Southeast Asian Startups: The Funding Has Not Dried Up; Ideas Have

Southeast Asia’s startup ecosystem is not suffering a capital crisis — it is suffering an imagination crisis.  The Business Times reported on 19^th October 2026 that debt funding for Southeast Asian startups has grown as equity options shrink.  Debt funding in the region rose from US$487.8 million in 2023 to US$3.1 billion in 2024.  It nearly doubled again to US$6.1 billion in 2025.  Some called this a maturing market.  Others claim it is a global trend.  Both positions are somewhat correct.  Neither says what it means.

Debt is what companies reach for when the equity case has collapsed, but the lights need to stay on.  Calling that maturity is the financial equivalent of calling bankruptcy proceedings a liquidity management exercise.  The shift from equity to debt across Southeast Asian startups is not a sign of a sophisticated ecosystem finding its footing.  It is a sign that institutional equity investors have looked at what is on offer and decided the risk-return ratio does not work.  They are right.  The question worth asking is why.

The Capital Exists; the Conviction Does Not

Singapore closed 472 venture deals worth US$4.6 billion in 2025 — a 34 per cent drop in value from the year before, according to EnterpriseSG’s Singapore Venture Funding Landscape report.  That figure was the third consecutive year of decline from the pandemic-era peak of US$10.6 billion across 1,058 deals in 2022.  Seed funding collapsed from US$810.9 million in 2023 to US$443.2 million in 2025.  Singapore led the regional contraction.  It recorded one final fund close in the venture space in 2025.  One.  Against ten in the prior year and 21 in 2023.

The money did not go anywhere.  GIC manages US$936 billion.  Temasek Holdings reports a net portfolio value of S$518 billion as of March 2026.  Singapore-domiciled family offices, per MAS estimates, hold hundreds of billions more in deployable capital.  70 per cent of LP commitments in 2024 and 2025 went to existing GP relationships, up from 60 per cent five years earlier, per Preqin data.  Of every US$100 of institutional PE capital available, US$10 to US$15 was accessible to a manager without an established LP base.  The capital has retreated to familiar names funding familiar ideas.  This is not selectivity.  It is institutional risk aversion with a new vocabulary.

Late-stage deals accounted for 33.3 per cent of total deal volume in Singapore in 2025, up from 26.9 per cent in 2024.  The GPs are funding companies that are already large rather than the ones that could become large.  Locking capital into illiquid assets at compressed multiples in a market that produced four PE-backed IPOs in an entire region in a calendar year is not conservatism.  It is a strategy with no exit.

The Embarrassing Comparison

The United States deployed US$193.2 billion into venture-backed startups in 2025, according to CB Insights data.  Asia, including China, India, and Southeast Asia combined, raised US$56.4 billion.  Southeast Asia alone raised US$2.2 billion in 2024 — a figure that would not fund a single mid-tier US tech company’s Series C.  The gap is not merely financial.  It is structural.

Silicon Valley’s top-tier firms operate under a specific thesis: back founders who are trying to change the world, not fix a broken supply chain in one of ten markets with different regulatory regimes.  Andreessen Horowitz manages over US$90 billion in assets under management.  Sequoia raised US$950 million across two vehicles in October 2025 alone.  Lightspeed closed over US$9 billion across six vehicles in December 2025.  These are not funds.  They are sovereign-scale capital deployment machines attached to networks of founders, engineers, and operators that Southeast Asia cannot replicate.

The exit infrastructure explains the rest.  US startups have access to NASDAQ and the NYSE — the deepest technology equity markets in human history, with a combined daily trading volume that dwarfs Southeast Asia’s entire annual venture funding.  Google, Microsoft, Meta, Apple, and Amazon collectively acquire dozens of startups annually, providing the M&A liquidity that sustains the entire VC ecosystem.  Southeast Asia has the Indonesia Stock Exchange, the SGX, and the Vietnam HOSE.  The region logged 31 public listings and 81 acquisitions across the first seven months of 2026.  The entire region.  In seven months.

There is also the talent drain.  Since 2025, venture firm Antler alone has helped more than 30 Asian founding teams relocate to the United States.  The region’s most ambitious founders — the ones who want to build globally rather than compete for market share in a single Southeast Asian country — have calculated that they cannot raise serious capital from Singapore if they are still in Singapore.  They are correct.  They are leaving.

The B2B software category tells the story most starkly.  One prominent investor noted that there is “very little B2B software in Southeast Asia — almost none of it — and if I look at our US portfolio, all of our big winners are in that category.”  The absence is not accidental.  Building enterprise software requires a customer base willing to pay for it, a sales motion sophisticated enough to close enterprise deals, and an exit market with strategic acquirers.  Southeast Asia has none of these at scale.  Silicon Valley has all three.

The Incumbency Problem

The second failure is not about capital.  It is about competitive reality.  Most of what is being funded in Southeast Asia is not a whitespace opportunity.  It is an attempt to occupy a niche that larger, better-capitalised entities will take over the moment the thesis is proven.  Grab Holdings holds over 70 per cent of Southeast Asia’s ride-hailing market.  In Malaysia and the Philippines, it exceeds 90 per cent.  Grab posted full-year 2025 revenue of US$3.37 billion and its first net profit of US$200 million — the first in its fourteen-year history — after burning through over US$12 billion in cumulative capital.  Any startup that enters ride-hailing, food delivery, or digital financial services in Southeast Asia today is not competing with other startups.  It is competing with Grab, GoTo Financial, SeaMoney, ShopeePay, and the digital banking arms of the three largest state banks in every market it operates.

The lesson from Vietnam is instructive.  Gojek — having burned billions — exited Vietnam in 2024 after losing market share to two opponents it should have been able to outlast.  Xanh SM, a subsidiary of Vietnamese conglomerate Vingroup, entered ride-hailing with artificially low prices and government-connected advantages that no startup could replicate regardless of its funding level.  It captured 32 per cent of the Vietnamese market.  Be Group, a local operator with a fraction of Gojek’s capitalisation, captured 24 per cent.  Gojek had 22 per cent and was falling before it gave up.  Capital does not beat structural advantage.  It never did.

This is what Singapore’s VCs and their LPs persistently fail to account for.  The large domestic conglomerates, the government-linked entities, and the incoming wave of well-capitalised foreign operators will enter any market the moment a Southeast Asian startup proves it is worth entering.  The startup will have spent three to five years and US$50 to US$200 million demonstrating the thesis.  The incumbent will arrive with ten times the resources and capture the market in eighteen months.

Exhibit A: Temasek Holdings

No institution better illustrates the failure of imagination and due diligence in Southeast Asian venture investing than Temasek Holdings — Singapore’s own sovereign wealth fund, the institution that is supposed to represent the gold standard of institutional investing in the region.  Temasek Holdings’ early-stage investment plummeted from US$4.4 billion in 2021 to US$509 million in 2024, and a mere US$70 million in the first months of 2025, according to Tracxn data.  First-round investments in unlisted companies fell from 82 in 2021 to 11 in 2024.  The world’s fourteenth-largest sovereign wealth fund has effectively exited the early-stage venture game — not because of strategic recalibration, but because of a sequence of high-profile failures that exposed the depth of its due diligence problem.

Case One: FTX — US$275 Million into a Lie

In October 2021, Temasek invested US$210 million for 1 per cent of FTX International.  In January 2022, it invested a further US$65 million for 1.5 per cent of FTX US.  Total exposure: US$275 million.  FTX filed for bankruptcy in November 2022.  Its founder, Samuel Benjamin Bankman-Fried, is currently serving a 25-year prison sentence for fraud.  Temasek Holdings wrote down the entire US$275 million.  Sequoia Capital and SoftBank did the same.  Temasek Holdings’ defence was that its “extensive due diligence” had relied on audited financial statements showing FTX to be profitable, and that the fraud was “intentionally hidden from investors.”  Both statements are true.  Neither is exculpatory.  Sophisticated institutional investors are supposed to identify what audited statements cannot capture — the character of management, the control environment, the governance structure, the alignment of incentives.  Holdings held no board seat.  It conducted due diligence over eight months and concluded that a company run by a 29-year-old who slept on bean bags in the Bahamas and played video games during investor calls was a sound institutional investment.

Then-Finance Minister Lawrence Wong Shyun Tsai stated publicly that the FTX loss caused reputational damage.  Temasek Holdings cut the compensation of the investment team and senior management responsible.  Then it moved on.  The lesson apparently learned: reduce early-stage exposure.  The lesson that should have been learned: do not confuse narrative charisma for investment substance.

Case Two: Zilingo — S$297.5 Million into a Management Catastrophe

Zilingo was a Singapore-based fashion e-commerce platform founded in 2015 by Ankiti Bose and Dhruv Kapoor.  It raised US$308 million in total from investors including Temasek Holdings, Sequoia Capital India, Burda Principal Investments, and EDBI.  Temasek Holdings was among its top five shareholders, holding 8.3 per cent of its shares as of June 2022.  Zilingo had not filed a financial statement since 2019.  Investors, including Temasek Holdings and EDBI, continued funding the company through 2020 despite this elementary governance failure.  In March 2022, whistleblowers approached the Zilingo board reporting unexplained payments approved by Bose to companies with no operational connection to Zilingo.  Bose was suspended on 31^st March 2022 and fired on 20^th May 2022 after a forensic investigation.  The company filed for liquidation in January 2023.

The red flags were visible long before the collapse.  Other potential investors had declined to back Zilingo after finding evidence of merchant fraud in Indonesia — which accounted for more than half of Zilingo’s GMV in FY2021.  Temasek Holdings and EDBI continued ploughing money in.  The company’s governance was sufficiently disordered that it had not filed a statutory account in three years.  Temasek Holdings, which is bound by the same Companies Act obligations as every other Singapore-incorporated entity, apparently did not treat this as a material concern.

To be precise: as of October 2026, no court has convicted Ankiti Bose or her co-founders of any offence connected with Zilingo, and the full facts remain disputed.  What is not disputed is that Temasek Holdings funded a company that had not filed accounts since 2019, which then collapsed into liquidation with total investor losses exceeding US$308 million.

Case Three: eFishery — US$300 Million into Fictitious Fish

eFishery was an Indonesian aquaculture technology company that deployed AI-powered feeders for fish and shrimp farmers.  It was valued at over US$1 billion — a unicorn — before the fraud allegations emerged.  Temasek Holdings invested alongside SoftBank and Sequoia Capital India across multiple rounds from 2021 onward.  FTI Consulting’s investigation found that eFishery had falsified its accounting since at least 2021.  For the first nine months of 2024, the revenue of three eFishery subsidiaries was inflated fivefold.  US$596 million of revenue was fabricated.  The company reported US$752 million in first-nine-months 2024 revenues.  It actually earned US$157 million.  FTI estimated that as of February 2025, eFishery had approximately US$50 million in cash and was not commercially viable in its current form.  Investors, including Temasek Holdings, were told they could expect to recover less than ten cents for every dollar invested.

The due diligence process was instructive.  The firms conducting verification used eFishery’s own database of farms to identify which farms they planned to visit — allowing management to prepare the sites in advance.  Only a handful of random spot inspections were conducted.  Mak Yuen Teen, Professor of Accounting at the National University of Singapore, noted on LinkedIn with commendable understatement: “Temasek didn’t think this may be fishy?”

The wider list of Temasek Holdings’ failed investments includes gene therapy company Locanabio, which ceased operations; Pear Therapeutics, a digital health company that filed for bankruptcy in the United States; and Tessa Therapeutics, a Singapore-based biotech that ceased development.

The Pattern

FTX.  Zilingo.  eFishery.  Locanabio.  Pear Therapeutics.  Tessa Therapeutics.

These are not isolated bad bets in a diversified portfolio.  They are a pattern.  The pattern is: an institution of enormous resources and theoretical sophistication, deploying capital at the peak of a valuation cycle, into companies with inadequate governance, insufficient financial controls, and in some cases active fraud, based primarily on narrative momentum and the endorsement of other prominent co-investors rather than independent analytical rigour.

Temasek Holdings’ response to this pattern has been to cut early-stage exposure from US$4.4 billion to US$70 million and cap early-stage investments at 6 per cent of the portfolio.  This is the institutional equivalent of burning your hand on a stove and deciding never to cook again.  The problem was never early-stage investing.  The problem was the quality of the due diligence and the susceptibility of the investment team to the narrative that every prominent Southeast Asian founder with a compelling story and co-investors with recognisable names was worthy of sovereign wealth fund capital.

Silicon Valley Does It Differently

The contrast with the American venture ecosystem is not primarily about capital quantum, though the quantum matters.  It is about institutional architecture.  Andreessen Horowitz built a portfolio support infrastructure — legal, marketing, recruiting, technical — that functions as a management consultancy for its portfolio companies.  Sequoia’s Scout programme identifies pre-seed opportunities through a network of over 100 scouts embedded across the technology industry.  Founders Fund’s due diligence on Anduril — into which it wrote US$1 billion in June 2025 — rested on years of relationship, deep technical assessment, and a thesis about the defence technology market that was developed over a decade before the cheque was written.

These firms do not fund companies because they are already famous, because the co-investors are reputable, or because the founder gives a compelling presentation.  They fund companies because the underlying thesis is independently verified, the market is sized rigorously, the management has demonstrated relevant capability, and the exit pathway is credible.

B2B software — the category that has produced most of Silicon Valley’s large exits — requires this discipline.  The customer is a business, not a consumer.  The sale requires a proof of concept, a pilot, a procurement process, and a multi-year contract.  The discipline of selling to businesses that scrutinise every line item is the best filter for investment quality that the venture industry has ever produced.  Southeast Asia does not build B2B software because the institutional infrastructure to sell, buy, and exit it does not exist at scale.  Until it does, the region will continue building consumer products and marketplace models that consolidate into the hands of incumbents the moment the market is proven.

What Should Change

The Business Times article frames the debt-equity shift as a consequence of macroeconomic conditions and a maturing market.  It is not.  It is a consequence of years of capital deployed into the wrong companies and industries by institutions that lacked the imagination to identify what was genuinely new and the analytical rigour to avoid what was merely fashionable.  The LP community in Singapore needs to fund managers who have built real sector expertise — not generalist funds with pan-regional mandates and fintech in the portfolio because fintech is what everyone else has in their portfolio.  The GP community needs to stop treating co-investor reputation as a substitute for independent due diligence — FTX had BlackRock and Sequoia on the cap table, which apparently satisfied the investment committee at Temasek that the investment was sound.  It was not.

The founders need to stop building for the exit and start building for the customer.  The companies that have generated real returns in Southeast Asia — Grab, after fourteen years and US$12 billion; Sea, after nearly a decade of losses and a brutal restructuring — did so by building something that a large number of people needed.  The companies that failed did so by building a narrative that institutional investors wanted to hear.

The debt funding increase is the ecosystem telling you something.  It is telling you that the equity case has failed.  The question is not how to solve the financing problem.  The question is why the ideas on offer do not merit the financing being sought.  That question has an answer.  The ecosystem does not want to hear it.

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Terence Nunis | Executive Chairman, Equinox Zenith | Author, The 1% Playbook: The Billionaire Cheat Code

Share Buybacks are Market Manipulation with Better Public Relations

Buybacks are, in most cases, a mechanism for management to enrich themselves at the expense of long-term shareholders while presenting the exercise as capital discipline.  The fact that regulators have permitted this does not make it acceptable.  The fact that it is widespread does not make it honest.

What a Buyback Does

When a company buys back its own shares, it deploys corporate cash — cash that belongs to all shareholders — to purchase shares in the open market.  The shares purchased are typically retired, reducing the share count and inflating earnings per share without any improvement in the underlying business.  No additional product sold, no margin improvement, no additional dollar of profit generated.  The EPS rises because the denominator shrank.  The business is identical to what it was before.  The management team, whose compensation is tied to EPS targets, has just awarded itself a pay rise funded by the company’s own cash.

The S&P 500 companies spent US$922 billion on share buybacks in 2023 and US$790 billion in 2024.  Over the decade from 2013 to 2023, S&P 500 companies returned US$6.3 trillion to shareholders through buybacks — more than they spent on capital expenditure and research and development combined.  The American economy’s infrastructure crumbled, its workforce productivity stagnated, and its manufacturing base hollowed out while its largest corporations spent their cash engineering their own share prices upward.  This is not capital allocation.  It is financial cosmetics.

The US Case: Boeing

Boeing Company provides the most comprehensively documented case study in the destructive potential of buyback-driven capital allocation.  Between 2013 and 2019, Boeing spent US$43 billion repurchasing its own shares.  This programme was funded partly through debt issuance — the company borrowed money to buy back its own stock.  Over the same period, Boeing cut 12,000 engineering jobs, outsourced critical engineering functions to suppliers with inadequate oversight, and deferred the development investment that an aviation manufacturer at the frontier of technology requires.

The 737 MAX entered service in 2017.  Its Manoeuvring Characteristics Augmentation System — a flight control software modification designed to compensate for an aerodynamic characteristic introduced by a heavier engine — failed in two successive crashes, killing 346 people.  The subsequent investigation identified systematic failures in Boeing’s engineering culture, safety oversight, and the relationship between its engineering and production functions.

The Federal Aviation Administration, the Department of Justice, and multiple congressional investigations documented that Boeing had prioritised cost reduction and schedule pressure over the engineering rigour that its products require.  The connection between the buyback-driven capital allocation and the degradation of engineering culture is not direct — correlation is not causation — but the coincidence of a US$43 billion buyback programme and a catastrophic engineering failure in the same decade at the same company, after the same cost-cutting exercises, is not one that responsible governance should dismiss.

Boeing’s share price, which reached US$440 in March 2019 just before the second crash grounded the fleet, traded at US$165 in October 2026.  The US$43 billion spent buying back shares at elevated prices destroyed shareholder value.  The capital deployed on engineering investment and workforce development would not have.

The Indonesia Case: State-Owned Enterprises and the Buyback Pressure

Indonesia’s state-owned enterprises — Bank Rakyat Indonesia Tbk, Bank Mandiri Tbk, Telkom Indonesia Tbk — have faced recurring pressure from the government, as controlling shareholder, and from institutional investors to deploy surplus capital.  The buyback versus dividend debate in the Indonesian context is complicated by the government’s dual role as shareholder and policy actor.

Bank Rakyat Indonesia conducted a buyback programme in 2020 and 2021 totalling Rp3 trillion — deployed during a period when the bank’s non-performing loan ratio was rising, and its micro-lending portfolio was under stress from the COVID-19 economic contraction.  The capital deployed on the buyback could not simultaneously be deployed on loan loss provisioning or loan book growth.  The signal the buyback sent — that the bank had surplus capital — contradicted the credit stress that its micro-lending portfolio was experiencing.  This is the governance problem: when management compensation is tied to share price performance, and when the government as controlling shareholder has an interest in maintaining the share price of its listed holdings, the incentive to deploy capital on buybacks rather than productive investment is structural.

Telkom Indonesia’s buyback programme in 2023 — Rp2.7 trillion deployed over twelve months — occurred simultaneously with the company’s stated need for capital investment in its fibre broadband network expansion.  A company that claims to need capital for network investment while simultaneously spending capital on share buybacks is, at minimum, presenting an inconsistent capital allocation story.

The Singapore Case: Jardine Matheson and the Delisting Buyback

The most instructive Singapore-listed buyback case is not a conventional market buyback but rather the privatisation mechanism used by Jardine Matheson Holdings to delist its subsidiary Jardine Strategic Holdings in 2021.  Jardine Strategic owned 84 per cent of Jardine Matheson.  Jardine Matheson owned 58 per cent of Jardine Strategic.  This cross-shareholding structure had existed for decades as a takeover defence.  In April 2021, Jardine Matheson offered to buy out Jardine Strategic’s minority shareholders at US$33 per share — a price that minority shareholders’ advisers argued significantly undervalued the portfolio, which included stakes in Hongkong Land, Dairy Farm International, Mandarin Oriental, and Jardine Cycle & Carriage.

The offer was structured such that the minority shareholders — holding 16 per cent of Jardine Strategic — had limited realistic alternatives.  The Jardine family and Matheson trusts controlled the outcome.  The buyout price represented a discount to the sum-of-parts valuation that multiple independent analysts calculated.  The minority shareholders received their consideration.  The Jardine family collapsed the cross-shareholding structure and eliminated the minority at a price of their choosing.  This is the buyback mechanism at its most structurally disadvantageous for minority shareholders: the controlling shareholder deploying corporate resources to eliminate the minority at a valuation set by the party with the structural advantage.

Dividends are a Better Signal

A dividend cannot be faked.  This is its fundamental advantage over a buyback.  A buyback can be timed to coincide with management share option vesting schedules, funded through debt in ways that inflate short-term EPS while building long-term balance sheet risk, or executed at overvalued prices that destroy capital while appearing to return it.  Each of these distortions is documented in the academic literature and in actual corporate history.  A dividend is cash.  It leaves the company’s bank account.  It arrives in the shareholder’s account.  It can be reinvested or spent at the shareholder’s discretion.  It is transparent in a way that a buyback programme — which may or may not be executed, may be suspended without notice, and is timed entirely at management’s discretion — is not.

DBS Group Holdings provides the Singapore case study.  DBS has consistently grown its ordinary dividend from S$0.60 per share in 2014 to S$2.16 per share in 2024 — a 260 per cent increase over the decade.  This dividend growth reflects earnings growth: DBS’s net profit grew from S$3.2 billion in 2014 to S$10.3 billion in 2024.  The dividend is not financial engineering.  It is the transmission mechanism through which genuine value creation reaches shareholders.  DBS has conducted buybacks — it repurchased S$3 billion in shares between 2023 and 2025 under MAS approval — but the primary return mechanism has been the dividend.  The management’s primary accountability to shareholders runs through the dividend, not the buyback.  A company that cuts its dividend has made a visible, public acknowledgement that its earnings trajectory has changed.  A company that suspends a buyback has made a much less visible decision that the market processes with considerably less clarity.

OCBC Bank’s dividend policy tells a similar story.  OCBC’s dividend per share grew from S$0.34 in 2014 to S$0.70 in 2023, with a special dividend of S$0.04 declared alongside the ordinary dividend in 2023.  The dividend growth trajectory is a more reliable indicator of the bank’s earnings quality than any EPS improvement that a buyback could engineer.

Berkshire Hathaway: The Exception

Warren Edward Buffett, Chairman and Chief Executive Officer of Berkshire Hathaway, avoided dividends for decades on the explicit grounds that he could deploy capital more productively than shareholders could by reinvesting it themselves.  This is the one coherent argument for retaining earnings rather than returning them: when the management can genuinely compound capital at above-market rates of return, retention is more valuable to shareholders than distribution.

Berkshire Hathaway demonstrated this proposition over fifty years.  Its book value per share grew from US$19 in 1964 to US$359,000 in 2024 — a compound annual growth rate of 19.8 per cent.  The retained earnings built the portfolio.  The portfolio built the returns.  The shareholders who held throughout compounded alongside Buffett rather than receiving periodic distributions at lower reinvestment rates.  This is the exception.  The exception requires a management team of Buffett’s capability, integrity, and demonstrated long-term record.  Most companies do not have this.  Most companies that retain capital rather than distributing it do not compound it at above-market rates.  They accumulate it on the balance sheet, attract activist investor attention, and are then pressured to deploy it through buybacks.

The activist investor pressure on Berkshire Hathaway since Buffett’s transition planning became public illustrates the problem.  Berkshire held US$325 billion in cash and short-term investments as of mid-2026 — a position that activist shareholders have characterised as capital inefficiency.  Their solution, in most cases, is a buyback programme.  Berkshire Hathaway has conducted buybacks —US$2.9 billion in 2024 — but selectively, at prices Buffett judged to be below intrinsic value.  This is the only condition under which a buyback makes analytical sense: when the management has a reliable estimate of intrinsic value, and the market price is demonstrably below it.  The activist shareholders pressing for a structural buyback programme are, in effect, asking Berkshire Hathaway to abandon the capital discipline that produced the record they are attempting to monetise.

Temasek Holdings and GIC Portfolio Companies

Temasek Holdings — Singapore’s state investment company — holds significant stakes in companies where the dividend versus buyback question has direct relevance to Singapore’s public interest in the management of its national reserves.

Singapore Airlines, in which Temasek Holdings holds 55.8 per cent, resumed dividends in fiscal year 2024 after the COVID-19 pandemic forced their suspension.  The resumption of the dividend — S$0.10 per share for FY2024 — was a more meaningful signal of the airline’s recovery trajectory than any EPS improvement through share reduction would have been.  Singapore Airlines operates in a capital-intensive industry where genuine earnings recovery requires fleet investment, route development, and workforce capability.  The dividend signals that the business is generating genuine surplus cash above these requirements.  A buyback at the same stage of recovery would have signalled capital deployment away from the business investment that the recovery requires.

CapitaLand Investment, in which Temasek Holdings holds 22 per cent, is structured as a capital-light asset management and real estate investment platform.  Its fee income model generates recurring cash flows that support a consistent dividend.  The company’s dividend policy — targeting 6 Singapore cents per share annually — provides the income return that its real estate investment trust investor base requires.  A buyback programme in place of this dividend would not serve the income-oriented investor base that the company’s listing rationale and shareholder mix reflect.

GIC’s portfolio companies — largely unlisted private equity and infrastructure investments — return capital through distributions and asset sales rather than open-market buybacks.  The private market equivalent of a dividend — the cash distribution — is the mechanism through which GIC’s investment performance ultimately flows through to Singapore’s fiscal position and the reserves that underpin the Singapore dollar.  The absence of the open-market buyback mechanism in the private investment context is not an accident.  It reflects the reality that private market capital allocation does not benefit from the short-term EPS engineering that the listed market permits.

The Regulatory Dimension

Share buybacks were illegal in the United States under Rule 10b-18 of the Securities Exchange Act until 1982 — when the Securities and Exchange Commission created a safe harbour that permitted companies to repurchase their own shares without being charged with market manipulation.  The deregulation of buybacks in 1982 coincided with the beginning of the shareholder primacy movement — the doctrine, associated with Milton Friedman’s 1970 New York Times essay and later with the Jensen and Meckling principal-agent theory, that the sole legitimate purpose of corporate management is to maximise shareholder value.  The buyback became the primary instrument of this doctrine.

The result, over forty years, is the documented hollowing-out of American corporate investment in favour of financial engineering.  The S&P 500’s aggregate research and development expenditure as a percentage of revenue has declined.  Capital expenditure as a percentage of operating cash flow has declined.  The share of corporate profits returned to shareholders through buybacks has increased from 5 per cent in 1982 to 56 per cent in 2023.

The United States Inflation Reduction Act of 2022 introduced a 1 per cent excise tax on corporate share buybacks — a modest acknowledgement that the regulatory framework had overcorrected in 1982.  Senator Ronald Lee Wyden, then Chair of the Senate Finance Committee, proposed a 2 per cent tax rate, which was reduced to 1 per cent in the final legislation.  The Biden administration proposed increasing it to 4 per cent.  The Trump administration has shown no inclination to do so – obviously.

Singapore’s regulatory framework does not impose equivalent restrictions or taxes on buybacks, though the MAS requires listed companies to obtain shareholder approval for buyback mandates and imposes limits on the volume and price of buyback transactions.

The Contention

Buybacks are not inherently indefensible.  They make sense when a company has surplus capital, few attractive investment opportunities, and shares trading demonstrably below intrinsic value.  They are indefensible as a routine capital return mechanism — which is what they have become in the US market and are increasingly becoming in Singapore and across Asia.  The routine deployment of corporate cash on buybacks, in preference to dividends, investment, workforce development, or debt reduction, reflects a management culture oriented toward short-term share price performance and compensation metrics rather than long-term value creation.

The dividend is an honest instrument.  It declares what the company believes it has earned in excess of what it needs.  The buyback is a declaration about what management believes the share price should be — and it is made by the people whose compensation depends on the share price being at that level.

These are not the same signal.  The market should not treat them as equivalent.  Shareholders should not accept them as equivalent.  And regulators, in Singapore and elsewhere, should examine whether the current framework sufficiently constrains the conflict of interest that the buyback mechanism creates between management and the long-term shareholders who are not selling.

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Terence Nunis | Executive Chairman, Equinox Zenith | Author, The 1% Playbook: The Billionaire Cheat Code

Western Brands in China: A Masterclass in How Not to Apologise

Western luxury brands have spent the past decade discovering something that any competent cultural anthropologist could have told them for free: Chinese consumers are not aspirational Europeans waiting for validation from Paris or Milan.  They are the world’s largest luxury market; they have long memories, and they do not forget.  The brands that treated China as a market to be condescended to have paid for it in market share, revenue, and the specific humiliation of watching domestic competitors fill the space they vacated.

Dolce & Gabbana: The Categorical Failure

The Dolce & Gabbana case of November 2018 is the most comprehensively documented brand disaster in modern luxury history.  The Italian fashion house released three promotional videos for its Shanghai runway show depicting a Chinese model attempting to eat Italian food — pizza, cannoli, spaghetti — with chopsticks, accompanied by a male voiceover making infantilising comments.  The videos were titled “Eating with Chopsticks.”  The condescension was structural, not incidental.  The chopstick — a utensil used daily by 1.4 billion people with more dexterity than most Italians handle a fork — was presented as a quaint instrument of cultural comedy.  The videos were pulled within hours after Chinese social media erupted.  Then it got worse.

Screenshots emerged — later disputed — of messages attributed to Stefano Gabbana, co-founder of the house, describing China as “a country of shit” and responding to critics with extended abuse.  Dolce & Gabbana denied Gabbana sent the messages, claiming his account had been hacked.  The denial was not believed.  The Shanghai show was cancelled.  Every major Chinese celebrity associated with the brand withdrew publicly.  Major Chinese e-commerce platforms including Alibaba’s Tmall, JD.com, and Suning removed Dolce & Gabbana products within 24 hours.  Consumers filmed themselves burning Dolce & Gabbana products worth tens of thousands of dollars in the streets of Shanghai.

The financial consequences were severe.  China had accounted for 30 per cent of the brand’s global sales.  That revenue effectively collapsed.  The house issued a video apology — Domenico Mario Assunto Dolce and Stefano Gabbana seated side by side, reading from what appeared to be a script — that Chinese consumers dismissed as insincere, belated, and performing contrition rather than expressing it.  The apology was delivered in Italian with Chinese subtitles, not in Mandarin.  Neither founder demonstrated the emotional register that Chinese cultural expectations for a public apology require.

Then, in a demonstration of catastrophic strategic judgement, Dolce & Gabbana filed a lawsuit worth over US$600 million against two American fashion bloggers who had reposted the anti-Asian messages attributed to Gabbana.  The move was interpreted — correctly — as an attempt to silence the people who exposed the brand’s behaviour rather than to address the behaviour itself.  In China, it confirmed what consumers already believed: the apology was not sincere.  The lawsuit was the real position.

As of 2026, Dolce & Gabbana has not recovered its Chinese market position.  The brand remains on a de facto boycott list maintained by Chinese social media communities.  Its global revenue has declined from €1.3 billion in 2018 to levels significantly below that figure.  Periodic re-engagement attempts — new campaigns featuring Chinese models, cultural collaborations — have each been received with a combination of scepticism and renewed outrage.

Louis Vuitton and Molly Tea: The Pyrrhic Victory

If Dolce & Gabbana destroyed itself through cultural arrogance, Louis Vuitton managed a different variant of the same failure: winning a legal battle while losing the cultural war, at a cost to the business that dwarfs the damages it recovered.  In May 2025, Louis Vuitton filed a trademark infringement lawsuit against Molly Tea — a Shenzhen-based milk tea chain with 2,500 stores — over its four-petal floral logo, which LV argued was confusingly similar to seven registered trademarks incorporating its iconic quatrefoil monogram flower.  The case proceeded through the Suzhou Intermediate People’s Court.

On 29^th June 2026, the court ruled in Louis Vuitton’s favour.  Molly Tea was ordered to pay CN¥10.3 million —US$1.5 million — in damages and legal costs, to cease using the infringing design, and to publish remediation statements across Weibo, WeChat, and four other platforms.  Louis Vuitton won.  Then Chinese social media explained to Louis Vuitton what winning cost.

The backlash ignited within hours of the ruling.  Molly Tea’s founder, Zhang Bo Cheng, framed the dispute not as a trademark case but as a question of cultural ownership: was LV’s four-petal monogram flower original, or had it borrowed from the Chinese baoxiang flower — a decorative motif used in Chinese art and architecture since the Tang dynasty, 618 to 907 CE — and was now using trademark law to prevent a Chinese brand from using a symbol from its own cultural heritage?

The state-owned Beijing Daily published a commentary questioning why Molly Tea had to pay a French luxury house over a floral design with roots in Chinese aesthetics thousands of years older than Louis Vuitton’s founding.  The hashtag “LV Accused of Monopolising Ancient Chinese Patterns” entered the top ten trending topics on Weibo.  Chinese consumers began referring to Louis Vuitton handbags as “toilet bags” — a meme that spread across social media with the velocity that only cultural anger produces.  Reports that Louis Vuitton had filed for judicial review of a separate decision by China’s intellectual property regulator — a standard legal procedure — were recast online as the company “suing the Chinese government.”  The narrative, regardless of its accuracy, embedded itself in the Chinese consumer consciousness.

The financial consequences are documented in LVMH’s Q3 2026 earnings.  LVMH Chief Financial Officer Cécile Cabanis acknowledged on the 15^th October analyst call that the Molly Tea controversy had weighed on the fashion and leather goods division’s performance.  Louis Vuitton’s China sales fell 30 per cent year-on-year in July and 20 to 25 per cent in August, according to JL Warren Capital.  Bernstein’s Luca Solca, Managing Director of Luxury Goods Research, estimated the Molly Tea backlash accounted for 2 to 3 percentage points of the division’s 5 per cent organic sales decline in Q3.  LVMH’s fashion and leather goods division revenue fell from €8.50 billion in Q3 2025 to €8.25 billion in Q3 2026.  Asia excluding Japan shifted from 4 per cent organic growth in Q2 to a 5 per cent decline in Q3.  Louis Vuitton recovered US$1.5 million in damages.  It lost hundreds of millions in Chinese revenue over the following two quarters.  The legal team won.  The business lost.

The error was not filing the lawsuit.  LV’s trademark was registered in China.  Molly Tea’s application to register its own logo had been rejected by China’s IP authority in 2024.  The legal position was defensible.  The cultural positioning was catastrophic.  A French luxury house suing a popular Chinese milk tea brand — a brand that Chinese consumers love, that celebrates Chinese culture, that has no conceivable connection to the luxury goods market — for a design that Chinese people believe originated in their own cultural heritage was interpreted as cultural appropriation meeting corporate aggression.  The fact that LV was legally correct was irrelevant to the court of public opinion, which operates on cultural logic rather than trademark law.

Versace, Coach, and the Hong Kong T-Shirt Incident

In August 2019, Versace released a T-shirt listing Hong Kong and Macau as separate countries rather than as regions of China.  Coach and Givenchy had produced similar items independently.  Chinese social media identified all three within hours.  Donatella Francesca Versace, Creative Director of Versace, issued a personal apology on Instagram within 24 hours — faster and more personally engaged than the Dolce & Gabbana response.  She acknowledged the error, confirmed the items had been destroyed, and issued the apology in her own voice rather than through a spokesperson.  Brand ambassador Yang Mi terminated her contract regardless, stating she was defending national sovereignty.  The crisis was shorter than the Dolce & Gabbana episode, but the episode cost Versace US$20 million in lost Chinese revenue over the following two quarters.

The structural lesson: the T-shirt errors were not made by malicious executives.  They were made by product teams and legal review processes that did not include anyone with sufficient understanding of Chinese territorial sensitivities to flag the issue before production.  These were organisational failures, not individual ones — which makes them harder to fix, because no single person’s departure resolves them.

The Xinjiang Cotton Controversy

The Western brand crisis of March 2021 produced the most comprehensive multi-brand damage event in the Chinese market since Dolce & Gabbana.  H&M, Nike, Burberry, and other Western brands had issued statements declining to use Xinjiang cotton following Western government pressure over allegations of forced labour.  Chinese consumers interpreted the statements as a political attack on Chinese sovereignty dressed as corporate ethics.  The Communist Youth League posted: “Spreading rumours to boycott Xinjiang cotton, while wanting to make money in China?  Wishful thinking.”  State media mobilised.  Chinese celebrities terminated ambassador relationships across multiple brands simultaneously.

H&M’s physical stores were removed from Chinese navigation applications within 24 hours.  Its e-commerce presence disappeared from Alibaba and JD.com.  China revenue fell 23 per cent in the following quarter.  Nike, generating US$1.9 billion in China revenue annually, saw a sustained boycott produce a 20 per cent year-on-year China revenue decline over two consecutive quarters.  Anta Group’s share price increased 25 per cent as Chinese consumers explicitly redirected spending toward domestic brands.

The strategic error: the assumption that corporate ethics statements produced for Western audiences — Western institutional investors, Western media, Western government relations — could be issued without consequence in the Chinese market.  This assumption reflected a structural failure to understand that Chinese consumers read international media, that Chinese state media monitors and amplifies Western corporate statements, and that Chinese consumer nationalism responds to perceived political attacks on sovereignty with economic consequences.

The Colonial Mindset Architecture

The common thread across all these cases is not stupidity.  It is a specific failure of imagination — the inability to inhabit the perspective of a consumer whose cultural reference points, political sensitivities, and historical memory differ from those of a European creative director or an American brand manager.  Western luxury brands were built on the premise of European cultural superiority — the idea that Parisian savoir-faire and Milanese craftsmanship represented a civilisational pinnacle that the aspirational consumer in emerging markets would pay to access.  This premise has expired.

Chinese consumers account for 35 to 40 per cent of global luxury goods purchases.  They are the world’s most significant luxury spending force.  They are not buying European brands for cultural validation.  They are buying them for craftsmanship, heritage, and aesthetic quality — and the moment a brand reimports the colonial dynamic, the consumer relationship breaks.

The Dolce & Gabbana chopstick videos were the expression of a deeply embedded assumption: that Chinese consumers would find their own cultural practices amusing when filtered through a European aesthetic gaze.  The LV versus Molly Tea dispute activated a different but related assumption: that a French trademark registration from the 19^th century could override a Chinese cultural symbol used since the 7^th century.  Both assumptions are expressions of the same underlying position — that European commercial claims supersede Chinese cultural claims.

This is the colonial mindset.  It is the mindset that produced the Opium Wars, the Treaty Ports, and the entire architecture of 19^th-century Western commercial extraction from China.  Brands that stumble into it are not discovering new territory.  They are wandering into a minefield that has been mapped for a century.

The Domestic Brand Beneficiaries

The market share that Western brands lost did not disappear.  It transferred to domestic competitors.  Anta Group’s revenue grew from CN¥24 billion in 2019 to CN¥54 billion in 2023.  Li Ning repositioned itself as a “China Chic” lifestyle brand following the Western sportswear boycott, generating a revenue increase of 57 per cent in 2021.  Molly Tea itself became an unexpected beneficiary of the LV lawsuit — brand recognition increased substantially, consumer solidarity purchases increased, and the episode provided marketing worth multiples of the CN¥10.3 million in damages the chain was ordered to pay.

The guochao — Chinese national tide — cultural movement, which positions domestic brands as expressions of Chinese cultural confidence, has moved from a youth phenomenon to a mainstream consumption trend.  The Western brand whose equity rested on European cultural superiority is now competing against domestic brands whose equity rests on Chinese cultural pride — and losing in every category where domestic quality has reached competitive parity.

The Strategic Lessons

The lessons are not complicated.  They are uncomfortable for organisations whose internal culture still reflects the assumptions that produced the original errors.  Chinese market operations require genuine cultural authority — not a team that translates marketing materials into Mandarin, but people with the standing, the knowledge, and the organisational power to stop a campaign, a product, a legal action, or a statement that will cause damage.  This person must be able to override creative directors, brand managers, and legal teams who outrank them.  At Dolce & Gabbana, no such person had sufficient authority.  At Louis Vuitton, the legal team’s assessment of trademark rights was not filtered through a cultural risk assessment of sufficient weight.  Chinese consumer nationalism does not separate political and commercial relationships in the way Western corporate frameworks assume.  A statement made for Western audiences will be read in China.  A legal action taken against a beloved Chinese brand will be experienced as cultural aggression, regardless of its legal merit.

The apology architecture matters as much as the apology itself.  A Chinese cultural apology requires sincerity, specificity, emotional engagement, and submission to the judgement of the offended party.  A Western crisis communications apology — carefully worded, legally reviewed, hedged, delivered by spokespersons rather than principals — reads as insincere because it is designed to manage liability rather than express genuine remorse.

The colonial mindset is not merely offensive.  It is strategically incorrect.  The Chinese market is not a favour being extended to European brands.  It is the market.  The brand that cannot internally reconstruct its relationship with Chinese culture — from condescension to respect — will continue to produce the errors that Dolce & Gabbana, Louis Vuitton, H&M, Nike, Versace, and Coach have demonstrated at significant commercial cost.

The Chinese market has a long memory, a mobilisable nationalist consumer base, and a capable domestic competitor set that benefits every time a Western brand creates the opportunity for a boycott.  The brands that have navigated this environment successfully — Hermès, which invested in genuine Chinese cultural partnership through the Shang Xia venture; Richemont’s Cartier, which has maintained cultural sensitivity in its Chinese market communications — have done so by taking the Chinese market seriously as a cultural relationship, not merely a revenue opportunity.  The brands that have failed treated China as a place to sell things to people who should be grateful for the attention.  The market has answered.

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Terence Nunis | Executive Chairman, Equinox Zenith | Author, The 1% Playbook: The Billionaire Cheat Code

Quora Answer: How Will the IMF Determine whether Debt Restructuring in Sri Lanka is Adequate?

The following is my answer to a Quora question: “How will the IMF determine whether debt restructuring in Sri Lanka is adequate?”

This is political theatre.  Sri Lanka’s economic collapse in 2022 was the most complete sovereign meltdown in Asia since the Indonesian crisis of 1998.  Foreign exchange reserves fell to US$50 million in usable form — barely enough to cover two weeks of imports.  Fuel queues stretched for kilometres.  Hospitals ran out of medicine.  The government defaulted on US$51 billion in external debt in April 2022 — the first Sri Lankan sovereign default in history.  President Nandasena Gotabaya Rajapaksa fled the country for Singapore in July 2022 after protesters stormed the presidential residence.  This was not bad luck.  It was the predictable outcome of decades of fiscal mismanagement, corruption, and the systematic capture of economic policy by political dynasties with interests orthogonal to the public good.

The IMF approved a 48-month Extended Fund Facility of US$3 billion in March 2023.  Sri Lanka has since completed several programme reviews.  The economy has stabilised.  Inflation has declined from 70 per cent at its 2022 peak to single digits.  Foreign exchange reserves have recovered to US$6 billion.  The IMF has declared progress.  The IMF’s assessment framework covers the standard metrics: primary fiscal surplus, revenue mobilisation, reserve adequacy, debt restructuring completion, and structural reform benchmarks.  By most of these metrics, Sri Lanka is performing adequately.  This is the diplomatic version.  The honest version is more complicated.

The IMF’s Shareholder Problem

The IMF is not a neutral arbiter.  It is a multilateral institution whose largest shareholders — the United States at 17.4 per cent of voting power, the European Union member states collectively at 30 per cent — exercise structural influence over its lending decisions, programme design, and assessment criteria.  Sri Lanka’s debt restructuring required the participation of China — Sri Lanka’s largest bilateral creditor, holding US$7.4 billion in bilateral debt.  China’s participation in the Common Framework debt restructuring process — the G20 mechanism designed to coordinate debt relief for distressed sovereigns — was delayed, contested, and eventually secured only after protracted negotiations that held up Sri Lanka’s IMF programme reviews.

China’s position throughout was that its development finance loans — extended through China Exim Bank and China Development Bank for projects including the Hambantota Port, the Colombo Port City, and various infrastructure programmes — should be treated differently from commercial bond debt.  The Western creditor nations and the IMF insisted on comparable treatment.  The dispute was not about Sri Lanka’s welfare.  It was about the precedent being set for the Common Framework’s application to other BRI-indebted sovereigns — Zambia, Ghana, Ethiopia — where the same creditor hierarchy dispute was playing out simultaneously.

Sri Lanka was the test case in a geopolitical contest between the Western-backed multilateral debt architecture and China’s bilateral development finance model.  The IMF needed Sri Lanka’s programme to succeed as evidence that the Common Framework could deliver.  China needed the terms to preserve the commercial viability of its overseas lending.  Sri Lanka needed debt relief to survive.  The interests were not identical.

The Hambantota Port best illustrates how Sri Lanka arrived at this position.  China Merchants Port Holdings financed the port with a US$1.1 billion loan at 6 per cent interest.  When Sri Lanka could not service the debt, it leased the port to China Merchants Port Holdings for 99 years in 2017 — the transaction that produced the debt trap narrative that has shaped Western discussion of BRI financing ever since.  Whether the narrative is fully accurate is debated.  What is not debated is that Sri Lanka signed a commercial agreement it could not service, under a government with documented corruption and conflicts of interest, using Chinese financing for a port whose commercial viability was contested from the outset.

The Corruption and Structural Reform Problem

The IMF’s programme includes structural benchmarks on revenue mobilisation, state-owned enterprise reform, and governance improvement.  These benchmarks are the items most likely to be partially met, reported as met, and then quietly reversed after the programme review is completed.

Sri Lanka’s structural problems are not technical.  They are political.  The Rajapaksa family’s domination of Sri Lankan politics for two decades — Percy Mahinda Rajapaksa as President from 2005 to 2015, then Prime Minister, then Finance Minister; Gotabaya Rajapaksa as President from 2019 to 2022; Basil Rohana Rajapaksa as Finance Minister — created a patronage network that penetrated every significant state-owned enterprise, regulatory body, and revenue collection function.

Ceylon Petroleum Corporation, Ceylon Electricity Board, and Sri Lankan Airlines collectively lost US$5 billion between 2010 and 2022 — a figure that exceeds the IMF programme’s total facility value.  These losses were not the result of market conditions.  They were the result of politically mandated pricing that subsidised connected interests, procurement that favoured politically connected suppliers, and employment rolls inflated to service political patronage obligations.  The IMF’s structural benchmarks require these entities to move toward cost-reflective pricing, reduce employment to operationally necessary levels, and implement transparent procurement.  The benchmarks have been partially met on paper.  The structural incentives for politicians to reverse them are unchanged.

The 2024 election of President Anura Kumara Dissanayake — a socialist politician whose Janatha Vimukthi Peramuna party had never previously held executive power — introduced a different political dynamic.  Dissanayake’s election on an anti-corruption platform created political pressure for structural reform.  His government’s ability to translate that pressure into durable institutional change — against an entrenched bureaucracy, a judiciary with compromised independence, and business interests with deep political relationships across party lines — remains the question the IMF’s programme cannot answer.

What the IMF Can and Cannot Assess

The IMF can assess whether Sri Lanka is meeting its quantitative performance criteria — fiscal surplus, reserve levels, revenue collection.  It can verify whether specific structural benchmarks have been enacted in law or regulation.  It cannot assess whether those laws are being implemented, whether the institutions implementing them are independent of the political interests they regulate, or whether the reform trajectory will survive the next election.

The IMF declared Zambia’s debt restructuring adequate in 2023.  Zambia’s structural reform programme, two years later, has produced limited observable change in the governance of the state-owned enterprises and revenue authorities whose dysfunction produced the debt crisis.  The money stabilised the macroeconomic position.  The structural problem remains.  Sri Lanka in 2026 is in a similar position.  The macroeconomic stabilisation has been achieved.  The fiscal primary surplus is being maintained.  The reserves have recovered.  The IMF will declare the programme a success when the facility concludes.

Whether Sri Lanka has addressed the structural conditions that produced the collapse is a different question.  The patronage networks still exist.  The state-owned enterprise losses have been reduced but not eliminated.  The revenue mobilisation improvement reflects cyclical recovery as much as structural reform.  The legal framework for anti-corruption enforcement has been strengthened on paper.  The institutional capacity and political will to use it against connected interests have not been demonstrated at scale.

The Assessment

The IMF assessment determines whether Sri Lanka has stabilised.  History determines whether it has reformed.  The money thrown at the problem was necessary to prevent complete state collapse.  It was not sufficient to address the conditions that produced it.  Those conditions require political will that the IMF cannot supply, institutional reform that takes a generation, and the sustained absence of the patronage dynamics that two decades of Rajapaksa governance embedded at every level of the state.

Sri Lanka is not Greece.  Greece had the European Union’s institutional framework, a functioning legal system, and the existential motivation of euro membership to drive reform.  Sri Lanka has the IMF, a 99-year port lease to China, and a new government with the right intentions and a very short runway before the next political cycle tests whether those intentions survive contact with power.

The IMF will declare the programme adequate.  The structural reforms will be partially implemented.  The next crisis will arrive in a different form, on a different timeline, when the next government inherits the same structural incentives and the same institutional weaknesses.  This is not pessimism.  It is the pattern that every IMF programme produces in the absence of the domestic institutional transformation that no external lender can purchase.

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Terence Nunis | Executive Chairman, Equinox Zenith | Author, The 1% Playbook: The Billionaire Cheat Code