Investing in Southeast Asia with Chin from The Smart Investor | 7investing
7investing

Investing in Southeast Asia with Chin from The Smart Investor

May 18, 2021 – By Simon Erickson

This month, our 7investing team set our sights overseas.

China and Southeast Asia are lands of opportunity for investors. But what should we know about the region’s consumers, regulations, and general business culture. And how is that different than other parts of the world?

To help us answer these questions, we’ve brought in an investing expert with a first-hand look at this region.

Chin Hui Leong is the Head of Investing at Singapore-based The Smart Investor (and also a former teammate of both Simon and Anirban). The Smart Investor provides stock commentary and market coverage for Singapore and several other parts of the world. Chin has a direct perspective into Southeast Asian businesses and how they differ from other parts of the world.

In this exclusive interview with 7investing, Chin speaks with 7investing lead advisors Simon Erickson and Anirban Mahanti about the Southeast Asian consumer and how he/she is embracing e-commerce and adopting digital payments. The three also discuss the relationship between tech companies and the Chinese government and the mentality of Southeast Asian business leaders.

Publicly-traded companies mentioned in this interview include Afterpay (TSX: ATP), Alibaba (NYSE: BABA), Alphabet (Nasdaq: GOOGL), Amazon (Nasdaq: AMZN), Atlassian (Nasdaq: TEAM), Facebook (Nasdaq: FB), Paypal (Nasdaq: PYPL), Sea Limited (NYSE: SE), Shopify (NYSE: SHOP), and Tencent (OTC: TCEHY). 7investing’s advisors or its guests may have positions in the companies mentioned.

Timestamps

Please note: This conversation began with a short greeting between the advisors, which has been omitted from the transcript. The timestamps are adjusted by approximately 12:42.

12:42 –  Introduction: The Consumer in Southeast Asia

15:30 – Are there regional e-commerce monopolies?

16:35 – Are things returning to normal again in Southeast Asia, post-COVID?

21:28 – The relationship between tech companies and the Chinese government

24:28 – Does the Silicon Valley “growth at all costs” mentality apply in Southeast Asia?

26:55 – The adoption of digital payments in the region

29:23 – Outro: Overview of The Smart Investor

Transcript

Hello everyone and welcome to this episode of our 7investing podcast. I’m 7investing founder and CEO Simon Erickson. I am joined by my colleague, 7investing lead advisor Aniban Mahanti. Anirban, good afternoon to you down in Sydney, Australia.

Anirban Mahanti  12:57

Good evening to you.

Simon Erickson  12:58

And it is good evening for me in Texas. We are also joined by another timezone represented in the globe. We’ve been chatting a lot about international investing lately and we thought that this would be just such a great opportunity and exciting chance to catch up with a good friend of ours, Chin down in Singapore, Chin is the head of investing for the Smart Investor service (www.thesmartinvestor.com.sg) out there that’s looking at growth stocks dividend stocks a whole bunch of different types of investing. Chin thanks very much for joining us on the 7investing podcast here.

Chin Hui Leong  13:28

Hi everyone. Glad to be here.

Simon Erickson  13:30

Chin, we really want to kind of chat about how it’s different in Singapore and in Southeast Asia and China, just how the companies are a little different down there maybe how the investing is different in different parts of the world, from where we are. Can I start you with the first question of what is it like for consumers in Southeast Asia, how are they different than they are here in the United States or in Australia.

Chin Hui Leong  13:52

Well, I think the first thing you can say is there’s no such thing as an Asian consumer, even I think within Asia, if you look at Japan or Korea or in Thailand, Malaysia, Philippines, Indonesia, Singapore, India, China, these are all very different sets of consumers. So, I spent 20 years of my life in Malaysia, and the next half of my life in Singapore, right, and I can say that, even between two countries where you can literally walk across, right, I used to walk across Malaysia, it takes about 15 minutes, you can’t do that now. But even then, these two countries are very different in terms of demographics, religion, spending power, political systems and so on. So I would say that, Sea Limited (NYSE:SE) probably has, is a very good example where they were able to sort of push back and even though they started late, within Southeast Asia with Shopee, the ecommerce site, they were able to actually dominate within Southeast Asia because Lazada, which is backed by Alibaba (NYSE:BABA), is more, I would say that they’re more used to experience in managing large populations and much deliveries, but when you come to Southeast Asia, there’s a difference between China and Southeast Asia where there’s so many different cultures, languages, demographics, and I think that’s why Sea’s winning over Lazada.

Simon Erickson  15:25

Yeah, that’s perfect. Oh, go ahead Anirban

Anirban Mahanti  15:27

Yeah go ahead, you go ahead please

Simon Erickson  15:30

I just wanted to follow up with that and ask about, you know, regional monopolies you said there’s so many different cultures, different countries, different languages. E-commerce is kind of, we see it as a winner take all. I mean the United States we’ve definitely seen Amazon rise to dominance here. Do you see regional monopolies in E-commerce in Southeast Asia, emerging too, on a country by country basis.

Chin Hui Leong  15:50

I would say its more country by country basis I don’t think that any sort of E-commerce platform can claim that they are the E-commerce, dominant E-commerce player within Southeast Asia, it’s probably better defined as the dominant E-commerce player in Indonesia, Thailand, Philippines. And last one, Vietnam, which are the three or four major countries with the most population within the Southeast Asia region, most of them tend to be headquartered in Singapore, but those are the four countries with the most population. I think the dominance tends to be focused by country, rather than by region. And I think that’s one of the reasons why Sea Limited actually were dominant, it’s part of their DNA to actually localize based on the country.

Anirban Mahanti  16:35

Excellent. I was going to, you know, follow through on the consumer trend, and you already mentioned that consumers are different. What, what I’m interested in understanding is sort of you know we’re doing this by Zoom a lot of these things are happening, whereas, the world is changing. To some extent, while it’s coming back, it’s also changing at the same time in the COVID world and post COVID world. I’m just interested in understanding what you see on the ground in Singapore. In terms of what, you know, the post-COVID what it looks like. And I guess, how does that differ from say what your experience is based on say Malaysia or other parts of Asia, in China and so on, and how the consumer is going to, I guess react and participate in the broader economy.

Chin Hui Leong  17:24

So, I think in Singapore, they’ve got the COVID situation. They perform quite well in controlling the COVID situation. I hesitate to say that this is always going to be the case because No, just the nature of the virus where you just need one case and the cluster develop and it can become a problem. And, indeed, that is what is happening in Singapore, there was a period of time where they were very low communicators and recently there’s been a flare of a few clusters developing which has brought back some of the measures, which were previously implemented in limiting the amount of people gathering and so on. But I would say that the post-COVID world. I don’t want to say post-COVID, because I think it’s more like age-of-COVID, COVID is not over, COVID is here to stay. I think that there’s a lot of similarity with what is happening all over the world. The amount of online shopping for example just to provide an example has gone from 5% to 25%, at the height of the sort of lock down measures, and then back down to 10%, which is still lower compared to the hype, but it’s still like twice where it was in January of last year, so I think that online shopping is definitely picking up. People have been going online and shopping online, and using online services more. And I think there is a sense that people are becoming more used to living with all these restrictions and so on, and being comfortable with something like this Zoom call.

Anirban Mahanti  19:04

So just as a follow up to this, I guess, would you say that there is a there’s room for hybrid where, you know, the work culture changes a lot, you know, 60% at home maybe 40% at the office, or less crowding in the offices, you know, therefore enabling more technology, you know, widespread adoption of different types of technology, whether it’s in the cloud or, you know, augmented reality or virtual reality whenever they become feasible, and just create a different type of you know we’re moving towards a different world, I guess.

Chin Hui Leong  19:37

Oh, I think the situation in Singapore is quite different because the vast majority of people, when you look at supermarkets, for example, I think the retail floor space per capita for retail space in the US is more than 20, right, that Singapore is closer to six and a lot of the supermarkets in Singapore are actually located at key transportation nodes, so it’s actually part of everyone’s daily commute, right so it’s a very good. If you go to work for example go to school or just simply go out, you will definitely pass by a supermarket, and it’s very convenient to just drop by to pick up something, have your meal, have your hair cut, or do whatever. So I think there’s a difference there. Even in Malaysia where there is, unless you’re in KL (Kuala Lumpur) there’s, there’s no, no mass transit system if you’d like a supermarket, you drive there you don’t like it you drive somewhere else, but in Singapore. You, it’s part of your daily commute, right. So, you would simply use it out of convenience so I think that retail wise, definitely. People are adapting, and there’s definitely space for hybrid sort of structure between offline- online.

Chin Hui Leong  20:53

The other example I can share is recently, the CEO of DBS, which is the largest bank in Singapore and I think Southeast Asia. He actually said that they are looking to have 40% of their workforce, work from home or or spend 40% of their time working from home, but they’re only reducing their office space by 20% instead of 40%, and they believe that the office space is still important, it’s just that it needs to be changed to foster more collaborative environment.

Simon Erickson  21:28

Chin, shifting gears a little bit I want to talk a little bit about tech companies out there in Southeast Asia and also in China. You know, in the in the US, our tech companies keep getting bigger and data privacy keeps coming up over and over and again you know Facebook (NASDAQ:FB) and Google (NASDAQ:GOOG) and Amazon (NASDAQ:AMZN). We keep talking about privacy and kind of this back and forth with the government of how regulation should fit in with this. How would you define tech companies and their relationship with the government, either in China or anywhere in Southeast Asia.

Chin Hui Leong  21:57

So I think in China. We have seen the stories and so on where the Chinese government tends to be very interventionalist. They do come down pretty hard. I suppose I can share three stories. Number one is from [unknown name], who is my friend and ex colleague at The Motley Fool Singapore. He said that Chinese companies serve two masters. One is the shareholder, and the other one is the government, so that’s one point of view, which you can look at.

Chin Hui Leong  22:26

The second one, which is maybe a bit more colorful. One of my friends. He said that for every one of his stocks that the Chinese government has actually messed with every single Chinese company he has owned. Now he didn’t use the word mess he use a more colorful word for it. But since this is a family friendly podcast, I will not say any more. But I may have given away the fun, but it’s, it’s a funny way to describe it but I can’t say that he’s wrong, right.

Chin Hui Leong  22:59

On the other hand you have a lady by the name of Jenny Lee, I believe, and she’s from GGV Capital and she gave this very interesting point of view. She said that Chinese companies and GGV Capital by the way has been investing in Asia for a long time, and she said that Chinese companies actually benefit from partnering with the government, the government, for example has built structures for for 5G, for example, I believe there’s now 300 million 5G subscribers in China or more than 200 million. And, you know, I think this sort of, this sort of, connection faster internet are better for companies like, you know, Tencent (OTC:TCEHY), Alibaba and so on. But on the other hand, when it comes to regulation, the Chinese government in her in her view tends to take a wait and see approach right they let all this innovation, or what Andreessen Horowitz calls permissionless innovation, where, where you don’t have to ask permission to actually innovate. And this happens for a while. And as things develop. Then they come in and actually put in regulations. Now, of course, the timing, and how they actually implement all these measures, tends to be a bit sometimes viewed as heavy handed the timing can sometimes look suspect. But generally, I think there’s some, I think there’s some credence to, that point of view.

Simon Erickson  24:29

Excellent, related to just staying with tech companies, one of the things that, you know, if you take a tech company like you know you’re familiar with, say, Amazon right, Amazon has not paid a single cent in dividends and just put on the show, you were talking about how dividends are so important in Australia and and Singapore, right, you know, people actually look for dividends. What’s the, do you see the mindset in the tech companies that are coming up say you know in Singapore and in other, you know, regions of Asia, where they have this sort of mindset that the American companies have typically demonstrated where, you know they’re going to pull, we’re going to take every cent that we are making from the business and bring it back into the business to try to grow the business, and you know, the free cash flow and the profits are gonna come, you know, decades later, and that’s okay and the market has been okay with it, right. So, is that changing or is do you think like you know the American companies are going to become more like the Asian companies in that sense in terms of how they have been investing profits or cash flows, let’s talk.

Chin Hui Leong  25:35

I think for the traditional companies, not the tech companies. So when I say traditional businesses, the banks the telcos and so on, share buybacks are quite rare. I think there is some share issuance but it’s all very tepid quite quite tame in comparison to tech companies. I can’t speak for for Asian tech companies because I think that you have examples such as [company name inaudible], which is, I assume not still not profitable, and then you have examples such as Alibaba and Tencent which have plenty of free cash flow. So, I think it really depends on the company and what they want to achieve. I guess that it’s in, in the US or in the US. I think in the early days, the likes of Shopify, the likes of Atlassian for example, in Australia, they actually benefit that from this shift of, you know offline to online, where the early days you could get advertising for really cheap and low prices at Google and Facebook but I think in the current environment where, you know where Google and Facebook has already matured, you may have to spend more if you want to reach more people.

Simon Erickson  26:55

Yeah, that makes a lot of sense. Speaking of Tencent and Alibaba, you know, huge companies in China, you know, huge ecosystems huge for digital payments and I know everybody’s, or a lot of people are in China are purchasing digitally, you got what is it WeChat Pay and Alipay. Is that true in the rest of Southeast Asia too, are mobile payments and these digital ecosystems that are giant are those picking up out there also.

Chin Hui Leong  27:21

I will say is definitely picking up but it’s nowhere near the sort of widespread usage within China and so on. I think that I’m told that, and I haven’t been to China for quite some time but I am told that in China, it’s quite rare that you use cash now, right. So, but in Singapore I think cash is still very common, in in Japan is still very common. And, but it’s changing right there are more options coming up all the similar trends which you see, Buy-Now-Pay-Later, Afterpay (ASX:APT) in Australia. There’s virtual banking licenses being awarded in Singapore for all of them. And I think Malaysia is looking to do the same so I think it’s catching up is just not quite there yet.

Simon Erickson  28:09

How about Australia Anirban, is it similar down there. Afterpay, is that just a huge company down there in Australia?

Simon Erickson  28:15

Afterpay is a big deal here like I mean it’s probably now one of the largest companies on the Australian market. Buy-Now-Pay-Later, I mean, has taken off by a storm right so it’s basically like a firm extent to this, you know, there’s Klarna, there’s Zip Pay. Yeah, it’s the model is very, I find the model very interesting in that, you know, it’s basically just a management of cash flow to buy the jeans is basically you take a mortgage to buy jeans, or whatever else you want to buy which is a very interesting concept. In many ways you can think of as the micro credit right, you’re getting little micro credit, and yeah so it’s hard here to understand what the endgame is or how far this thing can travel. Right. You know, Afterpay is making inroads in the US and has made inroads in, in the UK, but, you know, so can PayPal (NASDAQ:PYPL) or anybody else offer PayPal is offering the same sort of ideas right now it’s you know Buy-Now-Pay-Later. So, but interesting space I think in terms of how this industry is shaping up.

Simon Erickson  29:23

Yeah perfect and Chin, just one more question for you know, you, myself in a nearby we were all colleagues a few years ago, you’ve now gone on in Singapore to launch the Smart Investor can you tell us a little bit about, about your organization.

Chin Hui Leong  29:36

Sure. So I think the simple way to understand the Smart Investor is that we was, the Motley Fool, decided to exit Singapore, and as they exited, we just started to realize that there are a lot of members who were sort of left at sea, and they were asking us quite strongly where we’re going, what we’re doing and so on. And it was a great surprise to us because usually when a service shuts down there’s a lot of anger, understandably, and so on but what we got instead in Singapore was almost an outpouring of love, right. And I think that we are really lucky that people saw us for who we are and not the banner which we are standing behind. And that’s why we started the Smart Investor we wanted to help. Singaporeans, invest, we saw that they appreciated what we do. And we thought that we could add value to their lives and their financial lives.

Simon Erickson  30:33

Perfect, well it’s been really nice to reconnect with you again, Chin thanks again for joining us here on the 7investing podcast.

Anirban Mahanti  30:40

Thank you Chin.

Chin Hui Leong  30:40

Thank you for having me. Yeah, thanks, everyone.

Simon Erickson  30:43

And on behalf of my colleague Anirban Mahanti, I’m Simon Erickson. Thanks for tuning in to this episode of our 7investing podcast. We are here to empower you to invest in your future. We are 7investing.

Simon Erickson  12:42

Hello everyone and welcome to this episode of our 7investing podcast. I’m 7investing founder and CEO Simon Erickson. I am joined by my colleague, 7investing lead advisor Aniban Mahanti. Anirban, good afternoon to you down in Sydney, Australia.

Anirban Mahanti  12:57

Good evening to you.

Simon Erickson  12:58

And it is good evening for me in Texas. We are also joined by another timezone represented in the globe. We’ve been chatting a lot about international investing lately and we thought that this would be just such a great opportunity and exciting chance to catch up with a good friend of ours, Chin down in Singapore, Chin is the head of investing for the Smart Investor service (www.thesmartinvestor.com.sg) out there that’s looking at growth stocks dividend stocks a whole bunch of different types of investing. Chin thanks very much for joining us on the 7investing podcast here.

Chin Hui Leong  13:28

Hi everyone. Glad to be here.

Simon Erickson  13:30

Chin, we really want to kind of chat about how it’s different in Singapore and in Southeast Asia and China, just how the companies are a little different down there maybe how the investing is different in different parts of the world, from where we are. Can I start you with the first question of what is it like for consumers in Southeast Asia, how are they different than they are here in the United States or in Australia.

Chin Hui Leong  13:52

Well, I think the first thing you can say is there’s no such thing as an Asian consumer, even I think within Asia, if you look at Japan or Korea or in Thailand, Malaysia, Philippines, Indonesia, Singapore, India, China, these are all very different sets of consumers. So, I spent 20 years of my life in Malaysia, and the next half of my life in Singapore, right, and I can say that, even between two countries where you can literally walk across, right, I used to walk across Malaysia, it takes about 15 minutes, you can’t do that now. But even then, these two countries are very different in terms of demographics, religion, spending power, political systems and so on. So I would say that, Sea Limited (NYSE:SE) probably has, is a very good example where they were able to sort of push back and even though they started late, within Southeast Asia with Shopee, the ecommerce site, they were able to actually dominate within Southeast Asia because Lazada, which is backed by Alibaba (NYSE:BABA), is more, I would say that they’re more used to experience in managing large populations and much deliveries, but when you come to Southeast Asia, there’s a difference between China and Southeast Asia where there’s so many different cultures, languages, demographics, and I think that’s why Sea’s winning over Lazada.

Simon Erickson  15:25

Yeah, that’s perfect. Oh, go ahead Anirban

Anirban Mahanti  15:27

Yeah go ahead, you go ahead please

Simon Erickson  15:30

I just wanted to follow up with that and ask about, you know, regional monopolies you said there’s so many different cultures, different countries, different languages. E-commerce is kind of, we see it as a winner take all. I mean the United States we’ve definitely seen Amazon rise to dominance here. Do you see regional monopolies in E-commerce in Southeast Asia, emerging too, on a country by country basis.

Chin Hui Leong  15:50

I would say its more country by country basis I don’t think that any sort of E-commerce platform can claim that they are the E-commerce, dominant E-commerce player within Southeast Asia, it’s probably better defined as the dominant E-commerce player in Indonesia, Thailand, Philippines. And last one, Vietnam, which are the three or four major countries with the most population within the Southeast Asia region, most of them tend to be headquartered in Singapore, but those are the four countries with the most population. I think the dominance tends to be focused by country, rather than by region. And I think that’s one of the reasons why Sea Limited actually were dominant, it’s part of their DNA to actually localize based on the country.

Anirban Mahanti  16:35

Excellent. I was going to, you know, follow through on the consumer trend, and you already mentioned that consumers are different. What, what I’m interested in understanding is sort of you know we’re doing this by Zoom a lot of these things are happening, whereas, the world is changing. To some extent, while it’s coming back, it’s also changing at the same time in the COVID world and post COVID world. I’m just interested in understanding what you see on the ground in Singapore. In terms of what, you know, the post-COVID what it looks like. And I guess, how does that differ from say what your experience is based on say Malaysia or other parts of Asia, in China and so on, and how the consumer is going to, I guess react and participate in the broader economy.

Chin Hui Leong  17:24

So, I think in Singapore, they’ve got the COVID situation. They perform quite well in controlling the COVID situation. I hesitate to say that this is always going to be the case because No, just the nature of the virus where you just need one case and the cluster develop and it can become a problem. And, indeed, that is what is happening in Singapore, there was a period of time where they were very low communicators and recently there’s been a flare of a few clusters developing which has brought back some of the measures, which were previously implemented in limiting the amount of people gathering and so on. But I would say that the post-COVID world. I don’t want to say post-COVID, because I think it’s more like age-of-COVID, COVID is not over, COVID is here to stay. I think that there’s a lot of similarity with what is happening all over the world. The amount of online shopping for example just to provide an example has gone from 5% to 25%, at the height of the sort of lock down measures, and then back down to 10%, which is still lower compared to the hype, but it’s still like twice where it was in January of last year, so I think that online shopping is definitely picking up. People have been going online and shopping online, and using online services more. And I think there is a sense that people are becoming more used to living with all these restrictions and so on, and being comfortable with something like this Zoom call.

Anirban Mahanti  19:04

So just as a follow up to this, I guess, would you say that there is a there’s room for hybrid where, you know, the work culture changes a lot, you know, 60% at home maybe 40% at the office, or less crowding in the offices, you know, therefore enabling more technology, you know, widespread adoption of different types of technology, whether it’s in the cloud or, you know, augmented reality or virtual reality whenever they become feasible, and just create a different type of you know we’re moving towards a different world, I guess.

Chin Hui Leong  19:37

Oh, I think the situation in Singapore is quite different because the vast majority of people, when you look at supermarkets, for example, I think the retail floor space per capita for retail space in the US is more than 20, right, that Singapore is closer to six and a lot of the supermarkets in Singapore are actually located at key transportation nodes, so it’s actually part of everyone’s daily commute, right so it’s a very good. If you go to work for example go to school or just simply go out, you will definitely pass by a supermarket, and it’s very convenient to just drop by to pick up something, have your meal, have your hair cut, or do whatever. So I think there’s a difference there. Even in Malaysia where there is, unless you’re in KL (Kuala Lumpur) there’s, there’s no, no mass transit system if you’d like a supermarket, you drive there you don’t like it you drive somewhere else, but in Singapore. You, it’s part of your daily commute, right. So, you would simply use it out of convenience so I think that retail wise, definitely. People are adapting, and there’s definitely space for hybrid sort of structure between offline- online.

Chin Hui Leong  20:53

The other example I can share is recently, the CEO of DBS, which is the largest bank in Singapore and I think Southeast Asia. He actually said that they are looking to have 40% of their workforce, work from home or or spend 40% of their time working from home, but they’re only reducing their office space by 20% instead of 40%, and they believe that the office space is still important, it’s just that it needs to be changed to foster more collaborative environment.

Simon Erickson  21:28

Chin, shifting gears a little bit I want to talk a little bit about tech companies out there in Southeast Asia and also in China. You know, in the in the US, our tech companies keep getting bigger and data privacy keeps coming up over and over and again you know Facebook (NASDAQ:FB) and Google (NASDAQ:GOOG) and Amazon (NASDAQ:AMZN). We keep talking about privacy and kind of this back and forth with the government of how regulation should fit in with this. How would you define tech companies and their relationship with the government, either in China or anywhere in Southeast Asia.

Chin Hui Leong  21:57

So I think in China. We have seen the stories and so on where the Chinese government tends to be very interventionalist. They do come down pretty hard. I suppose I can share three stories. Number one is from [unknown name], who is my friend and ex colleague at The Motley Fool Singapore. He said that Chinese companies serve two masters. One is the shareholder, and the other one is the government, so that’s one point of view, which you can look at.

Chin Hui Leong  22:26

The second one, which is maybe a bit more colorful. One of my friends. He said that for every one of his stocks that the Chinese government has actually messed with every single Chinese company he has owned. Now he didn’t use the word mess he use a more colorful word for it. But since this is a family friendly podcast, I will not say any more. But I may have given away the fun, but it’s, it’s a funny way to describe it but I can’t say that he’s wrong, right.

Chin Hui Leong  22:59

On the other hand you have a lady by the name of Jenny Lee, I believe, and she’s from GGV Capital and she gave this very interesting point of view. She said that Chinese companies and GGV Capital by the way has been investing in Asia for a long time, and she said that Chinese companies actually benefit from partnering with the government, the government, for example has built structures for for 5G, for example, I believe there’s now 300 million 5G subscribers in China or more than 200 million. And, you know, I think this sort of, this sort of, connection faster internet are better for companies like, you know, Tencent (OTC:TCEHY), Alibaba and so on. But on the other hand, when it comes to regulation, the Chinese government in her in her view tends to take a wait and see approach right they let all this innovation, or what Andreessen Horowitz calls permissionless innovation, where, where you don’t have to ask permission to actually innovate. And this happens for a while. And as things develop. Then they come in and actually put in regulations. Now, of course, the timing, and how they actually implement all these measures, tends to be a bit sometimes viewed as heavy handed the timing can sometimes look suspect. But generally, I think there’s some, I think there’s some credence to, that point of view.

Simon Erickson  24:29

Excellent, related to just staying with tech companies, one of the things that, you know, if you take a tech company like you know you’re familiar with, say, Amazon right, Amazon has not paid a single cent in dividends and just put on the show, you were talking about how dividends are so important in Australia and and Singapore, right, you know, people actually look for dividends. What’s the, do you see the mindset in the tech companies that are coming up say you know in Singapore and in other, you know, regions of Asia, where they have this sort of mindset that the American companies have typically demonstrated where, you know they’re going to pull, we’re going to take every cent that we are making from the business and bring it back into the business to try to grow the business, and you know, the free cash flow and the profits are gonna come, you know, decades later, and that’s okay and the market has been okay with it, right. So, is that changing or is do you think like you know the American companies are going to become more like the Asian companies in that sense in terms of how they have been investing profits or cash flows, let’s talk.

Chin Hui Leong  25:35

I think for the traditional companies, not the tech companies. So when I say traditional businesses, the banks the telcos and so on, share buybacks are quite rare. I think there is some share issuance but it’s all very tepid quite quite tame in comparison to tech companies. I can’t speak for for Asian tech companies because I think that you have examples such as [company name inaudible], which is, I assume not still not profitable, and then you have examples such as Alibaba and Tencent which have plenty of free cash flow. So, I think it really depends on the company and what they want to achieve. I guess that it’s in, in the US or in the US. I think in the early days, the likes of Shopify, the likes of Atlassian for example, in Australia, they actually benefit that from this shift of, you know offline to online, where the early days you could get advertising for really cheap and low prices at Google and Facebook but I think in the current environment where, you know where Google and Facebook has already matured, you may have to spend more if you want to reach more people.

Simon Erickson  26:55

Yeah, that makes a lot of sense. Speaking of Tencent and Alibaba, you know, huge companies in China, you know, huge ecosystems huge for digital payments and I know everybody’s, or a lot of people are in China are purchasing digitally, you got what is it WeChat Pay and Alipay. Is that true in the rest of Southeast Asia too, are mobile payments and these digital ecosystems that are giant are those picking up out there also.

Chin Hui Leong  27:21

I will say is definitely picking up but it’s nowhere near the sort of widespread usage within China and so on. I think that I’m told that, and I haven’t been to China for quite some time but I am told that in China, it’s quite rare that you use cash now, right. So, but in Singapore I think cash is still very common, in in Japan is still very common. And, but it’s changing right there are more options coming up all the similar trends which you see, Buy-Now-Pay-Later, Afterpay (ASX:APT) in Australia. There’s virtual banking licenses being awarded in Singapore for all of them. And I think Malaysia is looking to do the same so I think it’s catching up is just not quite there yet.

Simon Erickson  28:09

How about Australia Anirban, is it similar down there. Afterpay, is that just a huge company down there in Australia?

Simon Erickson  28:15

Afterpay is a big deal here like I mean it’s probably now one of the largest companies on the Australian market. Buy-Now-Pay-Later, I mean, has taken off by a storm right so it’s basically like a firm extent to this, you know, there’s Klarna, there’s Zip Pay. Yeah, it’s the model is very, I find the model very interesting in that, you know, it’s basically just a management of cash flow to buy the jeans is basically you take a mortgage to buy jeans, or whatever else you want to buy which is a very interesting concept. In many ways you can think of as the micro credit right, you’re getting little micro credit, and yeah so it’s hard here to understand what the endgame is or how far this thing can travel. Right. You know, Afterpay is making inroads in the US and has made inroads in, in the UK, but, you know, so can This conversation began with a short greeting between the advisors, which has been omitted from the transcript. The timestamps are adjusted by approximately 12:42.(NASDAQ:PYPL) or anybody else offer PayPal is offering the same sort of ideas right now it’s you know Buy-Now-Pay-Later. So, but interesting space I think in terms of how this industry is shaping up.

Simon Erickson  29:23

Yeah perfect and Chin, just one more question for you know, you, myself in a nearby we were all colleagues a few years ago, you’ve now gone on in Singapore to launch the Smart Investor can you tell us a little bit about, about your organization.

Chin Hui Leong  29:36

Sure. So I think the simple way to understand the Smart Investor is that we was, the Motley Fool, decided to exit Singapore, and as they exited, we just started to realize that there are a lot of members who were sort of left at sea, and they were asking us quite strongly where we’re going, what we’re doing and so on. And it was a great surprise to us because usually when a service shuts down there’s a lot of anger, understandably, and so on but what we got instead in Singapore was almost an outpouring of love, right. And I think that we are really lucky that people saw us for who we are and not the banner which we are standing behind. And that’s why we started the Smart Investor we wanted to help. Singaporeans, invest, we saw that they appreciated what we do. And we thought that we could add value to their lives and their financial lives.

Simon Erickson  30:33

Perfect, well it’s been really nice to reconnect with you again, Chin thanks again for joining us here on the 7investing podcast.

Anirban Mahanti  30:40

Thank you Chin.

Chin Hui Leong  30:40

Thank you for having me. Yeah, thanks, everyone.

Simon Erickson  30:43

And on behalf of my colleague Anirban Mahanti, I’m Simon Erickson. Thanks for tuning in to this episode of our 7investing podcast. We are here to empower you to invest in your future. We are 7investing.

Recent Episodes

Digging Into Enterprise Software With Frank Wang, Engineering...

7investing Lead Advisor Anirban Mahanti sat down with Frank Wang, Engineering Director at Salesforce. The two discuss where Saas is in the adoption curve, what areas are at...

Investing in Tech’s Biggest Trends with GigaOm CEO Ben Book

What does the "digital transformation" really mean? GigaOm CEO Ben Book and 7investing CEO Simon Erickson take a closer look inside today's biggest technology trends.

Can Technology Fix American Health Care With 7investing Advisor Dana...

7investing advisor Dana Abramovitz chats with 7investing CEO Simon Erickson about the bigger-picture changes taking place in American health care. She offers insight from her...