Postcards from Singapore
In the first quarter of 2016, Mawer established its first international office in Singapore. Our Singapore team includes Paul Moroz (Deputy Chief Investment Officer, lead manager of the Mawer Global Small Cap Fund and co-manager of the Mawer Global Equity Fund), Peter Dmytruk (equity trader) and Ong Kiatworakun (equity analyst). I recently had the opportunity to speak with Paul about his relocation from Calgary to Singapore to get his initial impressions and thoughts. This is the first post in our Postcards from Singapore series.
CW: Hi Paul. We’re starting on time here in Calgary at 5PM Thursday, 7AM on a Friday morning for you. Why don’t we start with first impressions of Singapore. What do you think?
PM: First impressions are important but not always what they appear on the surface. Take the embarkation card you fill out on arrival in Singapore with its red ink: WARNING DEATH FOR DRUG TRAFFICKERS UNDER SINGAPORE LAW. That seems shocking at first but that level of legislation has produced a good result. It just feels so safe here. You don’t have any bad experiences in Singapore. Every taxi driver mentions how safe it is and says that’s a major reason he’s living here. I’m sure you have had some experiences where you might question how safe a place you’re in—Singapore has none of that. While things are strict and there are rules, there is the same level of structure for financial markets here—it truly is the Switzerland of Asia in that sense.
CW: So you’re there now and with a good first impression, let’s step back a bit and discover how you and the firm decided to be in Singapore.
PM: From the firm’s point of view, we had dipped our toe in the water with Peter Lampert’s (co-manager of the Mawer International Equity Fund) two-year relocation to Singapore. He learned some valuable things about differences in corporate culture and added to our process with some changes to how we question and approach management teams. The bottom line is that Peter’s experience improved our process. We want to continue to do that.
CW: What else is driving the decision to be in Singapore?
PM: We’ve set out to build a global investment firm. What does that mean? We are doing exactly what we’ve done in the past only now we’re pulling in more information from a different part of the world. You can certainly set up offices all over the world to try to get that information but broad geographic dispersion of analysts may create a massive problem. The challenge is how do you roll that up? How do you get value from that? Our approach has been; what if we could go to the other side of the world without having to fly 24 hours every time we want to talk to a management team in person, have a group of people on the ground who are integrated into the Mawer culture, continue to operate with a high degree of trust between one another and can communicate the key signals. It puts us in a better position to differentiate signals from noise.
CW: Expand on the signal and noise factor. Give us a few examples of how being in Singapore helps with that differentiation.
PM: Sure. It is really about ease of access to the economic, cultural and financial environment here. It’s easier access to management teams, easier access to conferences, communication with local trading desks and markets and getting used to the culture and subtle differences we expect to learn about. A good example of that is Christian Deckart’s blog about the Unknown Hockey Puck Phenomenon. While we’ve been able to discover those differences within our team, we expect to discover more of them as we develop our local knowledge from Singapore.
CW: There are many global investment firms. How does our approach differ?
PM: Some firms go with the multi-office model with people dispersed around the world. That model is challenging when it comes to communication and decision-making. Perhaps because of that, there are other firms who have said they’re only going to be in one spot. Our approach is a hybrid model. It’s on-the-ground research and daily contact with local trading desks, all carried out in the local time zone.
CW: How do you expect our Singapore initiative to progress?
PM: This is something that gets measured in years to be honest. I would compare it to our current company research database. We started with logging notes of meetings with management teams. At first, it didn’t feel like one interview would get us ahead much on evaluating management’s progress. But through cumulative and consistent application, we’ve built tremendous institutional knowledge and it now stands as one of our key resources. By taking the same approach, we hope to enhance our institutional knowledge—it’s in the early innings and it could change along the way but that’s the way I see it right now.
CW: We’ve covered some of the reasons for being in Singapore. What are some of the challenges?
PM: There is a personal side and a work side to that. Personally, other than dealing with the heat I have a limited personal network here. That is a challenge but an opportunity as well. I have been using LinkedIn to good effect to connect with local people in the industry – Singapore has a wide ex-pat community so it has provided additional global insight in conversations. For my family, our kids are learning about history from a Japanese and Singapore perspective. Local events are different and have led to interesting conversations we wouldn’t otherwise have at home in Canada - that is already shaping our experience and perspective.
CW: Let’s explore that perspective a little more. What about it would you highlight so far?
PM: I would say it’s a similar journey to what our kids go through: accepting everything is new, gaining confidence, and then realizing you’re positioned to take things on. This stretches you, it stretches your imagination. You realize you can do more than you originally thought. Some examples are making some contacts and getting into the investment information flow here—a trader in Vietnam, a Canadian who owns a Vietnamese restaurant chain and wants to list on the Hong Kong Exchange, and a school parent who is a bond trader for a Japanese bank. These are all new points of contact and information for us.
CW: Well Paul, it sounds like you and the team are off to a good start with Mawer’s Singapore office. I am curious about one important thing though, has your daily diet changed?
PM: I still have my daily shake and I have taken a step back from the food at the hawker centres so you’re not likely to see “two Pauls” when I’m back in Calgary! I have found an excellent salad place that I now go to every day for lunch called the Daily Cut. They serve protein salads; it’s one of the busiest places I’ve seen in a food court format. I’ve been so intrigued by the business activity, I actually looked up the owner to see if we could invest in it. They’re disrupting things and it’s part of the long-kale, short-french fry trend that seems to be happening all over the world.
CW: Thanks Paul. This has been an interesting update from Singapore, keep the postcards coming.