BEING RESPONSIBLE As regular readers will know , a while back I was asked to re-join a hedge fund I had worked for a decade ago to act as a Responsible Officer with the job of executing a “cessation of business” plan and closing the office. The incoming tenant wanted us out early so they could gut the premises for a “fresh start”. Somewhat annoyed at the “return to bare shell” rent agreement clause, I went on a mission to find new homes for everything destined for the dump as the beautifully fitted office still looked fresh. Two months have passed since we left LHT Tower, and I thought I would pay a visit to some companies that rehomed our equipment and furniture to see what they did and collect a few photos for the scrapbook. Recycling a hedge fund: what will happen to Hong Kong? LIGHTNING INTERNATIONAL CEO James Ross and his general manager Amanda Yang run a media distribution company in Central, dealing primarily with on-demand television programming. Online video-on-demand is a rapidly growing industry. Media Partners Asia estimates the segment grew 34 per cent in 2020 in Asia, handily outpacing growth in the United States and Europe, on the way to a US$55 billion regional opportunity by 2025. For Lightning, Hong Kong is geographically well-located to reach almost anywhere in the Asia-Pacific, with no language issues, a dynamic workforce and relatively few competing content distribution companies. Thankfully they have an insatiable appetite for servers, workstations and uninterruptible power supplies. The servers that were running our portfolio management systems were repurposed and are now far flung across Asia delivering video streams to vendors where localised advertisements are inserted by the computers during broadcast. This means that advertising targeted at individual viewers is now possible, so be careful what you browse for when the kids are in bed. Lightning also do some production work, and were recently involved as executive producer in a project called Noah’s Ark (noahsark.life), a conservation “reality show”. The Noah’s Ark Foundation is a US$5 billion project based in Johannesburg to preserve endangered wildlife. So far, six half-hour episodes have been produced. James is expanding his business into the world of documentaries through the acquisition of Docsville.com, a Britain -based streaming documentary service similar to Netflix with over 400 documentaries in its archives. The creative team behind it hail from the BBC, which excites Brits like James and me almost as much as Chicken Tikka Masala. Curry is British, pizza is Japanese OMNIA TECHNOLOGIES CEO Michele Bovetti of Fo Tan-based Omnia Technologies hails from Torino, and made his way into the plastic injection moulding business through confectioner Ferrero and its chocolate eggs. He set up his own firm to pursue a growing, lucrative business in high-precision, multicolour injection moulding of plastics. The powered desks he repurposed from our hedge fund provide a comfortable working environment for the long hours his team of engineers and designers work, focused on toys as well as anime-type collectibles. The business has become very time sensitive under pressure from the film industry, which has increasingly shorter production times on feature animations. What used to be a two-year lead time on toys has become 35 weeks, requiring new methods of production that may include complex ready-to-go movable joints injected at once, in different colours through a co-injection process which then excludes the need for painting. As toys can find their way into the mouths of children, he has his team looking at how designs can be improved to reduce the risk of blocking airways, opening up new fields for them, including plastic parts for medical applications. Omnia’s sales efforts have been hampered by coronavirus lockdowns, but as restrictions lift, Michele is confident that high-precision injection moulding in cosmetics, electronic, and medical devices such as automatic PCR testing tablets, will open up to them. In his words, if you only make syringes, you are likely to do very well as the medical industry is looking to consume 7-8 billion in the very near term. Hong Kong, geographically close to plastics firms and mould makers in mainland China , is exactly where Omnia needs to be. SAKA SAKA HOLDINGS It was a delight to meet Sing Tsang, CEO of Saka Saka Holdings, one of the largest games and collectible distributors in the APAC region focusing on consoles, video games and trading game cards – such as Yu-Gi-Oh! and Pokemon cards. He took the bulk of the remainder of the powered dealing desks and a good chunk of the carpet for his smart new office. Hongkonger Sing set up the company in 2004 when he was at university, and it has grown substantially, employing 80 like-minded young people at its offices in Sheung Wan and Taiwan . Saka Saka’s competitive advantage being based in Hong Kong is that it remains in close contact with regional emerging trends and themes in collectibles. He has recently seen a surge in demand for high-end collectibles and video games, benefiting from cash-rich investors, typically in stocks and cryptocurrencies, looking for something new amid the lockdown. By revenue, the markets in game consoles and trading cards in Asia Pacific (ex-Japan & Korea) have both more than doubled since 2014 to HK$14 billion and HK$900 million in 2019 respectively with encouraging projections for the next five years. In the longer term, Saka Saka could play a significant role in mergers and acquisitions, consolidating the APAC market and grow further. He also sees a lucrative future in licensing game character intellectual property for new products and games. Parents like Sing are encouraging their young children to engage more in physical activity, board games and family time and less screen time. WEWORKING STILL We vacated the LHT Tower in the last weekend of February, leaving the office stripped of anything that could be repurposed and we moved to WeWork to continue the wind-down. I gather the new tenants will move in finally this summer, with the construction taking longer than anticipated. I just wonder what they could have saved in rent if they took the space as offered by us and adapted it, rather than starting from “bare shell”. Perhaps our colour scheme just wasn’t green enough for their corporate Environmental, Social, and Corporate Governance advisory business. Neil Newman is a thematic portfolio strategist focused on pan-Asian equity markets