Where to invest your money in 2022

The World Bank Global Outlook noted that 90% of advanced economies may recover to pre-2019 levels in 2022

Asian SPACs are expected to enter the Hong Kong and Singapore markets this year.

The last year was not without challenges, as supply constraints and the chip shortage continue—and 2022 might not be so different for developing economies. The World Bank Global Outlook noted that 90% of advanced economies may recover to pre-2019 levels in 2022, but only a third of emerging and developing markets will hit the same target. Travel restrictions might not be lifted this year due to emerging COVID-19 variants, thus leaving the aviation and tourism sectors struggling. Trade costs are still expected to be high, hampering international trade growth.

With all of these developments, investing in 2022 might seem daunting. Hong Kong Business gathered some ideas on where to invest your money.

REITs

With inflation picking up following 2020’s economic recession, real estate is often thought of as a good hedge. But, based on historical data, Oliver Samson from Savills World Research said that it also depends on which region you plan to invest in.

“From a regional perspective, Europe provides the best inflation hedge in comparison with North America or the Asia Pacific. This is underpinned by the widespread use of indexation, which is quite unique to European real estate, and differentiates the region from its global peers,” Samson said on Savill’s Inflation Implications for Real Estate report.

For the Asia Pacific, Samson noted that lease lengths tend to be shorter than their international counterparts, at approximately three to five years. This, in turn, causes demand conditions to differ across major cities and sectors. “Vacancy rates tend to be higher in office and retail compared with industrial (similar to the global trend), and are much lower in Tokyo compared with other markets such as Shanghai and Singapore. Shanghai retail leases, much like many other cities globally, often include a turnover linked component,” he said.

Asian Capital Markets

Initial public offering (IPO) activity in Asia was undeterred by the pandemic, which several economies continue to battle to this very day. Data from Deloitte reported that as of mid-November, there was a record of US$9.8b raised from 121 IPOs from Southeast Asia alone, overtaking last year’s performance. Thailand had raised the highest funds from IPOs for the third consecutive year, followed by Indonesia, Malaysia, the Philippines, Singapore, and Vietnam.

Whilst it is possible that 2022 will continue to have a robust IPO market, investors have another thing to look forward to: special purpose acquisition companies (SPACs). In September 2021, the Singapore Exchange released its regulations for black cheque listings. Hong Kong is expected to follow suit in 2022 with its own regulations. These two influential markets can light a fire that could lead the way to SPAC listings in other markets, giving companies a faster option to raise funds.

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IPO activity in Asia was undeterred by the pandemic. As of midNovember 2021, a record of US$9.8b was raised from 121 IPOs from SEA alone

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“There is now a significant uptick in companies in China and across Asia considering a similar route to accessing US capital markets as investors and management teams try to mitigate some of the challenges of traditional US IPOs; in particular market volatility around pricing and the significant investment of management time and cost,” Deloitte China said in its The Rise of SPAC in Asia report.

Cryptocurrency

Cryptocurrency has become bigger than ever in 2021, with the price of a single Bitcoin skyrocketing to over US$57,000 as of the end of November 2021—and central banks from different economies are taking notice, with Sweden’s Riksbank, the Bank of England, the Bank of Canada, and the central banks of Thailand and Singapore researching the implementation of central bank digital currencies or CBDCs.

On the opposite end of the crypto-space is decentralised finance or DeFi, keeping with cryptocurrency’s roots of having minimum regulation, save for being on a secure blockchain, enabling faster, registered transactions. 2022 would be an interesting year for cryptocurrencies, with governments and emerging fintech companies seemingly at odds with the future of this digital tender.

The top 10 cryptocurrencies based on approximate market cap in 2021 are Bitcoin (US$1.8b), Ethereum (US$557b), Binance Coin (US$104b), Tether (US$73b), Solana (US$64b), Cardano (US$52b), XRP (US$47b), U.S. Dollar Coin (US$38b), Polkadot (US$37b), and Dogecoin (US$28b).

NFTs

Non-fungible tokens (NFTs) have taken centre stage in the crypto-asset space since it was announced in mid-2021. As a unique digital asset, NFTs provide one-of-a-kind and noninterchangeable proof that one has purchased another digital asset. With NFTs mostly linking to visual artworks, the NFT market has served as an online art trade. The most expensive NFT, Everydays: The First 5000 Days by artist Beeple, was auctioned off for US$69.3m.

However, contrary to popular belief, NFTs do not prove ownership of the asset it links to. “An NFT is not the underlying asset itself, but an electronic record proving ownership of the asset that is separate from other legal ownership risks (such as the copyright, in the case of a digital artwork). In other words, owning an NFT does not necessarily equate to owning the asset underlying the NFT, unless the NFT specifically includes a transfer of rights such as the copyright,” defined PwC in its Annual Global Crypto Tax Report 2021.

“If such a transfer were allowed under local law at all, it could be tricky in a blockchain environment, given that in certain jurisdictions the transfer of copyright must be in writing and signed by the copyright owner,” PwC added.

E-commerce

E-commerce is a booming industry, especially in Southeast Asia. Analytics firm AppsFlyer, in its 2021 State of eCommerce App Marketing report, saw a 240% increase in spending from Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam. In-app revenue rose by 13% to 35% from March to July of 2021, bucking the 2.05% decline in global spending.

“Southeast Asia is poised to experience a digital shopping wave; what businesses do now can determine their market share over the next few years,” said Sam Chiu, Senior Director of Marketing, APAC, AppsFlyer.

The Asia Pacific and Australasia regions are poised to become e-commerce powerhouses in the future, with sales opportunities of over US$6.

The Asia Pacific and Australasia will become an e-commerce powerhouse in 2021 and beyond, due to e-commerce sales opportunities of over US$68.5b, according to a new report from global market research company Euromonitor International. Sales in the Asia Pacific are expected to hit the US$2t mark by 2025.

Green finance

There has been an increased interest in green finance. Data from the Climate Bonds Initiative show that an approximate US$452.2b green bonds were issued globally in 2021, far exceeding the US$279b issued the year previous. Standard Chartered, in its Sustainable Investing Review 2021, noted that 13% of emerging affluent, affluent, and high net worth investors have sustainable investments making up more than a quarter of their portfolio. An approximate 61% of these investors have placed funds in a sustainable investment solution.

Investors effectively are spending less and getting higher returns on green bonds, than they are on other bonds. And that’s also showing up in the level of oversubscription on bond issuance. So everyone wants bonds right now, they want certainty. They’re the most popular category of bond versions right now. So that bodes really well for your supply and demand and growth going forward,” said KMPG Partner and Head of Financial Services Anton Ruddenklau said in an interview with Hong Kong Business last quarter.

KPMG Partner for Financial Services Leon Ong, in the same interview, cited Hong Kong and Singapore as growing markets for green finance, adding that China will continue to be the juggernaut in the Asian region.

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E-commerce sales in APAC are expected to hit the US$2t mark by 2025

NFTs have taken centre stage in the crypto-asset space since mid-2021 Idea 5:

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COUNTRY REPORT: ISRAEL

Israeli companies are relatively young and are looking to explore opportunities in the global market

Israel and Hong Kong forge fertile business bonds

The Head of Economic and Commercial Mission for the Consulate General of Israel says several of its companies are keen on entering the Hong Kong market.

Hong Kong is soon to be a safer place for health workers due to “Israel is really well-known in terms of innovation and technology. There are many different startups closed system transfer devices that minimise their exposure to hazardous drugs when administering medication.

This technology was developed by Simplivia, one of the many Israeli companies that have seen the advantage of doing business with Hong Kong. Other Israeli medtech companies looking to expand their businesses in Hong Kong include Libra@Home, which uses virtual reality technology in neurorehabilitation; and Newsight, whose SpectraLIT device can detect COVID-19 in saliva samples. The latter is even building a sub-office in Fragrant Harbour in the near future.

In an interview with Hong Kong Business, Yoav Haimi, Commercial Consul and Head of Economic and Trade Mission at the Consulate General of Israel in Hong Kong, said that several Israeli companies, particularly startups, are interested in capital raising and strategic investment in Hong Kong as well as partnering up with local firms. with top-notch technologies that can be implemented within companies in Hong Kong. Israeli companies are relatively young and are looking to explore opportunities in the global market,” Haimi said. What sets Israeli companies apart from their global counterparts? The answer is simplicity itself. “We take a very simple idea which no one thought about, and think outside the box, and we can really change the ecosystem,” the consul said. Medtech is amongst the fields that Israeli companies can greatly contribute to the Hong Kong economy. Another field is smart cities—in the areas of waste management, construction, and building assessment. In fact, Percepto is an Israeli firm that’s doing just that, using drone technology to help inspect aging buildings in Hong Kong whilst lowering the risk to human life, providing accurate data, and lowering assessment time.

Investing in Israel and HK markets

With online shopping gaining more traction in Asia, Haimi sees potential in Israeli firms like Glassbox, which provides analytics on consumer behaviour in e-commerce platforms. He noted that Hong Kong nationals are also showing more interest in Israeli food, with Halva Kingdom now exporting delectable Mediterranean sweets to the East Asian market. These are just a few of the Israeli companies that have entered the Hong Kong market through the assistance of the Economic and Commercial Mission. Haimi said that there is a nigh unlimited number of tech providers from the Israeli market that are ready to partner with Hong Kong companies. But there has also been increased interest in investing in Israel from Hong Kong and Mainland China. “We see that investors are looking to be a part of the great success of the Israel ecosystem, looking for specific solutions. Typically, these are companies from Mainland China, for a strategic corporation. Another opportunity I see for Hong Kong companies is establishing research and development centres [in Israel], something that many multinational companies are doing in Israel,” Haimi said, adding that Yoav Haimi these companies recognise Israel’s expertise in innovation. The Economic and Commercial Mission headed by Haimi helps connect Hong Kong and Israel businesses. All Hong Kong companies have to do is to contact the office, give them their specific needs, their budget, and their timeline—and they will help find their best match. “I can do the work for them, bring them the best companies in terms of the catalog, videos, connect them to the co-founders and the relevant teams within these companies. That’s what we do on a daily basis,” Haimi explained. Israeli startups Economic and Commercial are interested in Mission at The Consulate General capital raising of Israel in Hong Kong is located at and strategic the 701 Admiralty Centre Tower II, investment in 18 Hardcourt Road. Its website is Hong Kong https://itrade.gov.il/hongkong

PROPERTY TECHNOLOGY - SMART CITY

Chinachem looks to a sustainable future through innovative use of proptech

It has opened up its properties as ‘Innovation Places’ where start-ups can pilot and refine their solutions.

Chinachem Group and HKSTP key persons at the launch of ‘CCG Accel — Powered by HKSTP’ in March 2021

Having celebrated its 60th Anniversary of serving the community last year, Chinachem Group is now looking firmly forward to the decades ahead – in particular how it can help put Hong Kong at the forefront of smart city development and make it a more liveable and more sustainable city for future generations.

Being independent of public or family ownership, the Group enjoys the freedom to place social and environmental values on an equal footing to profit – a concept it terms “Triple Bottom Line”, balancing the interests of people, prosperity, and the planet. Its motivation is to create shared value in the communities it serves.

In this respect, the Group sees innovation as not only beneficial to its own success, but also as a valuable opportunity to help Hong Kong strengthen its competitive edge in regional and international markets. Having already adopted a wide range of innovative technologies in its property developments, the Group is taking the opportunity to work with local start-ups and help them grow their own businesses under a “Collaborate – Adopt – Invest” approach. This means establishing partnerships with innovators to develop new technologies, testing the resulting products in real-life situations and, if they prove successful, investing in the startups to help them scale and develop the technologies further.

One notable collaboration is the “CCG Accel – Powered by HKSTP” programme launched in March in partnership with Hong Kong Science & Technology Parks Corporation. This pioneering programme is aimed at propelling tech start-ups with high potential by guiding them through the crucial transition from the pilot stage to mass adoption. Each of its three themed accelerator cohorts will provide training, mentorship, and support for up to 10 startups, with the Group helping the start-ups

shape and trial their solutions at Chinachem Group properties ahead of general adoption. The first cohort has been given an exciting opportunity to demonstrate and pilot their innovations at the iconic Central Market, a heritage building newly revitalised and reopened to the public under the Group management.

The Group has also recently launched the Inno Place@CCG programme, based on a “Living Lab” concept that breaks away from traditional innovation labs where testing is restricted to physical lab space. This programme, also supported by HKSTP, will see the Group open up its properties as “Innovation Places” where selected innovations can be trialled in a real-world environment – a win-win arrangement that allows the start-ups to pilot and refine their solutions, and the users to benefit immediately from them.

As regards its own proptech initiatives, the Group has, for several years now, made wide use of Business Information Modelling (BIM) for its new property developments, and is the first local developer to use the BIM, Novade and Oracle Aconex platforms in a single project. At its Mount Anderson construction site, it is pioneering the use of a portable battery storage system called Enertainer to replace traditional diesel generators, thereby reducing both carbon emissions and noise pollution. Enertainer has been developed by Ampd Energy, another local start-up incubated at HKSTP.

At the upcoming Tonkin Street redevelopment in partnership with the Urban Renewal Authority, the Group is adopting Modular Integrated Construction – the first deployment of this process for a private-sector residential building in Hong Kong. This will greatly speed construction time, an important issue given the city’s acute housing shortage.

Looking ahead to smart city development, the Group is working with the Smart City Consortium to develop Internet of Things (IoT) technologies for property applications in Hong Kong and design a set of guidelines for both existing and new IoT solutions. While IoT-powered solutions in smart buildings will help improve costefficiency and operational effectiveness, they could also increase cybersecurity risks if no suitable standards, guidelines and best practices are in place – hence the importance of this collaboration for Hong Kong’s future smart city development.

Simply put, Chinachem Group’s ultimate aim is to embed innovation into every element of its business processes and operations and become an industry leader in the application of proptech. In this way, it can help the city take full advantage of the opportunities opened up by proptech to foster the development of smart buildings and smart living in Hong Kong.

THE GROUP IS TAKING THE OPPORTUNITY TO WORK WITH LOCAL START-UPS AND HELP THEM GROW THEIR OWN BUSINESSES UNDER A “COLLABORATE – ADOPT – INVEST” APPROACH