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Fine-tuning my 50-year-old BS radar

Chew Sutat
Chew Sutat • 8 min read
Fine-tuning my 50-year-old BS radar
Greenwashing within the financial services industry has become a real issue / Photo: Bloomberg
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Since this column started in Issue 1000 of The Edge Singapore last September shortly after my retirement from the SGX Group, many have asked where my “dry”, “cryptic” and “punny” prose originates from.

Some readers have commented that it is rare in financial reporting ecosystem to find opinion and facts together, especially in mainstream media.

Apart from the good editors at The Edge Singapore, who often turn my “rants” into readable material, I confess my prose comes from having a British university education and a diet of reading The Economist since junior college days and The Financial Times since my undergraduate days and, of course, this publication since it started in 2002.

No, it is not that I agree entirely with the liberal Western bias that has gotten more pronounced over the years and the occasional lack of cultural sensitivity for the rest of the world.

But as another friend correctly pointed out, “No FT, no comment.” It is in this spirit that one can agree to disagree with the views expressed explicitly in commentary or implicitly in reporting that I hope readers of “Chew on this” will possess and not take offence.

I learnt this the hard way back in March 2018 when I unwittingly gave off the record remarks at a private media luncheon in Hong Kong. Although they were contextualised and reported positively in the Hong Kong press, they were somehow used by FT as a Singapore “criticism” of the Chinese city to promulgate the Western line of an example of the evil and nefarious hand of Beijing eroding the freedoms of the Special Administrative Region.

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Lesson learnt! We know that in the post-truth world of Trump where alternative facts can become gospel and many have no time to look beyond 280-character tweets, I only hope there will be space for both journalists and analysts, who carry the spirit of the old CLSA buccaneers, perhaps in open spaces like Smartkarma, who can continue to be insightful and help us laugh at ourselves ever so often.

BS detector activated

This week, I am celebrating my 50th birthday. Older, I certainly am. Wiser, maybe, but I live each day with an open mind with lots for me to learn still. Some have asked me how, being a cheerleader of markets for 25 years in the industry in various capacities, I can often, with a pinch of cynicism and buckets of scepticism, call out the fluff, especially when the momentum for a particular theme is on and purveyors of each brave new world appear to be making hay while the sun shines, indiscriminately.

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Well, I don’t have any special powers. Having paid tuition fees over time, I hope to have learned some lessons and am happy to share them with any who will care to listen. Perhaps, they will not make the same mistakes I have made before.

Last week, FT proffered a piece of satire in and around a very serious topic: ESG (environment, social and governance). For the right reasons, the decades-old more traditional SRI (sustainable and responsible investing) or the 28 years since John Elkington coined the term “triple bottom line” (people, profits and planet) became almost a millennial mantra as investment and private bankers latched on to launch ESG products and the World Economic Forum put sustainable finance right at the heart of the agenda of central bankers.

Globalisation with sustainable characteristics may indeed reduce some of the protests seen regularly at the G20. Likewise, nations, corporates and individuals through consumption choices focusing on net-zero climate outcomes now, should save future generations from droughts or floods as the main bulk of the focus has been on the “E” to the extent that “greenwashing”, which refers to disinformation disseminated by an organisation to present an environmentally responsible public image, has become a real issue.

No, I do not object to market solutions like the trading of carbon credits, which tree-hugging purists would describe as a capitalist cop-out. And yes, I am a believer in “transitioning”-based arguments unless the whole world can run on green energy today and forget about the “S” impact on communities in the developing world who are dependent on producing or using fossil fuels. Shouldn’t the First World lead by example instead of mere talk? It is mildly depressing that with the “energy crisis” which is an unintended consequence of the Ukraine war in the main and compounded by Brexit for the poor residents in the UK and the bad government in Sri Lanka, some of the “E” agenda has gone to the back burner.

Tom Braithwaite of FT coined and trademarked the “BS Index”, albeit in part perhaps a defence of his former colleague, ex-editor of FT’s Lex columns, Stuart Kirk. In his current capacity as HSBC’s head of responsible investing, Kirk “misspoke” plainly about ESG which was seen as an inappropriate joke and was duly suspended by his corporate overlords. But Braithwaite pointed out that if such an index were created, Warren Buffet of Berkshire Hathaway or Jamie Dimon’s JP Morgan would be unlikely to qualify with “too much plain-speaking and clear strategy”.

On the other end, irrespective of whether we admire Elon Musk’s creatively and ballsiness for slamming ESG as a “scam” or quarrelling over the methodology underpinning ESG indices, S&P Dow Jones Indices did remove Tesla in May for failing “S” and “G” even if their business could help “E”. Should such businesses be supported by pension funds that track indices or should Exxon and Shell be included because they have “transitioning” plans? The jury is out but as for me, I am clear. It may be the most profitable trade or sexiest investment idea around but if my BS radar is triggered by the talk or actions of the principals involved, I will keep a wide berth as it will eventually stink.

A bit of palmistry on the chicken crisis

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In late May, many Singaporeans scrambled for a final fix of chicken rice as Malaysia’s “indefinite” export ban kicked off this month. Apparently, frozen chicken does not work so well. While there was fresh chicken run in the wet markets, I couldn’t figure out if they were all to be immediately consumed or indeed taken home to be — ironically — frozen again.

Unfortunately, this whole exercise and the rationale provided by our neighbours smell like a bit of BS. A registration exercise and issue of licences may be good domestic politics to force local producers to keep a lid on prices that have crept up with input feed costs rising, much like Indonesia’s palm oil export ban that was lifted shortly after. However, the sceptics point out that apart from the obvious costs of implementing this: It is clearly a revenue-generating exercise. This crisis will pass or we will just eat more Brazilian chickens. Fortunately, our government — unlike Sri Lanka’s — does plan and has stockpiles and contingencies. No need to panic.

In Issue 1007 The Fear of Having Fomo, a swath of overvalued BS was identified. This included Cathie Wood’s Ark Innovation ETF, the Goldman Sachs Non-Profitable Technology Index, meme stocks, seriously dodgy cryptos and the excesses of US spacs.

It appears sadly to be hubris in 2022 for many caught up in that vortex. To be fair, to go long at the right part of the BS cycle can indeed create stratospheric profitable trades. However, when in the midst of all the “this time it is always different” hype, it is very hard to call the bluff and even harder to go short. But as 2022 trundles towards the halfway mark, it is refreshing to see folks like Kong Wan Sing, founder of co-working startup JustCo, talk about “profits before IPO” versus several other Southeast Asian “unicorns’’ that loaded up capital with listings or despacs in the US and are now under even more pressure to perform.

Perhaps, for a season, we will speak more plainly, companies will match the words they commit to with real action, and investors in private and public markets will be more sanguine. Then again, this hope is probably BS because as long as there a greater fool is out there, there will be a peddler with a story to sell.

Chew Sutat retired from Singapore Exchange 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

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