My favourite version of this seasonal classic, Have Yourself a Merry Little Christmas, was crooned by Ol’ Blue Eyes Frank Sinatra, whose nicely soothing baritone is much-needed warming I need for my trip to Uzbekistan this wintery year-end period, where the thermometer is seen to dip to as low as minus 19 degrees.
Hopefully, like our local weathermen, the forecasts will be wrong. But Sinatra melting the hearts of lady fans in his time and the stuff that all retirees crooned in their final office karaoke, My Way kicks off this year’s Christmas music edition after the more upbeat Mariah Carey’s All I Want for Christmas in 2021 when the column started, and last year’s hope and prayer — Do They Know it’s Christmas.
Unfortunately, Russia’s invasion of Ukraine has dropped off the front pages and also the US congressional agenda. In its place, we have had the spark in the Middle East ignited by Hamas that has caused immense suffering in Gaza as Israel retaliated with a steady rain of bombs. The ancient fault lines that have resurfaced have also led to unintended consequences, from radicalised individuals on a rampage in Paris to extenuating cultural and religious divisions in multi-religious societies.
For many, 2023 is the year where we have suffered from lighter pockets no thanks to higher food and energy prices, as conflict and politics cause supply chain disruption, worsened by friend-shoring and trade barriers going up as the effects of living in a (higher than the US Federal Reserve’s hoped for 2%) inflationary environment has been passed through to the consumer.
The disproportionate and asymmetric impact this has had between the haves and the have-nots, not just individuals but entire communities and countries, have inspired voters from the Netherlands to Argentina to change their governments.
Despite another COP jamboree just completed in Dubai this year, the climate change agenda has been pushed back by real politics in the UK and the Revenge of the Right in the US, as epitomised by the anti-trust lawsuit taken out by 22 state Republican Attorney Generals against the Net Zero Alliance.
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Of course, the practical realities of the cost and time required for transition in the Global South and the energy needs are also reasons why. Even without Donald Trump, who threatens to storm the White House again next Nov 5 — going by current polling — this year’s COP28 had the biggest presence of more than 2,500 delegates representing the global fossil fuel industry.
Rates, risks, returns
With multiple increases in interest rates by central banks wielding their blunt tools in their belated efforts to arrest inflation throughout the year, it is almost a miracle that equity portfolios are generally unscathed — except those heavily exposed to REITs.
With the MSCI World heavily dominated by the US equity market weights in mid-double digits, and our 2023 dark horse Japan outperforming with returns in the mid-20 %, it has left the economies and equity markets in the rest of the world Europe, China and Asia behind, as they nurse the impact of disruptive high US interest rates and the strong dollar.
Fortunately, our Singdollar has remained steady, our sovereign wealth and debt a safe and calm port in a sea of global storms. That has helped keep inflation generally at bay and jobs intact while EDB continues to win new net wins in foreign direct investments.
Notwithstanding that, the Straits Times Index (STI) looks to meander to finish at the low end of its trading range, as it is heavily weighted by the three local banks that are bracing for a softer outlook with rate hikes over. It would have been lower if not for the strong dividend carry.
Nonetheless, there’s a range of individual stock winners to be found if one is nimble, although our typical conservative Singaporean investors this year discovered the joys of T-Bills investing and kept lots of dry powder in cash and other government-guaranteed instruments instead. With the US Federal Reserve reaching peak rates in 2023, perhaps some trickling out of the legions of lockedup cash will find its way back into the markets next year to give it a run into Chinese New Year on Feb 10.
As gold and Bitcoin finish on a high this year, it sends a mixed signal of rates peaking, macro uncertainty and fluffy speculative froth that has revived some 2021 meme stock activity on the Nasdaq of late.
We may have been conditioned since the 2021 bubble burst to discount so much negative news in our stride that we may climb that wall of worry in 2024 as the winter for risk assets recedes along with the USD and rates. A trickle out of the US capital market, which had hovered up global institutional and private capital as China and emerging markets were de-weighted, may be the catalyst. Perhaps our troubles will be left behind.
Once again, as in olden days
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Inherited riches
As a sign of recent (tougher) times, a recent UBS Billionaires Ambitions report showed that new billionaires minted this year largely inherited their wealth instead of making money from the good old ways of investing, hard work and entrepreneurship. This is the first time in the nine years of this study that this result has been obtained, and the world’s largest wealth manager believes it will not be the last.
Over the next two to three decades, more than 1,000 ageing billionaires are expected to pass US$5.2 trillion ($6.9 trillion) to their heirs. Almost 60% highlight that their biggest challenge is preparing their heirs. With over half of the next generation looking to step away from the family business and pursue their ambitions, for the business families from Hong Kong to Jakarta, it makes for interesting reading of tea leaves, including the Yuletide champagne and cakes, to think about who will stay on in the C-Suite and where the future is heading.
There is a growing list of next-generation owners faithfully carrying on what their families have built for them. The two scions of Thailand’s Charoen Sirivadhanabhakdi are already running the drinks and property businesses with the help of plenty of professional managers; Ren Letian was seemingly saddled with a big pair of shoes to fill but has now led Yangzijiang Shipbuilding to sit on a record order book and renewed interest in its share price.
Fifth-generation Ben Keswick has already put his print on the ever more transparent Jardine Group, sending some signals of value creation for shareholders. Will the favoured son or daughter be the “friend” to investors and stick around as the businesses transfer to the next generation?
There may be others amid a generational transfer who may deepen their core businesses in property and hospitality, like OUE LJ3 , or take it in a different direction of healthcare altogether. Others may be institutionalised and handed over to professional managers, who, over time, unlock value for shareholders through M&A.
With many of these Asian family conglomerates trading within their net asset values, the next couple of years may herald the return of such stocks — old names and old friends of yore (Tuan Sing, Shangri-La Asia S07 , Sinarmas, New World, CP All) with cash and capital to be realised for those with the patience.
Paradox of generosity
Stocks aside, it is the season for family and friends, and we should not forget the season for giving. The UBS survey of billionaires showed a disturbing result: Those who inherited their wealth were less likely to give it away! In contrast, 68% of first-generation billionaires said philanthropy was an important part of their legacy, compared to only 32% of the inheriting generation.
Perhaps it is the weight of responsibility of the inheritor, who sees their role as stewardship of the founders’ wealth and not frittering it away, especially for those busy dodging the curse of the third generation.
The founder-entrepreneurs, who started from rags, better appreciate the value and potential of giving a leg up than their offspring. Or simply because it’s the demographic of the older generation thinking about legacy and the younger ones full of vigour looking to build more.
Or perhaps it is potentially a skew of Western versus Asian respondents, which may have dominated the survey. I have had the pleasure of interacting with many stewards who went beyond traditional philanthropy to developing catalytic philanthropic models that can mobilise significant sustainable investment capital to solve global ills. Some of whom feature prominently with Temasek’s Philanthropy Alliance Asia.
As we sit in a safe, comfortable Singapore, we must spare a thought and play a role where we can, as global citizens, or at least a regional one, lessen the issues from transboundary haze to instability that may come back to haunt us.
But as those with better means do that, let’s spare a thought for those in our midst in Singapore. This Christmas, if each of us does a little of what we can, it will all add up. As we part with that bit of treasure for a donation that makes financial sense (with a 250% tax credit for charities in Singapore with an Institution of a Public Character status), let’s also spare some time not just to reflect but to reach out to our neighbours, our friend, and those in need in the community. The paradox of generosity is that in giving, we receive; in grasping, we lose.
Someday soon we all will be together
If the fates allow
Until then, we’ll have to muddle through somehow
So have yourself a merry little Christmas now
Chew Sutat retired from Singapore Exchange S68 after 14 years as a member of its executive management team. During his watch, the exchange transformed from an Asian gateway into a global multi-asset exchange, and he was awarded FOW’s Lifetime Achievement Award. He serves as chairman of the Community Chest Singapore
