Greetings from a haze-smothered Singapore. I don’t recall it being this bad since the late 1990s (2015 was reportedly worse, but I was living abroad then). Unfortunately, with El Niño delaying the onset of the Indonesian monsoon, it looks like we will have to suffer it out for a while longer. And while it is, for now, more of an inconvenience in Singapore, spare a thought for the people in areas such as Kalimantan, who are now living in near-apocalyptic conditions.

In other news, I recently returned from a work trip to Korea, where the investment conferences seem to be getting bigger in recent years, and with noticeably more foreign investors in attendance. Part of that is, of course, due to investor enthusiasm for the AI trade (which might well have peaked already), but there are also other reasons to justify the growing attention from foreign investors.

Korea is perhaps the most interesting opportunity in Asian public markets today. You have a combination of reasonably attractive starting valuations for many small- and mid-cap companies, a positive tailwind from ongoing corporate governance reforms, and, in many cases, low-hanging fruit for investors to go after in terms of improving capital allocation and shareholder returns. There are, however, numerous challenges and vested interests to overcome. The intent to reform seems real, but we will see whether Korea can deliver on execution (the next AGM season will be one to watch).

Another nuance is what stage listed, family-controlled companies are at in their succession planning. Korea has one of the highest inheritance tax burdens in the world, and the way inherited shares are valued for tax purposes can create strong incentives for controlling shareholders to keep share prices depressed ahead of transferring their economic ownership to the next generation. Conversely, post-succession, heirs faced with substantial tax as well as associated debt obligations may be strongly incentivised to increase shareholder returns and pursue measures that support higher equity valuations in order to help finance these obligations.

Finally, in a world where higher inflation and interest rates are starting to weigh on discretionary consumer spending, Korea’s windfall from AI-related semiconductor demand in recent years puts it in a relatively favourable position. While the benefits have so far been concentrated in a narrow part of the economy, there is scope for a broadening of domestic consumer spending over the coming year, while the government also has greater fiscal capacity to support consumers where needed.

Anyway, below are some recent links readers might find of interest:

• East Asian Institute (NUS): Jason Bedford – an update on China’s banking system.
• Columbia Business School: A conversation with Li Lu.
• Inside the Rope with David Clark: Gary Hui – how Geometrica outperforms consensus.
• Bloomberg: Hedge funds pitch machine makers and app providers at Sohn Tokyo (individual pitches covered in more detail at Hedge Fund Alpha).
• Milken Institute: Building and investing for the next generation with Jim Coulter (TPG) and Lincoln Pan (Jardine Matheson).
• View From The Top: Marc Stad (Dragoneer) – be patient, then be bold.