Quora Answer: Why, Despite Boycotts over Controversial Political Stands, Has Tesla Stock Risen 22% in the Past Year?

The following is my answer to a Quora question: “Why, despite boycotts over controversial political stands, has Tesla stock risen 22% in the past year?”

Where did you come up with this imaginary number?  Tesla’s trailing twelve-month return sits at roughly 2.84%, not 22%, as of the most recent trading data.  The stock did rally hard earlier in the window, touching an all-time closing high of US$489.88 on 16^th December 2025, before a brutal post-earnings collapse wiped much of that gain out.  Following its second-quarter 2026 results, Tesla shed roughly US$214 billion in market value in a single stretch, with the stock plunging 14% and market capitalisation briefly falling below US$1 trillion for the first time in months.  The honest headline is not why Tesla rose 22% despite controversy.  It is why Tesla rallied to an all-time high on pure narrative, and why that narrative is now visibly unwinding in real time.  That is, if anything, a more damning story than the one originally proposed.

Tesla posted record second-quarter 2026 revenue of US$28.24 billion, up 26% year-over-year, alongside a record 480,126 vehicle deliveries.  Beneath that headline, operating income fell 57% to just US$398 million, and operating margin collapsed to 1.4%, down from 4.1% a year earlier.  Adjusted earnings per share came in at US$0.33, badly missing the roughly US$0.53 Wall Street expected.  Free cash flow turned negative at US$1.1 billion, the first negative reading in two years.  Gross margin fell to 16.8% to 16.9%, down from over 20% just two quarters earlier.  Average revenue per vehicle dropped to approximately US$42,730, from US$45,345 a year prior.  Research and development spending jumped 49% to US$2.37 billion, chasing artificial intelligence, Robotaxi, and Optimus, three businesses that remain, by revenue, a rounding error against the automotive division still carrying the entire company.  Capital expenditure guidance for 2026 sits above US$25 billion, with Elon Reeve Musk telling investors on the earnings call that the company intends to spend as fast as it possibly can, a sentiment that should terrify any shareholder currently watching free cash flow run negative.

Why the Valuation Remains Absurd Even after the Crash

Even after the sell-off, Tesla traded at a market capitalisation of roughly US$1.423 trillion as of late July 2026, a figure that at its peak exceeded the combined market capitalisation of the next 37 largest automotive manufacturers on the planet, including Toyota, BYD, and General Motors.  Tesla’s price-to-earnings ratio sits at 346.  Toyota’s sits at 10.  Tesla’s profit per vehicle fell roughly 40% year-over-year to approximately US$2,140 in the first quarter of 2026, nearly identical to Toyota’s US$2,078 per unit, meaning the company’s supposed manufacturing edge has essentially evaporated on the one metric that actually measures whether a car company is good at making and selling cars.  A market pricing Tesla at 34 times Toyota’s earnings multiple, while the two companies now earn almost the same profit per vehicle sold, is not pricing Tesla’s automotive business.  It is pricing a story about robots and rockets that has not yet produced meaningful revenue.

The SpaceX Merger: Consolidation Dressed as Synergy

Musk came the closest he has ever come to confirming a Tesla-SpaceX merger on the Q2 2026 earnings call, telling analyst Colin Rusch of Oppenheimer that overlap between the two companies keeps growing, particularly around the Terafab chip project, while stopping short of formal confirmation and deferring to Tesla’s general counsel.  Nevada corporate filings from January 2026 registered two merger subsidiary entities, X-A Merger Sub and X-S Merger Sub, listing SpaceX CFO Bret Johnsen as an officer, the standard legal scaffolding for a stock-for-stock combination.  This deserves scepticism rather than excitement.  Musk holds 42% equity in SpaceX but 85% of its voting power, an entrenchment structure private companies can maintain far more easily than public ones facing shareholder scrutiny.  SpaceX itself posted a net loss of roughly US$4.9 billion in 2025 on revenue of US$18.7 billion, and had priced its own planned IPO at a valuation of US$1.77 trillion, roughly 95 times trailing revenue, a multiple no company in market history has sustained the growth rate required to justify over a decade.  Folding a loss-making, opaquely governed private company into a public one already trading at an inflated multiple lets those SpaceX losses, and that governance structure, migrate onto Tesla’s balance sheet and into Tesla’s shareholder base, diluting existing public holders while Musk’s combined voting control likely strengthens rather than weakens.  Tesla’s own Q1 2026 filing already discloses a US$2 billion equity stake in SpaceX, appreciated to roughly US$3 billion.  That is not synergy.  That is the private company’s risk quietly finding its way onto the public company’s books, ahead of a formal vote shareholders have not yet been given the chance to properly scrutinise.

Why Sentiment, Not Fundamentals, Drove the Rally in the First Place

The mechanism behind the earlier rally to US$489.88 was never a secret.  Tesla’s China sales fell 9% in the first half of 2026, with domestic automakers now holding roughly 72% of the Chinese EV market, and yet the stock climbed regardless, carried by Robotaxi headlines, Optimus demonstrations, and merger speculation rather than by any of the operating metrics actually deteriorating in plain sight.  Investors were not pricing the 1.4% operating margin.  They were pricing a narrative about a future Musk kept promising and kept delaying, the exact pattern Electrek’s own coverage flagged as the reason repeating the same commitments on the Q2 call accelerated the subsequent sell-off once the numbers arrived and failed to match the story.  A market that rewards repetition of a promise over delivery of a result is not functioning as a pricing mechanism.  It is functioning as a fan club with a stock ticker attached, and fan clubs, eventually, run into a quarterly earnings report that does not care how enthusiastic the membership is.

There was no 22% rally built on resilience in the face of controversy.  There was a speculative run to an all-time high, built on merger rumours and unfulfilled robotics promises, that has since partially collapsed under the weight of a 1.4% operating margin, negative free cash flow, and a per-vehicle profit now converging with a conventional Japanese automaker trading at a fraction of the multiple.  The proposed SpaceX merger does not fix any of this.  It imports a loss-making, unaccountably governed private company’s balance sheet into the public one, at the exact moment public shareholders have just watched US$214 billion evaporate in a single stretch.  If this is resilience, the word has stopped meaning anything.

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

Quora Answer: What are the Structural Obstacles Preventing Danantara from Delivering Sustainable Returns?

The following is my answer to a Quora question: “What are the biggest obstacles to Indonesia’s sovereign wealth fund, Danantara, delivering high and sustainable returns?”

How about everything about it?  Indonesia launched Danantara — Daya Anagata Nusantara — on 24^th February 2026.  President Prabowo Subianto described it as the vehicle that would transform Indonesia into a developed nation.  Its initial capitalisation was US$20 billion.  Its projected AUM target is US$900 billion.  It is simultaneously the most ambitious sovereign wealth fund ever launched in Southeast Asia and the one with the least credible foundation for achieving anything it has promised.  The ambition is not in question.  The architecture is.  And the architecture is a disaster.

The Governance Problem: A Family Business Masquerading as a Sovereign Fund

I will dispense with diplomatic language.  Danantara’s governance structure is not merely imperfect.  It is a textbook example of how to design a sovereign wealth fund for political extraction rather than investment performance.  Prabowo appointed his son, Didit Hediprasetyo Prabowo, to the supervisory board.  His close political ally, Muliaman Hadad, chairs the board.  The Chief Investment Officer, Pandu Sjahrir, is the nephew of Luhut Binsar Pandjaitan — the former Coordinating Minister for Maritime and Investment Affairs, a man whose fingerprints appear on virtually every major economic decision in Indonesia for the better part of a decade.  This is not a coincidence of talent.  This is a political architecture dressed in investment vocabulary.

The sovereign wealth funds that actually deliver sustainable returns — Norway’s Government Pension Fund Global at US$1.7 trillion, Singapore’s GIC, Abu Dhabi Investment Authority — share one defining feature: the insulation of investment decisions from political influence.  This insulation is not peripheral to their success.  It is the mechanism of their success.  Remove it, and you do not have a sovereign wealth fund.  You have a state slush fund with a better brochure.  Danantara has not merely failed to achieve this insulation.  It has structurally guaranteed its absence.  The presidential family is on the supervisory board.  The political inner circle controls the chair.  The CIO reports to a governance structure whose primary qualification for appointment was proximity to power rather than proximity to returns.

The regional cautionary tale is Malaysia’s 1MDB — which began with a legitimate developmental mandate, a governance framework that looked defensible on paper, and ended as a US$4.5 billion fraud that implicated Goldman Sachs, consumed a Prime Minister, and produced one of the most embarrassing money-laundering investigations in the history of global finance.  1MDB’s governance looked fine on paper too.  The paper was the problem.  Danantara’s governance does not even look fine on paper.  The political capture is visible, documented, and apparently unembarrassing to its architects.  That lack of embarrassment is itself the most alarming signal.

The Legal Framework Problem: Built on Sand

Danantara was established through Government Regulation Number 10 of 2026 — not through dedicated primary legislation passed by the DPR.  This means the next President of Indonesia can materially alter Danantara’s mandate, governance structure, and investment framework without parliamentary process.  The investment commitments Danantara makes to international co-investors — joint ventures, infrastructure mandates, long-term capital commitments — are made on the basis of an institutional framework that is legally less durable than a mid-sized Singaporean company’s articles of association.

International institutional investors — the pension funds, endowments, and sovereign funds whose participation Danantara needs to approach its stated scale — evaluate counterparty frameworks partly on their durability.  A fund whose legal basis can be rewritten by executive decree between one administration and the next is a fund whose commitments are worth precisely as much as the current government’s intention to honour them.  Which is to say, they are worth whatever political convenience determines at any given moment.  This is not a theoretical risk.  Indonesia has changed governments before.  Indonesian administrations have reversed predecessor commitments before.  The infrastructure investment landscape is littered with project agreements that the subsequent administration found inconvenient to honour.  Danantara’s regulatory architecture provides no protection against this pattern.  It institutionalises it.

The Accountability Vacuum: No Audit, No Accountability, No Credibility

Danantara’s assets are explicitly excluded from oversight by the BPK — Indonesia’s supreme audit agency.  The justification offered was that standard government audit processes are too slow and insufficiently commercially sophisticated for a fund operating in competitive global capital markets.  This argument is so transparently self-serving that one is almost impressed by the audacity of its proponents.

The Santiago Principles — the voluntary governance framework endorsed by 26 sovereign wealth funds including GIC and Temasek Holdings — explicitly require independent external auditing as a condition of institutional credibility.  Danantara’s architects apparently reviewed these principles, noted the audit requirement, and decided that Indonesia’s sovereign wealth fund would be the one exception.  Without BPK oversight, Danantara’s financial performance is whatever its management and supervisory board choose to report.  There is no independent verification mechanism.  There is no external audit trail.  There is no accountability architecture that would allow Indonesian citizens — whose SOE dividends are capitalising this fund — to determine whether their capital is being competently managed or quietly redirected.

1MDB had internal audit functions.  It had external auditors.  Deloitte, KPMG, and Ernst & Young all signed off on 1MDB accounts at various stages.  The fraud persisted for years because the audit mechanisms had been captured by the same political relationships perpetrating it.  Danantara has dispensed with even the pretence of independent external oversight.  1MDB at least maintained the fiction of accountability.  Danantara has not bothered with the fiction.  The exclusion of a US$20 billion public fund from independent audit oversight is not a governance innovation.  It is a governance catastrophe — one that signals, with remarkable clarity, that the fund’s architects anticipate needing to do things with the money that independent auditors would find difficult to approve.

The Mandate Confusion: Designed to Fail, Designed to Excuse Failure

Danantara’s stated mandate simultaneously requires maximum risk-adjusted commercial returns and strategic developmental investment in national priority sectors including food security, energy transition, and digital infrastructure.  These objectives are not inherently incompatible.  What makes them catastrophic in Danantara’s specific context is the complete absence of explicit prioritisation mechanisms, transparent trade-off documentation, or accountability frameworks that would allow anyone to evaluate whether the developmental investments are generating adequate returns or subsidising political vanity projects at the expense of financial performance.

This ambiguity is not an oversight.  It is a feature.  When investments generate strong returns, the government claims credit for sound commercial management.  When investments in politically strategic sectors — the President’s free meals programme, infrastructure in politically important constituencies, SOEs that employ people in swing regions — underperform, the developmental mandate provides perfect cover.  The dual mandate without prioritisation is a permanent accountability escape hatch, designed with the specific purpose of ensuring that no investment outcome can ever be definitively characterised as a failure.  A fund that cannot fail by definition cannot learn.  A fund that cannot learn cannot improve.  Danantara’s mandate architecture guarantees mediocrity as the ceiling rather than the floor.

The Talent Problem: You Get What You Pay For

Building a sovereign wealth fund capable of deploying US$900 billion requires investment professionals of exceptional quality.  GIC employs approximately 1,800 investment professionals.  ADIA employs approximately 1,700.  Both have spent decades competing for talent against the world’s leading investment banks, private equity firms, and hedge funds — offering compensation structures and institutional mandates that attract professionals who could work anywhere.  Danantara’s initial staff are drawn primarily from Indonesia’s SOE ecosystem and domestic financial institutions — institutions whose investment track records, commercial sophistication, and compensation structures are not the primary reference points for global institutional investment talent.

The fund has announced partnership discussions with BlackRock, Goldman Sachs, and others.  These partnerships — if they materialise, which is not guaranteed given the governance concerns — will provide deal flow and co-investment access.  They will not provide the internal capability to evaluate those opportunities intelligently, negotiate terms effectively, or manage the resulting portfolio.  You cannot outsource investment judgement.  You can only outsource the appearance of it.

The compensation structures available within a government-affiliated entity are constrained by civil service pay scales and the political optics of paying investment professionals international market rates while the President’s free meals programme consumes fiscal resources at record pace.  The talent required to run a credible sovereign fund at scale will not accept domestic civil service compensation.  The talent that will accept it is precisely the talent you do not want running a US$900 billion fund.

The Scale Problem: US$900 Billion is Not a Target.  It is a Fantasy.

Norway’s Government Pension Fund Global took approximately thirty years to reach US$1.7 trillion.  It was funded by a consistent, legally ring-fenced stream of petroleum revenue deposited according to a fiscal rule that limited annual domestic withdrawals to three per cent of fund value.  That fiscal discipline — maintained through multiple governments, multiple economic crises, and sustained domestic political pressure to spend the money — is what built the fund.  The discipline was the institution.  The money followed.

Danantara’s US$900 billion target rests on no comparable fiscal discipline.  It rests on SOE dividends — dividends from the same SOEs that are simultaneously being asked to fund their own operational development, to serve the government’s developmental mandates, and to generate the commercial returns required to sustain their own dividends.  This is a circular capitalisation strategy that depends on each component performing well enough to support the others — at precisely the moment when the Indonesian macroeconomic environment is providing the least favourable conditions for any of them.

The US$900 billion figure is not a financial projection.  It is a political aspiration dressed in a number sufficiently large to impress an audience that will not ask how it was calculated.  No credible methodology for reaching US$900 billion from a US$20 billion base — through SOE dividends, in a country whose fiscal deficit is surging, whose currency is at 1998 crisis levels, and whose international bank counterparties are repatriating capital — has been publicly presented.  Because no credible methodology exists.

The Macroeconomic Environment: Launching a Lifeboat in a Storm

The conditions into which Danantara has been launched are not merely challenging.  They are the conditions that make a poorly governed sovereign fund most dangerous.  Indonesia’s fiscal deficit surged to Rp240.1 trillion in Q1 2026 — more than double the Rp99.8 trillion of the same period in 2025.  Moody’s changed Indonesia’s credit outlook to negative in February 2026.  Fitch followed.  The Jakarta Composite Index has fallen approximately 32 per cent year-to-date — the world’s worst-performing major equity market.  The rupiah has collapsed to levels not seen since the 1998 Asian financial crisis that nearly destroyed the Indonesian state.

Citigroup, HSBC, and Standard Chartered repatriated Rp11.5 trillion from their Indonesian operations in two years — slightly exceeding their combined profits for the period.  The world’s most sophisticated institutional money is leaving Indonesia faster than it is arriving.  It is leaving because the risk-adjusted return on Indonesian exposure has deteriorated materially under the current administration’s fiscal and governance trajectory.

Danantara is being launched as a vehicle to attract the international capital that the Indonesian macroeconomic environment is simultaneously repelling.  This is not merely contradictory.  It is delusional.  International institutional investors evaluating Danantara as a co-investment partner will conduct the same risk assessment that led Citigroup and HSBC to repatriate capital.  The governance concerns, the political capture, the audit exclusion, and the macro instability will all appear in that assessment.  The conclusion will not be flattering.

The Verdict

Danantara is not a sovereign wealth fund.  It is a political vehicle with sovereign wealth fund branding.  Its governance architecture guarantees political capture.  Its legal basis guarantees institutional fragility.  Its exclusion from independent audit guarantees an accountability vacuum.  Its dual mandate guarantees cover for underperformance.  Its talent pool guarantees investment mediocrity.  Its scale target guarantees disappointment.  And its macroeconomic context guarantees that it will attempt all of these things in the least favourable conditions available.

The most charitable interpretation is that Indonesia’s technocrats are attempting to build something credible within the constraints of a political system that is structurally opposed to the conditions that credibility requires.  The technocrat’s dilemma in Indonesia is ancient and well documented — genuine professionals operating within political constraints, delivering what they can within what the system permits.

The less charitable interpretation — and the one the structural evidence more strongly supports — is that Danantara was designed primarily as a political instrument: a vehicle for directing state capital toward politically connected recipients, insulated from audit oversight, protected by a developmental mandate that provides indefinite cover for underperformance, and branded with sovereign fund vocabulary to attract the international legitimacy its governance architecture does not deserve.

The burden of proof lies entirely with the institution.  It has five years to demonstrate that the structural obstacles can be overcome.  It has chosen a governance framework that makes demonstration nearly impossible and a legal basis that makes the attempt reversible.  The Indonesian people, whose SOE dividends are funding this experiment, deserve considerably better than what has been built in their name.

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

Introducing the Panel Session - Carbon Credits: The Next Financial Instrument

On the 08^th December 2023, I will chair a panel discussion for the Institute of Electrical & Electronic Engineers GreenTech, Sustainability, & Net Zero Policies & Practices Symposium.  This is a programme in alignment with the United Nations Clmate Change 28^th Conference of Partners (COP28), in the Green Zone, at Expo City, Dubai, United Arab Emirates.  The title of the session is “Carbon Credits: The Next Financial Instrument.” 

The panellists for the session are as follows:

1.      David Chen C. Y.; Chief Executive Officer; AgriG8

2.      Dr. Vincent Lim Boon Heng; Chief Financial Officer, Asia-Pacific; DataLogic

3.      Dr. Victor Tay; Group Chief Executive Officer; RHT Consulting Asia 

According to the OECD Environmental Outlook to 2050: The Consequences of Inaction - Key Facts and Figures, climate crisis is expected to cost the global economy 5.5% of GDP by 2050.  The number varies according to sources, but as of COP21 according to the World Bank, US$23 trillion will be lost in lost GDP output.  At this point, emission reductions are not enough, and the world is looking for alternative solutions.  We need to find a way as a united world to make this work.  For carbon credits to work, we need to consider expanding the compliance market to include high-quality investment-grade carbon offset credits.  Given the recent greenwashing scandals, coupled with the existing rating agencies that are not uniform in their processes, established global financial rating standards need to be set up for carbon credits in both the compliance and voluntary markets. 

All stakeholders should work towards a sustainable framework to create investment-grade, rated carbon credits, so that we can support a secondary market as a source of revenue.  Carbon credit derivatives would generate interest in the trade, create a new class of financial instruments, and attract a new influx of funding.  The capital injection could be the start of the 5^th industrial revolution: a post climate change world.  We need the buy in of the private sector through an appeal to self-interest, not altruism, as we move away from traditional sources of energy into renewables.  One of the fastest ways to achieve this is through a mature carbon trading market. 

Our goal for this session is to provoke a deeper conversation with stakeholders on the need for investment-grade carbon credits, a unified global rating system, and pivoting carbon trading towards high-quality investment-grade offsets.

Quora Answer: Do Insurance Companies Invest in Medical Clinics?

The following is my answer to a Quora question: “Do insurance companies invest in medical clinics?” 

No, because that would be a conflict of interest.  When an insurer assesses a claim, they are looking for ways why they should not pay out.  If the clinic was owned by the insurer, then any assessment originating from it can be questioned, because every claim denied could be ascribed to some sort of bias.  Which insurer would want that?  Insurers already make more than enough money without the unnecessary drama of every denied medical or life claim becoming some sort of controversy.

Quora Answer: Do Financial Planners Get Kickbacks from Stocks They Recommend?

The following is my answer to a Quora question: “Do financial planners get kickbacks from the stocks they recommend?” 

If they did, it would be a conflict of interest and a breach of ethics.  It would be a criminal offence, and they would lose their license.  Financial consultants are not supposed to have a relationship with the companies of the stocks they recommend, directly or indirectly.  If they do, they should declare that conflict of interest, and it should be documented.  Non-disclosure is a breach of compliance.

Quora Answer: Why Would an Insurer Cancel a Policy?

The following is my answer to a Quora question: “Why would an insurance company cancel a policy?” 

Policies lapse when premiums are not paid.  Coverage ends when the period of coverage is over.  For a policy to be cancelled, however, normally means that the insurer discovers a material fact that would have affected underwriting when the application for coverage was made.  If the omission was due to a mistake, the policy is simply cancelled, and new coverage must be applied for.  If the omission was deliberate, there are likely to be legal consequences.  Examples of omission of material facts include falsified data, non-declaration of medical conditions, and discrepancies in the contract. 

Another reason why a policy may be cancelled, especially for investment plans, is when the company considers the transaction suspicious.  This includes a pattern of churning, constant top-up and partial withdrawals without a sound financial reason, or a beneficial ownership arrangement that is suspicious.  This pertains to money laundering, and the insurer is obliged to make a report to the authorities.

Quora Answer: What are Aspects of Due Diligence in Investment Funds?

The following is my answer to a Quora question: “What are the aspects of due diligence in investment funds?” 

There are two main aspects.  The first is the due diligence on the source of funds that come into the fund, and the second is the due diligence conducted on the investment targets.  The due diligence in the source of funds looks at the source of wealth and income of the entity, the capitalisation if applicable, any red flags in terms of legal encumbrances, and beneficial ownership, and suspicious transactions.  All investment committees and their compliance department have a comprehensive checklist.  The due diligence on the companies or projects involve the usual checks in the background of the company and the people involved, the projected revenue and return, any conflicts of interest, and legal encumbrances.  This also involves the analysts.

S$670,000 Loss: A Cautionary Tale

Ashley Wong was a UOB relationship manager.  That designation carries a specific legal meaning in Singapore.  A licensed representative operates within the scope of their principal’s authorisation.  They recommend products their principal has approved, through channels their principal controls, to clients whose suitability they have formally assessed.  Wong did none of this.  He recommended PixelTrade to Mr. Andy Poh in his personal capacity — outside UOB, outside his authorisation, and in direct contravention of MAS guidelines governing licensed representatives.  A financial adviser cannot solicit investments in products unconnected to their principal.  It is a clear regulatory violation, and Wong knew it.  The moment he crossed that boundary, he exposed himself to personal liability and handed MAS a violation on a platter.  That UOB bore no legal responsibility for his conduct was the correct judicial outcome.  Wong was not acting as UOB’s representative.  He was acting as himself — and the consequences were his alone to answer for.

Mr. Poh invested US$500,000 in PixelTrade on the promise of 7% to 8% annual returns from a company lending to “big institutions.”  He signed PixelTrade’s documents — not UOB’s.  He transferred money to PixelTrade — not UOB.  He received no UOB trade confirmation, despite having received one for every prior bond purchase.  He claims he did not read a single document he signed.

Judicial Commissioner Andre Maniam found that Mr. Poh had failed to prove Wong misrepresented PixelTrade as a UOB product, noting that the documentary evidence contradicted his account at every turn.  Mr. Poh’s own wealth planning document, dated 4^th October 2017, stated: “I want to maximise my return. I am comfortable with taking significant levels of fluctuation to the value of my investments, including the possibility of losing more than my initial investments.”  He signed it.  He claimed in court to be risk averse.

His investment history contradicted this further.  Just before investing in PixelTrade, he made four bond investments with UOB — non-risk-free.  After discovering PixelTrade was not UOB-approved, he went on to purchase ten more bonds from UOB — again, none guaranteed. The man who claimed extreme risk-aversion continued purchasing risk instruments without interruption.  His police report against PixelTrade made no mention of Wong deceiving him into believing the investment was UOB-approved.  The judge noted this pointedly: if Wong had genuinely defrauded him, Mr. Poh would surely have told the police exactly that.  The Court of Appeal upheld the High Court ruling entirely.

The first failure was professional.  Wong violated the boundaries of his licence.  A licensed representative exists within a regulated framework because unsupervised personal recommendations carry exactly this risk.  MAS guidelines are the architecture that protects both clients and practitioners.  Wong dismantled that architecture for reasons we can only speculate about.  The consequences for Mr. Poh were catastrophic.  The consequences for Wong’s career were terminal.

The second failure was personal.  An 8% annual return from a single, unlicensed, unverified counterparty is not a conservative investment.  It is a yield that demands explanation of where that return comes from, what risk underwrites it, and why a licensed institution is not offering it.  Mr. Poh asked none of these questions.  He relied on friendship and the promise of yield.  MAS’s Investor Alert List is publicly accessible.  PixelTrade appeared on it one month after Mr. Poh invested S$670,000.  A basic search before transferring funds would have surfaced it.  He did not search.

For investors, the obligations are clear.  Read every document before signing it.  Verify every investment against MAS’s registers and alert lists.  Understand that a yield significantly above market rates reflects risk — not opportunity.  A relationship with a banker is not a guarantee.  It is a professional engagement governed by regulatory requirements, and those requirements exist to protect you — but only if you engage with them honestly.  The investor who signs without reading, chases yield without understanding risk, and then claims ignorance in litigation is not a victim of the financial system.  He is a participant in his own loss.

For practitioners, the lesson is simpler.  Your licence defines your boundaries.  Operating outside those boundaries — regardless of personal relationships, regardless of the investment's apparent merit — exposes your client to unprotected risk and yourself to regulatory and legal consequences.  The regulated framework is the infrastructure that makes professional trust possible.

Wong destroyed that trust.  Mr. Poh compounded the destruction by refusing to exercise the basic diligence that would have prevented it.  S$670,000 plus legal fees for lessons that cost nothing to learn in advance.

This is the article: Man's $670,000 Investment Loss, a Cautionary Tale, dated 12^th September 2021.

SINGAPORE - There are plenty of cautionary tales about mishaps in the financial world, but few come with a price tag of $670,000 plus tens of thousands of dollars in legal fees.  This sorry saga began in 2017, when a bank customer, Mr. Andy Poh, plunged headlong into an investment on the recommendation of a bank relationship manager at UOB at the time.

Mr. Poh sunk US$500,000 (S$670,000) into a British investment company to supposedly earn 7 to 8% of annual returns through its business of giving loans to big institutions.  He did not read the documents he signed, but still invested in the company because he had relied on what bank relationship manager, Ashley Wong, supposedly told him - that the company PixelTrade would continue to do well and that Mr. Wong’s own colleagues were also dealing with the firm.

Mr. Poh viewed Mr. Wong as his friend, as he had made substantial bond investments with the bank through his help and guidance.  But about a month after he completed his transfer of funds to PixelTrade, the Monetary Authority of Singapore put the company on its Investor Alert List in January 2018 to caution the public that it was not licensed to do business here.  Mr. Poh tried to recover his money, but when this proved futile, he lodged a police report against PixelTrade in October that year.  Mr. Wong had resigned from UOB by then due to personal reasons.

As it turned out, Mr. Wong had recommended the company to Mr. Poh on his own, without the bank’s knowledge, because PixelTrade products had nothing to do with UOB.  Mr. Poh tried to get back his money from PixelTrade, and Mr. Wong, who knew “the main person” at the company, helped to arrange a meeting.  That attempt also failed, so Mr. Poh asked UOB’s senior management “to find a way” to recover his hard-earned cash.  A UOB team met Mr. Poh to discuss the situation, but no compensation was offered because the investment was not made with the bank; Mr. Poh had dealt with PixelTrade directly and signed its documents.

Mr. Poh’s next step was to file a lawsuit, claiming that Mr. Wong had defrauded him by making various false representations about investing in PixelTrade.  But the suit was directed not at Mr. Wong, but UOB, on the basis that, as it was Mr. Wong’s employer, it was liable for his alleged fraud.  Mr. Poh also claimed that UOB had been negligent in not protecting him against the loss of the money that he had transferred to PixelTrade.  But his case was dismissed by the High Court last year.  Mr. Poh appealed, and the case was heard by two judges of the appellate court recently.  Their decision last month upheld the High Court ruling on the case.

Mr. Poh’s main argument was that he was misled by Mr. Wong into thinking that PixelTrade was a UOB-approved investment, which was why he put in so much money.  When Judicial Commissioner Andre Maniam heard the case in the High Court, he found that Mr. Poh had failed to prove the manager had indeed said that, noting that he was no novice investor.  Just before he bought into PixelTrade, Mr. Poh had made four bond investments with UOB, and he had to sign bank documents.  If PixelTrade were indeed a UOB investment, he would also have signed similar documents.  But in this case, he had signed PixelTrade’s own documents and transferred money to it and not to UOB.

“Indeed, Mr. Poh’s case is contradicted by the documents which he received from UOB and PixelTrade, all of which he claimed he did not read even though he had signed them and returned the signed copies to UOB and PixelTrade,” noted the judge, adding that Mr. Poh was clearly negligent in “blindly” investing hundreds of thousands of dollars.

“Mr. Poh says that if he knew the contents of the documents, he would not have signed them.  The short answer to that is: Mr. Poh should have read the documents, and if he did not agree with the contents, he should not have signed them,” the judge added.  Judicial Commissioner Maniam also noted other evidence that would have alerted Mr. Poh that PixelTrade was not a UOB investment - UOB sent him trade confirmations for his bond purchases, but there was no such confirmation for his PixelTrade investment.

During the trial, Mr. Poh said that he was very “risk-averse” and that he would not have bought into PixelTrade but for the fact that he was misled into thinking UOB was selling it.  But this was contradicted by his own investment record with UOB because he had signed documents on “understanding your investment decision”, and such documents stated that even the bonds that he bought were not risk-free.  For instance, his wealth planning document, dated 04^th October 2017, stated: “I want to maximise my return.  I am comfortable with taking significant levels of fluctuation to the value of my investments, including the possibility of losing more than my initial investments.”  Mr. Poh said that he just signed documents whenever they were given to him without reading them, even though they warned customers not to sign if they did not understand the contents.

The judge also looked at Mr. Poh’s police report against PixelTrade.  The report focused on the company and made no mention that Mr. Wong had deceived Mr. Poh into thinking his investment in PixelTrade was “UOB-approved or UOB-guaranteed”.  “If Mr. Wong had defrauded him, Mr. Poh would surely have told the police that,” noted the judge, who concluded that Mr. Poh had known all along that PixelTrade had nothing to do with UOB.  Judicial Commissioner Maniam said that as a frequent investor, Mr. Poh should have known that even bonds issued by banks or financial institutions were not risk-free.  “Indeed, Mr. Poh went on to purchase 10 more bonds from UOB, after he had been informed that his PixelTrade investment was not a UOB-approved investment product,” he noted.  “Those 10 bonds, like the first four he invested in, were neither risk-free nor guaranteed by UOB, but that did not deter him.”

Mr. Poh’s claim that the bank was negligent in transferring his money to PixelTrade was dismissed as well, with the judge saying that the transfers were according to his instructions to UOB.  The bank had no duty to ensure that Mr. Poh did not lose money by investing in PixelTrade, simply because bank transfers were common transactions for many purposes.  “To take a simple example, if a customer remits money to buy gold, a bank is under no duty to check whether that is a good purchase or investment, let alone to reimburse the customer for any losses if the price of gold falls,” Judicial Commissioner Maniam ruled.

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

Strategic Challenges to Singapore’s Corporate Tax System

In budget speeches in 2020 and 2021, Deputy Prime Minister, and then, Minister of Finance, Heng Swee Keat spoke about Base Erosion & Profit Shifting (BEPS).  BEPS refers to tax planning strategies used by multinational enterprises to exploit gaps and mismatches in tax rules for the purposes of tax avoidance.  Tax evasion is a crime; tax avoidance is a business strategy.  Since developing countries have a higher reliance on corporate income tax, they suffer from BEPS disproportionately.  It is estimated that BEPS practices cost countries US$100 billion to US$240 billion in lost revenue annually. 

The OECD/G20 Inclusive Framework on BEPS has over 135 countries and jurisdictions collaborating on the implementation of 15 measures to tackle tax avoidance, improve the coherence of international tax rules, and ensure a more transparent tax environment.  On the surface, it looks like a wonderful initiative.  It is not in Singapore’s interest for several reasons.  Our Minister of Finance is correct is that the BEPS initiative will significantly impact how we structure our tax system, and erode our competitive advantage.  This is an impingement of our sovereignty. 

Tax avoidance is a legitimate means of generating revenue.  Most of my clients come from around the region, and there are legitimate reasons why they avoid paying taxes in these countries.  For one, there is corruption.  Taxes paid disappear into a blackhole of politician’s personal coffers, and not into running the government and infrastructure development.  These individuals have their own companies.  Corporations are, in effect, subsidising business rivals to their own detriment. 

We must also consider that the tax regime is discriminatory.  In certain countries of Southeast Asia, ethnic Chinese businessmen are liable to higher taxes, both legitimate and otherwise.  Funds in banks disappear, and even insurers do not pay up the full claims.  Naturally, they put their funds in Singapore. 

Any discussion on the sovereign right to fair taxes must also include measures to address corruption and discrimination in tax collection.  For Singapore to simply adopt these measures would mean we are being punished for our efficiency, our low corruption, and our better infrastructure.  It would make no sense for us to give up our competitive advantage. 

As part of the OECD/G20 Inclusive Framework on BEPS, there have been discussions on a global corporate minimum tax for corporations (GMTR).  OECD and G20 countries aim to reach consensus on both fronts by mid-2021, which is naively optimistic.  This minimum tax is expected to make up the bulk of the US$50 billion to US$80 billion in extra corporate tax that the OECD estimates companies will end up paying globally if deals on both efforts are enacted.  Should participating countries agree, governments could theoretically still set their own tax rates, but should those rates be lower than the GMTR, the home countries of these companies will top up the taxes. 

As it is, the Biden administration has said it wants to deny exemptions for taxes paid to countries that do not agree to a minimum rate.  While the governments involved in these discussions, including Singapore, broadly agree on the basic framework for the GMTR, they do not agree on the minimum tax rate itself.  Another thorny issue is whether investment funds and real estate trusts should be covered, so that they can be compatible with the 2017 US tax reforms.  The Biden administration wants to raise the US corporate tax rate to 28%; it has proposed a global minimum of 21%.  The Biden administration also wants the minimum to apply to US companies no matter where the taxable income is earned.  This proposed rate is more than twice the 12.5% minimum tax that had previously been discussed in OECD talks.  If this is implemented, it will affect many multinational corporations operating and benefiting from incentivised corporate tax rates in Singapore.  It will severely erode our economic advantage, and should be viewed as an existential threat to our standard of living. 

For the moment, we do not have an international consensus on the GMTR.  That gives us a small window to strategise, and consider the implications and options.  Due to the size of the economy, we are still a small boat dragged in the wake of giant ships.  Singapore does not have the size to simply go it alone, and disregard international developments. 

Singapore has doubled down on being a centre for wealth management, attracting family offices and funds from some of the wealthiest individuals in the world.  We have even implemented a new VCC structure for funds.  What is likely to happen is that the VCC framework will be relaxed so that SFOs can take advantage of it.  This allows UHNW families some choices, since funds and trusts are not part of the main discussion on GMTR, only corporations. 

Another concern is the OECD tax policy study of 2018.  One of the findings is that more countries have expressed a renewed interest in net wealth taxes as a way to raise revenue.  This is now a greater imperative due to the losses arising from economic closure, because of Covid19.  Revenue from income and consumption-based taxes have declined, and struggling economies need ways to raise more revenue.  A wealth tax is a low-hanging fruit.  A wealth tax disincentivises savings and long-term investments. 

While we have tweaks to our tax system, in a post-pandemic world, we need to be ahead of the curve of these international developments, because it will not be business as usual, especially in a corporate tax context.