422,000 units globally.  The growth of 6% were the slowest growth in recent years amid the uncertainty caused by the trade disputes between China and the US.  IFR forecasts the outlook remains bright riding on ongoing automation trend and continued technical improvement, resulted with an estimate of 584,000 units in 2022.  Asia dominates the top installed markets with China leading with a significant gap, taking a market share of 36.5%, followed by Japan's 13%.  Industry-wise, automotive, electrical/electronics, metal and machinery are the top 3 segments adopting robots in the supply chain. 

David Lai , CFA

Partner, Co-Chief Investment Officer

Philippines: Consecutive Rate Cuts May Drive Loan Growth Ahead
Oct 3, 2019


Bangko Sentral ng Pilipinas stands firm with its pro-growth policy by lowering the required reserve ratio (RRR) a day after cutting the benchmark interest rate.  The 100 basis-point reduction will bring down the effective RRR to 15% for universal banks, accounting for ~90% of total loans and ~92% of deposits, in early November.   Although the growth rate of outstanding bank loans remained weak with the latest number hovering at 10.5%, almost 5% points below the level at the beginning of this year, it may pick up gradually ahead after the consecutive rate cuts by the central bank.  That explains the policy makers are quite confident that the economy will speed up in the 2nd half of this year on increasing public spending and easing monetary condition. 

 Going forward, governor Diokno even indicated that he intents to drop the RRR to single digit by the end of his term in 2023.  


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