Higher fines set for employers who flout health and safety rules

LEGAL BRIEFING Higher fines set for employers who flout health and safety rules

This could lead to higher business costs and insurance premiums, court watchers have warned.

Hong Kong’s Labour Department is proposing higher fines for offenders of the Occupational Safety and Health Ordinance.

This could lead to higher business costs and insurance premiums that may result in raising market entry barriers and reducing competition, according to Angela S. Y. Yim and Regina G. B. Ng of Mayer Brown law firm.

The two main pieces of occupational safety legislation in Hong Kong is the The Factories and Industrial Undertakings Ordinance (FIUO) and the Occupational Safety and Health Ordinance.

Occupational Safety and Health statistics in 2019 showed that there was a decline in the number of occupational injuries recorded at 32,872 from a record of 35,964 in 2018. The injury rate per 1,000 employees was said to be 10.8 in 2019 compared to 11.8 in 2018. Out of the 32,872 occupational injuries 16 were fatal.

Occupational injuries refer to injury cases that resulted in death or incapacity to work for over three days and reported under the Employees Compensation Ordinance.

Most industrial accidents in 2019 were in the food and beverage sector with 4,425 accidents for that year. Accident types range from contact with hot surfaces or substance, slip, trip or fall in the same level, and injury by a hand tool.

Yim and Ng said though industrial accidents in Hong Kong have declined steadily over the years, the number of fatal industrial accidents has been hovering at around 20 cases annually for the past two decades. The point of concern for the Labour Department is that one-third of the defendants are repeat offenders of the OSHO in cases of serious injury.

There are three categories of offenses under the OSHO: minor offenses, serious offenses to very serious offenses that have a maximum fines between, $10,000, $50,000 and $200,000 respectively. Offending individuals may be imprisoned for a maximum of 12 months. “Very serious offenses are those that are very likely to cause serious consequences such as death or limb amputation and those that are related to a major failure in safety management systems or use of prohibited carcinogens.”

These fines are comparatively low compared with other countries such as Canada who has a maximum fine at around $9m.

Last December, the Labour Department issued a consultation paper on increasing the penalties for occupational health and safety offences.

They proposed 215 offence provisions be reassessed, with the seriousness of 145 offences raised and 70 lowered. The department proposed almost threetimes the previous amount for their new fines. They range from $30,000 for minor offenses, $150,000 for serious offenses, and around $600,000 for very serious offenses. With consideration to the affordability of fines from employees’ perspective lowered the fine of $600,000 of the provisions concerning employees down to $150,000.

In early consultations, the department mulled a maximum fine of 10% turnover without a cap but some oppositions voiced that this may be too heavy a burden for small businesses.

The Labour Department said it aims to submit the amendment bill to the Legislative Council as soon as it is possible so that the amendment exercise can be completed within the term of the current government for immediate commencement.

Yim and Ng observed that there has been a trend with the department on taking a tougher stance on occupational safety and health offenses with the aim to lower industrial accidents.

Even with concerns that the imposition of higher penalties might have adverse effects for the smaller businesses, Yim and Ng agreed that an update for the ordinance is long overdue, with Hong Kong lagging behind other developed countries in relation to the fines and penalties for occupational safety and other health breaches.

They stated that though it is encouraging to see the department taking action, there is no data to prove a correlation between higher penalties and fewer industrial accidents.

An update is long overdue as Hong Kong lags on fines and penalties for occupational safety and other health breaches

New fines may stifle small businesses

Angela S. Y. Yim

Regina G. B. Ng

MARKETING BRIEFING The new “realities” that are transforming the retail scene in Hong Kong

Augmented and virtual reality technology is giving consumers exciting shopping experiences in their own homes and has helped them form new shopping habits.

The “new normal” in the retail sector has led to a huge “Adopting mobile reservation systems, QR codes for decrease in footfall amidst safety restrictions and a huge touchless menus and payments, and in-store virtual fitting economic downturn. rooms are strategies companies are taking to minimise

Since the onset of the pandemic, retailers have innovated human interactions,” the Euromonitor report stated. ways to manage their operations in an uncharted territory They can also offer services such as personal shopping and to hook consumers despite a recovering economy. appointments through video conferencing, VR travel They have mainly relied on immersive technologies such experiences, and crafting personalised goods through as augmented reality (AR) and virtual reality (VR) to give Herbert Yum artificial intelligence. consumers the perfect shopping experience in the comfort Moreover, consumers are also seen to be growing of their homes. accustomed to the inclusion of immersive technologies in

According to the latest report on consumer trends by their retail experience. Euromonitor International, technologies like AR and VR An Accenture survey found that consumers in Asia Pacific have helped consumers form new habits around shopping are some of the greatest advocates for immersive technologies and socialising. in the world - with an average of 68% more likely to buy from

Brands like Nike, UNIQLO, and SK-II have already a brand that focuses on better experience using immersive implemented both AR and VR technology by offering virtual foot size checking function for sneakers, in-store magic mirror to try on apparel items, as well as an AR-featured AR and VR are in its “rapid developing pop-up store. phase” as most consumers are still having

Euromonitor International research manager Herbert their “novice experience” with the Yum has noted that the use of AR and VR boomed in e-commerce in 2016, when companies like Sony and technology Google launched VR gears, allowing the virtual experience in gaming and other platforms. technologies like AR and VR.

Delivering virtually enabled at-home experiences remains The survey also found that nearly three in five consider imperative to drive e-commerce sales and gather data amidst experiencing products before purchasing to be their top the recovery of the retail industry, the research company also motivation for trying immersive technologies. noted. Being able to try on and experience the product itself is Given the necessity of AR and VR in the midst of the “new crucial in making a purchase, especially for consumer goods. normal”, the technology is most likely to be seen further in the

“For consumer goods that product or service experience retail experience as it becomes integral to the daily operations acting as a more important factor when making purchasing of retailers. Whilst the trend of immersive technologies decisions, virtually enabled at-home experiences would then is rising, Yum described AR and VR to be in its “rapid be an effective tool to fill such incapability of online shopping, developing phase” as most consumers are still having their hence helping drive e-commerce sales,” Yum said. “novice experience” with the technology.

As such, businesses are using these technologies and “Untapped potential is huge as the technology processes to encourage consumers to safely visit onsite as well advancement on future AR and VR hard and software with the help of smart devices. would be the key determinator of the future growth of this segment,” he said. However, Yum mentioned that integrating the virtual world in physical spaces would increase the cost for businesses, with those reliant on a high number of physical retail networks suffering the most amidst a drastic push in the setup cost. “This is particularly important to Asia cities such as Hong Kong, Singapore, Shanghai and Tokyo, where the rental and labour costs are relatively higher than other major cities in Asia,” he said. Yum advised businesses, especially those struggling, to rethink and transform the composition of their retailing channel and the role for each, before allocating a significant amount of resources in such integration.

INTERVIEW Amidst a crisis, Hong Kong’s Mox Bank sees boundless opportunities

The neobank has outlined a bold plan to kickstart a new generation of virtual-savvy customers.

The current crisis may have upended operations of Hong Kong’s banking industry, but for Hong Kong virtual-only lender Mox Bank, it is also a time that is rife with opportunity.

“We saw that as a result of COVID-19 outbreak, that more and more people are living their lives virtually or online—whether it’s online shopping, for work, study or entertainment,” Deniz Güven, CEO of Mox Bank, told Hong Kong Business in an exclusive interview.

“We believe the pandemic has made many more consumers in Hong Kong to adopt and be comfortable in living their lives virtually, whether it’s shopping, dining, learning,” he later added.

The plethora of prospects that the new normal has opened for digital financial offerors aligns with Mox Bank’s proposition, whose name reflects the endless opportunities it plans to create with its customers—which the lender cheekily refers to as “Generation Mox.” Unlike other virtual banking propositions in APAC, Mox does not only target a single generation or segment, but intends to focus on providing personalised banking services for each individual customer’s life stages.

“Our research spoke of wanting savings and spending advice, based on their life stages, not how much they already have. They want advice to help them track and achieve their life goals. They want even better security and fraud monitoring in these times of e-commerce. They want more services and rewards out of their banks, and this is what we will initially focus on,” said Güven. He also revealed that prior to its beta launch, the bank—whose parent company is the British multinational finance giant Standard Chartered, in partnership with PCCW, HKT, and Trip.com—conducted surveys with over 2,000 people to learn more what they desire from the neobank.

Mox’s first project is launching Asia’s first all-in-one numberless bank card in partnership with Mastercard—a physical card for spending and ATM cash withdrawals and without any printed card numbers, expiry date, or card verifications. Instead, these could be accessed from the Mox banking app.

Hong Kong Business had a chat with CEO Güven to learn more about Mox Bank’s entrance in Hong Kong’s banking industry as well as its vision of growth for the bank in the coming years.

Mox Bank’s research found customers were keen for savings and spending advice, based on their life stages, not how much they already had.

What was the idea behind the name “Mox”? How does the name of your bank represent how you want to position yourself in the banking industry?

Many folks have asked how we came about with our name

Deniz Güven, CEO, Mox Bank

and logo. Well, it was actually quite a simple journey. We researched, asked potential customers, we went through more than 2,000 naming suggestions, before we found the one we all like—Mox.

Mox can mean many things. It reflects the endless opportunities we can create—Mobile eXperience; Money eXperience; Money X (multiplier), eXponential growth, eXploration. It’s all up for us to define, together. As for our logo and our visual design, they are inspired by the round shape of a Hong Kong dollar coin, which is also a nod to our roots. We take pride in being one of Hong Kong’s newest virtual banks, complementing Standard Chartered’s heritage of being Hong Kong’s oldest note-issuing bank with over 160 years of experience in serving the community.

What are your thoughts in being one of Hong Kong’s newest virtual-only banks? What is your outlook for the local virtual banking industry?

We are excited about the opportunities ahead. Despite the many retail banks available in Hong Kong, with the many online banking services available to consumers, we believe there are still gaps in banking services that people need today. Currently, there is an underserved customer base in Hong Kong.

We’ve been listening to what customers want, and we’ve

been researching on what’s missing in banking. We spoke with over 2,000 people and they all tell us they want new and better experiences. They spoke of wanting savings or spending advice, based on their life stages, not how much they have. They want advice to help them track and achieve their life goals. And we saw that as a result of COVID-19 outbreak, that more and more people are living their lives virtually or online—whether its online shopping, for work, study or entertainment.

What’s important to note is that Mox is connecting banking into people’s everyday lives and shaping a new model that just might reflect the future of banking. Banking has to be simple, intuitive and even delightful, to consumers.

What is Mox Bank’s charm point? How do you plan to establish your foothold in the industry amidst competition from other lenders?

We are in the business of trust and we take pride in being a subsidiary of Standard Chartered Bank and its heritage of over 160 years in serving the community. Our differentiator from other VBs is our customer experience and the partners we have, bringing new ways of rewards and spending. You need partners to build an ecosystem and diversify distribution channels, particularly for the service-led bank that Mox is conceived to be. We wanted Mox to become integral to people’s daily lives, so working with partners that had already achieved this, to create joint service offerings, was key to our value proposition.

Tell us more about your offerings. Who is your target customer base? What services does Mox Bank offer, or plan to?

Mox is simply a smarter, easier, delightful way to bank. Everything we do is based on extensive research to identify what truly matters to you and to solve real pain points. We will deliver a suite of retail financial services as well as lifestyle benefits all in one place, with the focus of providing financial well-being to our customers. We are reaching out to the Generation Mox in Hong Kong. They’re a tribe of creative, curious and connected people, who want to do more, feel more, see more. They’re digitally savvy, regardless of age. They want to grow, individually, financially, as a community and a society. For starters, we’re bringing to Hong Kong a whole new experience for savings and spending. We want to get customers to form good savings habits, and we will help them automate this. Customers can set up specific savings goals and be in a better position to track their progress, and focus on achieving them one by one. Savings Calculator and other tools help customers to automate saving habits. Customers will earn daily interest.

Why launch an all-in-one numberless card?

When you open a new account with Mox, you’ll receive a virtual Mox card, with which you can actually start to conduct your banking immediately.

But there’ll be instances that you need a physical bank card, such as spending and ATM cash withdrawals. We partnered with Mastercard in coming up with our Mox Card, re-defining innovation, security and privacy. Our numberless bank card has no card numbers, expiry dates or card verification value (“CVV”). This helps reduce your risk of losing personal information, making it one less thing to worry about.

All card information can be securely accessed in the Mox app. And if you ever lose the card, simply and instantly freeze it in the app. Users can enjoy ATM services at over 2,000 Jetco ATMs in Hong Kong, and all ATMs globally that accept Mastercard cards.

If possible, can you share with us your future projects and plans you have in store in the coming year?

We will start by offering a unique experience in savings and spending, and over time will introduce other services as well.

We aim to introduce some market firsts to Hong Kong consumers. Together with Mastercard, Mox is the first bank in Asia to launch an all-in-one numberless bank card—a physical card for both spending and ATM cash withdrawals without any printed card numbers, expiry dates or card verification value (CVV). This helps reduce customers’ risk of losing personal information, making it one less thing to worry about. All card information can be securely accessed in the Mox app. And if our customers ever lose the card, simply and instantly freeze it in the app.

How has Mox Bank been received by the public so far?

In early May, we started to invite Hong Kong people to sign up on our website and get early access to our services. We would like to take this opportunity to thank the applicants for their tremendous support of Mox.

This is very successful, as we have had a very large number of registrations. We look forward to creating Mox with them.

We are very happy with our progress so far, and we’re excited that the launch is gathering pace. We’re proud to say that the team has continued to build the bank, with a work-from-home model. I have to hand it to my team here. Their perseverance, passion and commitment to the cause. Despite being of different cultures, different experience sets, they hunkered down and didn’t let the pandemic affect target deadlines. By Frances Gagua

Mox Bank says its preliminary goal is on winning “heart share”, rather than market share.

Three out four CEOs say the pandemic has accelerated digital customer experiences

CEOs pivot towards longterm growth strategies

transformation was already central to his company’s growth strategy and operating model, shifts in customer attitudes and behaviours had accelerated that transformation. “Any resistance in our clients’ mindsets to moving to the cloud or the next generation of digital solutions has largely, if not entirely, evaporated. I think we’ve seen three to four years of progress in just three to four months, in terms of acceptance of what the new world needs to look like,” he told KPMG. Meanwhile, as businesses focus on their survival, the report has noted that new challenges are also rising. In January, 2020, CEOs ranked talent risk as the 12th greatest risk to growth. However, this issue has skyrocketed to be the Number One threat for growth since the onset of the pandemic.The pandemic has shaken the confidence of CEOs, but KPMG’s global research KPMG International global shows they still have some optimism for the long-term impact on business. head of clients and markets

AGary Reader stated that the s the COVID-19 pandemic Global CEOs are Businesses deem digital growth as report highlights how human continues to impact more confident one of the most critical levers they and operational risks have been businesses around the in their own can control, with the past year in given greater priority by senior world, companies have taken companies particular highlighting the vital need executives. on a wide range of different growth for digital transformations. “CEOs recognise that losing strategies to shield themselves. prospects, 75% of CEOs say the pandemic key employees and attracting In particular, many organisations compared with has accelerated the creation of a specialised talent can have have repositioned their focus the global seamless digital customerexperience, a critical impact on future toward long-term growth, in the economy as a with over one in five (22%) of business performance,” he said hope of riding out the storm and whole those saying progress “had sharply in the report’s conclusion. “Many minimising their losses over the accelerated”. As one respondent leadership teams are concerned short and medium terms. told KPMG’s researchers, “this has about the mental and physical

According to KPMG’s 2021 CEO helped to put us years in advance of wellbeing of their staff , but also Outlook, the pandemic has certainly where we expected to be”. recognise that unless they manage shaken CEO confidence in global One international media industry this properly, growth will likely be economic growth, with about 32% CEO explained that whilst digital (heavily) stunted.” of the 1,300 business leaders from around the world saying they were ‘less confident’ about prospects CEO confidence at different levels over the next three years for global growth over the coming three years.

Whilst CEOs are uncertain about how the economy will run, they are more optimistic of what the future holds for their companies. Around 67% of then told KPMG they were “more confident” on the growth prospects for their businesses, as they had “more control and levers of influence” in the fortunes of their Source: KPMG CEO Outlook report companies.

New venue for performance perfect events

Empire Hotel Hong Kong gives a glimpse of the new Empire Grand Room.

Empire Hotel Wan Chai lobby

Empire Hotel Hong Kong in Wan Chai has unveiled a new look for its Empire Grand Room, an ideal venue for corporate meetings, trainings, trade and property exhibitions and seminars.

The venue has recently undergone a head-to-toe make-over including brand new carpeting, wall furnishings, and meeting furniture.

More importantly, the renovation is wellappointed with a state-of-the-art audiovisual system and hi-tech fixtures enabling the venue to step up to the next generation of clients’ needs, nature and versatility of their events and arrangements.

Bright and elegantly designed and furnished, the Empire Grand Room consists wall are impressive and visually-stimulating. This LED edge lighting technology allows a more environmental and aesthetic impact.

Positing next to the video wall is a sleek lectern equipped with 4K touch-screen preview monitor and microphone. A 65’’ interactive 4K UHD LCD touchscreen panel with integrated annotation software is each available in Room 2 and Room 3.

All display solutions support ‘plug and play’ of presentations, high-resolution video and almost any other type of content stored on a USB device or internal memory. Display mirroring function is available across all function rooms for a larger audience in a simultaneous meeting.

Moreover, popular video conferencing is made easy with professional conference cameras and all relevant apps installed.

Showcasing your products, sharing and streaming your ideas across different times and spaces can never be made easier in Empire Grand Room. Transform your meetings and presentations into a vibrant, visually-stunning and seamless interactive experience. Standard meeting and rentalonly packages are available whilst special requests and budgets can also be custommade.

Call our sales hotline: +852 3692 2139 / 3692 2134 or email: meetings-wc@ empirehotel-hongkong.com for more details.

of three separate function rooms which can also be re-configured into one large function space totalling 2,100 sqft.

Natural daylight is allowed in all function spaces where attending guests won’t easily fall into Morpheus’ arms during any event. Alternatively, blinds and lighting controls are within reach if you wish for a more subdued ambience.

The new state-of-the-art visual system offers the video wall display solutions equipped with 4K picture quality in Empire Room 1 (approx. 1,100 sq. ft.). Nine LCD panels with LED backlighting technology are tiled together to form a seamless 140” large screen of 4K UHD resolution. Images and presentations projected on the video

INTERVIEW Hong Kong’s only homegrown virtual bank enjoys data-led kick-start

WeLab Bank achieved a goal-breaking 10,000 customers just 10 days after its launch.

WeLab Bank believes that it’s parent company’s WeLab Bank seven-year head start in the online financial amassed 10,000 services space—and in leveraging data customers analytics—puts it at an advantage in meeting Hong Kong within 10 days banking customers’ needs. of its public

Just 10 days after it publicly launched in July, it has launch in July, immediately amassed 10,000 customers. Two months 2020. later they already count 20,000 uses in their debit card. Though impressive, the statistics came as no surprise to WeLab: they consider themselves masters at moving quickly and efficiently, according to Adrian Tse, Chief Executive of WeLab Bank.

More than that, they immediately respond to their customers’ needs. “We conducted multiple user research studies long before we have launched,” Tse told Hong Kong Business in an exclusive interview. “For example, we came up with GoSave because users have expressed their difficulties from participating in the incumbents banks’ deposit offers. They are not able to withdraw their money before the maturity date, and if they choose to do so, they will be penalized for their actions.”

One of the two unique products that WeLab Bank introduced upon launch, GoSave is a time-deposit product that “harnesses the power of the community,” Tse said. “More people joining GoSave means a higher interest rate. We added the “minibus” element, which has personal connections with our users, to make the experience more memorable.” What makes it better is that you can enter the GoSave service for as little as HK$10 (US$1.30). Customers can also pull out their money at any given period without any penalties whatsoever. Not only that, the bank is quick to embark on partnerships that meet their customers needs. Recently, they partnered with online food ordering service OpenRice upon noticing that 70% of the transactions in their debit card are online orders for food.

“This is exactly what makes us different from the others: that is, our ability to leverage technology. In all these, technology helps us collect the data and also allows us to build and promote other offerings to our customers,” said Tse.

Adrian Tse, Chief Executive, WeLab Bank

our goal to do different “experiments” to help customers take control of their financial journey, so that they can have fun while growing their money. What we are doing is leveraging technology to redesign a solution that is suitable for the customers during their financial journey.

Whilst we started our journey in consumer lending in Hong Kong, and eventually expanded to China and Indonesia, our ambitions did not stop here. WeLab wants to open up additional channels to extend a broader range of financial services. When the Hong Kong Monetary Authority (HKMA), the regulator, decided to give out eight virtual bank licenses last year, we think this would be a good time to move into the banking territory because [what virtual banking represents] is exactly our objective when we leverage technology in our financial services: that is, to bring a very different banking experience to customers in Hong Kong. In the end we were fortunate to get one of the licenses, and we continue to bring joy to our customers through innovative products.

What was the idea behind the name “WeLab”? How does the name of your bank represent how you want to position yourself amongst customers and the industry?

Lab basically stands for “laboratory” where scientists conduct their experiments and projects. It represents

Can you tell us more about the founders of the bank? What inspired them to launch WeLab?

The founder is Mr. Simon Loong, who is also our Group CEO. He’s been in banking for over 15 years and is very experienced in the field. I worked with Simon back in

Standard Chartered, where we got first-hand experience on how traditional banking is fulfilling people’s banking needs. We saw that the products that’s been offered by incumbents are unable to serve everyone’s needs, where it is our believe that everyone should have simple and equal access to credit. Simon then started WeLab Group, where we leveraged big-data powered technology and our know-how in risk management to revolutionize lending: by delivering seamless, purely online lending experiences accessible 24/7 to underserved consumers.

What are your thoughts in being one of Hong Kong’s newest virtual-only banks?

The online business model is in our DNA. We are very well positioned to demonstrate a very different banking experience to Hong Kong customers and some of the specific characteristics that we have will allow us to deliver this experience. As Hong Kong’s only homegrown virtual bank, we have a very deep understanding of what types of financial products Hong Kong customers need. We are wholly owned by the WeLab Group who has a seven years track record of delivering online financial services. As of today, we’ve hit 46 million individual customers. As for how and why we grooved with 46 million customers: we have a startup mentality and we move very quickly. Launching WeLab Bank is an example. We got the license last April and then under just about 400 days, we have already launched the bank. The bank was launched in late July, and within 10 days we have already accumulated 10,000 customer applications, which is very exciting for us. That’s how quickly we move things.

How has WeLab Bank been received by its customers and the general public so far?

We launched in late July and in just less than two months, we have shown some good results. More than 60% of our customers have used two or more of our product or services. As of interview, we have over 10,000 of GoSave transactions and also over 20,000 transactions on our WeLab Debit Card, and they continue to grow on a daily basis. We were happy that our customers come back and use it repeatedly, showing strong interest to use our products. We hope to bring further innovation to the market in the coming years to come.

Tell us more about your other services.

We have another product, the WeLab Debit Card, which is a tap-and-go card that is the first numberless card publicly launched in the market. With the debit card, you will not overspend because you can only spend the balance that is in the account. Also, when we did our survey and talked to customers, they told us that they want to make sure the card is secure and private.

The concept of a numberless card is that even if someone picked up the card or whilst the card is being given to someone in the restaurant to get the bill, nobody can get your personal details or card numbers.

To complement the physical card, we have a virtual card in the app as well. When our customers download the app, when they’ve successfully open an account, they can go online and do their online shopping at any time that is convenient.

What is your outlook for Hong Kong’s growing number of virtual banks?

I think these are very exciting times. From a market perspective, Hong Kong’s banking sector is huge. It has an annual income of about US$51b and we think there is room for virtual banks to take a significant piece of the market share.

Customers have also shown their enthusiasm in trying out virtual banks, as seen in how we achieved 10,000 customers in less than 10 days. What we also observed during the COVID-19 pandemic period is that people are willing to do things on the phone or online. In fact, they are trying to avoid going to branches or leaving their homes. This is how the pandemic has become an enabler or a catalyst for people to try and use virtual banking services. With even more innovation coming to the market, I think the outlook for virtual banks in Hong Kong will be incredibly exciting.

What’s next for WeLab Bank?

We have a strong product roadmap and will roll out features in the coming months. All of our features will be customer centric with the goal to help them manage, grow, and save their wealth.

Interestingly, when looking at our customer demographics after launch, we found out that 30% of our customers are aged 40 and above. This was a pleasant surprise since we thought the majority of our customers will be in the younger generation. This shows that age is not a limit for being tech savvy. As we continue to build innovative products, we will continue to leverage big data analysis to better understand our customers, so that we can provide a tailor-made and diversified portfolio of products to better help them reach their goals. By Frances Gagua

WeLab Group was started with the view of leveraging big-data powered technology and its founders’ knowhow in risk management to revolutionise lending.

WeLab Bank partnered with Mastercard to launch a numberless card last July. (Source: WeLab)

Investors will face plenty of risk, but also opportunity, during the Year of the Ox in 2021

Where to invest your money in 2021

2020 was a year of disruption for many investors but there is light at the end of the tunnel. Here are eight diverse investment ideas to consider for 2021

Political upheaval, social unrest, and continuing trade wars marked a tumultuous year for business and investors alike in 2020. And that’s even before the global impact of the COVID-19 pandemic – and the ongoing lockdowns and business restrictions – were factored in.

But while what goes down doesn’t necessarily have to come back up, the overwhelming view of economists and investment managers is that recovery is on the cards in 2021. Fast work on several COVID-19 vaccine options, coupled with a greater understanding of spread minimization techniques among policymakers, has meant many have rung in the New Year with a renewed sense of confidence.

Andrew Tilton, Chief Asia Pacific Economist with Goldman Sachs Research, has told the firm’s Exchanges podcast that he is also optimistic about growth in the Asia Pacific region in particular.

“China – the biggest economy in the region – has already recovered quite a lot, and is now showing growth on a year-by-year basis,” he said, adding that effective vaccination programmes will be provide another kick-start to local markets. “It’s really widespread vaccination that will allow those remaining restrictions to be lifted and have another reacceleration of growth to get back to more or less normal.”

Nigel Green, CEO and founder of independent fintech advisory deVere Group, says 2021 is set to be a year of major investment risks – but also massive opportunity.

“2020 was a year for which nobody had planned,” he said.

“This included investors, many of whom were caught spectacularly off-guard by not having properly diversified portfolios, he added. “Looking ahead to 2021, it is likely that investment headwinds will still exceed the tailwinds – but, I believe, that there are also more major investment opportunities to be had in the next year than perhaps in the last decade.”

Whilst we here at Hong Kong Business have no crystal ball, and can’t predict the future, we have talked to some of the leading analysts and institutions from across Asia and around the world. What follows are eight of the most interesting examples from their advice to clients for the year ahead.

Whichever way your investment portfolio heads in 2021, and the Year of the Ox, we wish you all the best of luck and prosperity. Stay well, and invest with care.

Asian equities

When it comes to regional views of the stock markets, Asia is seen as a likely strong rebounder in 2021, according to a wide range of analysts and guidance.

Ronald Chan, Chief Investment Officer (Equities, Asia ex-Japan) for Manulife, describes the investment outlook for the Asia region as “greater than the sum of its parts”. He says robust fiscal and monetary stimulus globally and in Asia allowed equities to recover the worst of the pandemicinduced downturn, with regional equity indices ending the year with a nearly 19% return in 2020 (albeit with significant

Andrew Tilton

Ronald Chan

Idea 1:

volatility across different markets and industries).

He is expecting growth of roughly 5.5% overall during what will still be a period of gradual and uneven recovery.

BlackRock, meanwhile, says the region is well placed to take advantage of the global recovery. “Many Asian countries have been more effective at containing the virus – and are further ahead in the economic restart,” it has advised clients. “We see the region’s tech orientation allowing it to benefit from structural growth trends.”

Schroders is also bullish on Asia, but has a particularly confident outlook for Chinese equities. These have already rebounded faster and stronger than other markets, in line with the “first-in, first out” story of the Chinese economy’s pandemic. “We believe sectors providing exposure to long-term growth themes in the country will continue to outperform. In particular, we like areas including industrial automation, electric vehicles and components, and supply chain localisation,” said Louise Lo, Head of Greater China Equities for the global fund manager, based in Hong Kong.

Asia-Pacific REITs Idea 2: Many real estate investment trusts (REITs) took a significant hit from the lockdowns of 2020, but several analysts say that gives them strong room for renewal and growth in 2021. Hui Min Ng, Portfolio Manager within Manulife Investment Management, says this is particularly true where “lower for longer” global interest rates are now providing a generous tailwind for property development.

“Moving into 2021, we envisage the macroeconomic backdrop should gradually improve across the region, with significant dispersion in economic growth across the region,” she says. That should create a recovery in cashflows for retail landlords (given the low base of 2020), while industrial REITs are likely to remain stable throughout 2021 “with growth boosted from accretive acquisitions”.

“The main attraction of Asia Pacific REITs as an asset class is the stable, sustainable payout of dividends to investors. While this assumption was challenged in early 2020, the response by governments and central banks helped to stabilise the real estate sector (and) moving into 2021, we believe an improving economic outlook and continued low interest rates should be beneficial for the asset class,” Ng said.

In Singapore, DBS Bank is also confident of the local REIT market, but says mid-cap trusts are offering particularly good value to investors at this time.

Louisa Lo

Mary Jane McQuillen

Top 10 Asia Pacific REITS

“In general, mid-cap REITs are usually able to produce better returns because of their ability to act quicker than large-cap REITs, while also being more financially stable than their small-cap counterparts,” the bank has advised.

“And now, mid-cap industrial S-REITs have ample valuation buffers, while some have also gradually increased their overseas portfolio over the years, making them more diversified.”

Technology Idea 3: Technology assets, particularly those with exposure to cloud computing and the work-from-home revolution that was a hallmark of 2020, enjoyed a surge in valuations over the past 12 months. While many have predicted that rate of growth to slow down in 2021, some analysts are predicting an unprecedented rally well into the New Year.

Scott Glasser, Co-Chief Information Officer and Portfolio Manager with ClearBridge Investments is one such investor still bullish on big tech. “Simply looking at valuations would suggest technology stocks are overbought and most at risk of disappointing investors in 2021,” he says. “Yet much of market forecasting is based on past analogs and we would argue that given the unique nature of the COVID-19 pandemic, which caused voluntary shutdowns of broad swaths of the economy, such analogs are not as applicable today.”

Research from State Street in Asia Pacific goes some way to backing this theory up. Its survey of institutional investors in the region found a majority (64% in Asia Pacific, and 68% globally) expected continued and improved investment in new technology in 2021. Those moves to replace legacy IT systems with new tech and services are likely to maintain demand and revenues across the global tech market.

ESG Investing Idea 4: Successfully managing environmental, social, and governance issues has become so vital for organisations throughout the developed world, that it even has its own investment trend that has gained plenty of interest – and funds – from the finance community. UBS’ Chief Investment Office says sustainable, or “Impact Investing” is also seeing some strong relative returns for its dedicated funds, portfolios, and indicies.

“So far, during the global coronavirus outbreak, MSCI Asia ex-Japan ESG Leaders have outperformed the regional benchmark by over 200 basis points,” it advised clients in 2020. “While past performance is no guarantee of future performance, we expect ESG considerations to continue to influence corporate and investor actions in Asia in the future.”

Mary Jane McQuillen, Head of ESG Investment at ClearBridge is similarly upbeat about the sector’s growth prospects in 2021.

‘We expect many of the drivers of strong returns for stocks with strong sustainability characteristics to continue in 2021,” she says. “We believe renewable energy will enjoy long-term secular growth as the world transitions to a less carbon-intensive economy and as solar and wind power has become more cost-competitive with fossil fuels. The

push to lower emissions and increased energy efficiency will (also) continue to support the growth of electric vehicles (EVs) and their evolving supply chains.”

Gold Idea 5: While the world is looking forward to a year of recovery and growth in 2021, the previous year has taught us that uncertainty will likely persist for many years to come. That has brought some of the tried and tested safe haven investments back into focus, and the most trusted of these continues to be gold.

HSBC is describing gold as an important “portfolio diversifier” in 2021, particularly with ultra-low yields on highquality bonds expected to persist.

“(Gold’s) strong relationship to real interest rates should offer protection against positive inflation surprises,”it added. “There remains an abundance of uncertainty, with the imminent risks of Brexit, continued geopolitical uncertainty, and the as-yet uncertain success of a coronavirus vaccine.”

Goldman Sachs is also preparing for a continued rally of gold prices and associated assets. It holds a US$2,300 per ounce target for 2021, which would represent a 22% rally from current levels. In a recent investors’ note, Goldman analysts Mikhail Sprogis and Jeffrey Currie said this prediction was based on expectations for renewed concerns over inflation globally.

But not everyone is convinced. Some analysts suggest gold’s safe haven status has come under pressure during the current crisis, leading to greater than expected volatility last year. There is also growing demand pressure from a very different asset that many are claiming has alternative safe haven properties. That forms the basis of our next investment idea.

Bitcoin Idea 6: It’s been a tumultuous ride for the world’s best-known cryptocurrency over the last few years, but 2020 saw it catch the eye of a serious level of institutional investment. Bitcoin’s price grew over 300% last year, boosted in part from its acceptance by mainstream companies such as Paypal. Many now see it as an alternative safe-haven for gold over the long term (the term “digital gold” is now being used to describe bitcoin), although with significantly greater price volatility in the short term.

Nikolaos Panigirtzoglou, Senior Global Markets Strategist with JP Morgan, believes that the adoption of Bitcoin by institutional investors has only just begun compared to holdings of gold. He sees Bitcoin’s intrinsic value rising significantly over the coming years as mining activity improves, although nearterm risks are clearly skewed to the downside.

“The sponsorship we have seen for bitcoin through corporates and respectable asset managers is changing the views of many baby boomers (who have long-held a preference for gold as their investment safe haven of choice)”.

Green hydrogen Idea 7: It’s the first, lightest and most abundant element in the universe, and it could provide a low-impact solution to the world’s energy needs. While currently, 99% of hydrogen is captured using fossil fuels, climate scientists say the technology to “greenify” these carbon-heavy processes is now within sight.

Bank of America Global Research says the stars are about to align for a potential $11 trillion market, with

Gold price rises during volatile 2020

Source: www.gold.org/goldhub

Nikolaos Panigirtzoglou

Nicholas Hardingham

green hydrogen supplying up to 24% of energy needs by 2050. It says the falling cost of electrolysers (down 50% in the past five years, and estimated to fall 60% - 90% further before the end of the decade) used to produce green hydrogen, technology improvements, and the global focus on sustainability all highlighting the potential of green hydrogen as a revolutionary fuel source.

“Scaling up any new technology entails challenges, but we think now is the time to look at it, before it goes mainstream,” the Bank advised in a Hydrogen Primer report from September last year.

Beneficiaries of an effective green hydrogen solution will include the renewable energy sector, utilities, industrials, and chemicals. The oil and gas industry and coal sectors, meanwhile, can expect significant loss of global demand, Bank of America Global Research says.

Emerging market bonds Idea 8: Both corporate and government-based bonds offer a stable investment choice in 2021, but analysts have an overwhelming preference for emerging market bases for these assets.

Nicholas Hardingham, a Senior Vice President with Franklin Templeton Fixed Income, says the growth gap between advanced economies and the emerging markets is set to widen further this year, with China in particular heading for an 8.2% expansion of GDP. “This is important because China is a growth engine to which many other emerging markets sell their commodities,” he said.

Emerging market government bonds are currently yielding around 4% more than their counterparts in advanced economies, and Hardingham sees that trend likely to continue into the year ahead. “As 2021 starts, government debt is expected to rise to 125% of GDP in advanced economies, compared with 62% in emerging markets.”

Standard Chartered’s Wealth Management Advisory is also positive on emerging markets, particularly Asia. “We prefer Asian USD bonds and Emerging Markets bonds as they should benefit from the weaker USD, stronger inflows, reduced geopolitical risks given the US election results, and potential for capital appreciation given cheap valuations,” it advises in its Market Outlook 2021 report.