MONTHLY HIGHLIGHT - Apr 2026 Hong Kong Still Matters: Energy, Capital, and China Connectivity in a Less Predictable World
- 7 days ago
- 9 min read
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Since my last notes on Malaysia, and before that Abu Dhabi, the world has become materially less predictable. The Iran conflict has sharpened a vulnerability that Asia has long lived with but perhaps under priced: our dependence on the Gulf is not limited to crude oil. It runs through LNG, helium, and a wide range of petrochemical feedstocks embedded in industrial supply chains across the region. For example, helium is critical for chip cooling, fiber optic manufacturing, and lithography equipment, making it a strategic vulnerability for companies such as Samsung, SK Hynix, and Kioxia. Polyethylene and polypropylene, derived from Gulf-sourced ethane and naphtha, also remain essential inputs for plastics and packaging. The issue now is not only price, but reliability. Inventories in parts of the system are tightening, visibility is poor, and the range of outcomes remains unusually wide.
Against that backdrop, I spent part of mid-March in Hong Kong for the Milken conference and the Bloomberg Family Office gathering. What struck me most was the return of energy. This was my third consecutive year visiting Hong Kong around the same period, and this year the city felt noticeably more alive. Art Basel week clearly helped, but it also felt like the Hong Kong government and local institutions were making a serious push to restore confidence and activity. Across panels and private meetings, the tone was far more constructive than many external headlines would suggest. There was repeated emphasis on global capital returning to Hong Kong, particularly around AI, robotics, life sciences, and green technology, with the city positioning itself as a place where capital, talent, and technology can converge at scale.
The city itself also reminded me why it still matters. The airport remains one of the deepest and most efficient gateways in Asia. Its hotel, legal, and financial services infrastructure is still highly sophisticated. The city felt safe, and even simple moments, including time in Repulse Bay during a stretch of unusually pleasant weather, reinforced that Hong Kong still offers a globally competitive quality of life and operating environment. In separate conversations, Hong Kong was described not as fading, but as busier, more diverse, and still uniquely positioned as a gateway into Shenzhen, Guangzhou, and the broader China opportunity set.
Another notable theme was that some Chinese families may be reconsidering Hong Kong as a destination for capital. Not necessarily in a dramatic or one-way fashion, but enough to suggest that proximity, familiarity, legal infrastructure, and execution capability still matter. Several discussions also touched on the pipeline of Hong Kong IPOs and listing activity involving Chinese companies. In one meeting, there was direct discussion of a major Chinese technology company choosing Hong Kong over the United States for a future driven by geopolitics, market positioning, and valuation support from comparable listed names in Hong Kong. In another, a participant referenced having raised roughly HKD 2 billion through a secondary placement on the Hong Kong Stock Exchange last year. These were reminders that Hong Kong’s capital markets ecosystem remains active and relevant, especially for Chinese issuers and China-linked capital.
I came away reminded that Hong Kong is not dead. It remains a valuable bridge to China, especially at a time when China continues to advance quickly in AI, robotics, pharmaceuticals, EVs, and advanced manufacturing. Across meetings, there was a recurring view that technology may prove to be the bigger long-term driver than geopolitics alone, and Hong Kong still has a meaningful role to play in channelling that growth into investable opportunities.
This is also personal for me. I first built a manufacturing and distribution business in Hong Kong. After selling that business, I went on to start Pine Capital. So returning to Hong Kong is not just about observing markets. It is also about reconnecting with a place that helped shape my own journey, and seeing clearly that it still has strategic relevance ahead. We intend to do more there through partnerships, distribution, and investments linked to Hong Kong and China.
If you would like to discuss opportunities related to Hong Kong, China, or North Asia more broadly, please feel free to reach out via ir@pinevp.com.
Hyuk-Tae Kwon
Founder and CEO
Portfolio Spotlight
Singapore's F&B Squeeze: Can Food-Tech Save the Table?
by Investment Manager Joel Kam
With the recent bout of high-profile closures in the F&B scene in Singapore, we decided to interview our portfolio company, Alchemy, to better understand what is causing these closures, and can innovation play a part to change the narrative and potentially save some of these businesses. Here are some key questions we asked Alan, the founder of Alchemy, and his responses having worked with various players in the space:
1. We've seen a wave of unexpected closures in the F&B space. Having spoken to various players on the ground, what are the core concerns that the Alchemy team is hearing from business owners?
A: The core concerns affecting players in the F&B space are rising food cost, rentals and manpower shortage.
The shocks in supply chain in recent years starting from the Ukraine-Russia conflict to current US-Iran war has resulted in relentless increase in food cost globally and hits Singapore operators especially hard since we import most of our goods.
We also see discrepancies in the supply, demand and therefore pricing for commercial & retail space. Increased property speculation in these real estate segments, as a result of tightening regulation in the residential sectors, has led to F&B tenants footing higher rental premiums.
On top of that, we see the influx of foreign brands causing elevated concerns to local players, where these foreign players often have larger capital backing. These foreign brands sometimes also may not be overly concerned on maximising profitability, leading to spill-over effects such as the higher salaries that are more difficult to match for local players, aggravating manpower shortages.
F&B operators have also noted that local consumers are more cautious in spending at the moment given the uncertain global situation. Many brands had therefore pivoted to offer more value oriented meals to cater to current sentiments.
2. How can tech and innovation play a role in this space to improve the livelihoods of F&B owners?
A: In our opinion, F&B operators can look at new innovation in raw materials, production processing and work flow in order to manage manpower shortage, food & rental cost.
For example, Alchemy's Sweetfibre sugar replacer not only replaces sugar in products with great taste and texture but is also able to drive cost savings in many instances. These claim and cost benefits have been adopted and enjoyed by brands such as Marina Bay Sands, Guzman Y Gomes & Swensen's among others. Other ingredient companies such as Prefer also pitch coffee & cocoa replacers at a fraction of the cost.
With the advancement in food processing technologies, many F&B operators are also turning to internal or external central kitchens located in non-prime locations to handle the bulk of food preparation. This increases the proportion of retail space that can be used for serving patrons instead.
We also notice that there is an increasing camp of F&B operators that operate on a 'no-central-kitchen' model by outsourcing the backend preparation responsibilities to external parties such as Simple Food Solutions. This way, instead of investing in both retail and central kitchens, operators can concentrate their capital on revenue generation rather than capacity building. This method also helps ease manpower requirements since F&B operators no longer need highly trained chefs in the outlets.
3. In light of these developments, where is the focus for Alchemy moving forward and are there key initiatives that you are excited about?
A: Alchemy has crossed our 10th year mark since inception and we're very excited about two key areas:
The first is our innovation around the Sweetfibre sugar replacer we have developed which has opened up new growth opportunities. For the first time, F&B brands are able to offer better-tasting and healthier products, which are cost-saving as well. We can now offer both ingredient solutions and B2B finished products such as our instant powdered beverages which have been certified as a healthier choice and yet are cheaper to use. In the current operating environment where food costs are front and centre for operators, health versus cost considerations are often conflicting, but we believe that should not always be the case.
Another key initiative we're very excited about is in the fortification of white rice through our newly launched FibreGrain™. As the main Asian staple, white rice is loved but also sometimes demonised for lacking nutrition. With our FibreGrain™ mixed into white rice grains, a simple bag of rice can also become a delivery of nutrients and vitamins that boost immunity, and fibre intake. For years, we have pride ourselves with helping diabetics enjoy lower GI white rice. Now, we extend that reach to general consumers to make regular eating healthier.
Long-term out-performance does not require catching the lows
by Investment Director Larry Lau
“I will tell you my secret, if you wish. It is this: I never buy at the bottom and I always sell too soon.” — Baron Rothschild
That quote came to mind as I sat down to write this month’s update. It has been a challenging month, to say the least, with the S&P 500 falling -5.1%, its largest monthly decline since March 2025.
Against that backdrop, we are pleased to share that our U.S. strategies delivered another month of out-performance despite heightened volatility and the ever-changing rhetoric from Trump. As of 31 March, our main U.S. strategy extended its +4.1% YTD out-performance to +6.0%. U.S. Factor Rotation improved from +5.1% YTD to +5.9%, while U.S. Sector Rotation rose from +5.8% YTD to +6.8%.
As the war began, one popular narrative was that “wars are always a good buying opportunity.” That is directionally true over time, but the more important question is when to buy. On the other side are those who advocate “long-term thinking” and simply riding out the volatility. There is truth in both perspectives, which is precisely why we believe our Active-on-Active (AoA) approach can serve as a valuable complement to investors’ portfolios.
In February, we wrote about how cutting losses freed up both financial and mental capital, allowing us to rotate more effectively across the AI value chain as opportunities emerged. That was the offensive side of AoA, and it played an important role in February’s out-performance.
When it comes to defense, our primary focus is the active re-balancing between equities and cash. We do this because when market structure turns negative, the reward for bearing risk typically falls just as downside risk begins to widen.
That defensive element was a key source of out-performance during a month in which the S&P 500 fell -5.1%. It also reinforced the value of AoA and our commitment to clients that capital preservation will always be a core priority. One important contributor was our decision to raise cash to 20% at the end of February 2026, as highlighted in our March monthly newsletter. We subsequently increased cash to 28% on 2 March (Monday), before fully redeploying capital and returning cash to 0% on 3 March (Tuesday).
A more significant shift occurred on 12 March (Thursday), when the S&P 500’s market structure turned negative. We knew what that meant within our framework: reduce risk and adopt a more defensive posture. We first raised cash to 9%, then to 20% on 16 March (Monday), and further to 30% on 17 March (Tuesday), as our assessment of developments in the Iran conflict and the prevailing negative market structure once again suggested that the market was under-pricing Iran risk.
On 20 March (Friday), we reduced cash to 10%, then to 5% on 23 March (Monday), and back to 0% on 24 March (Tuesday), maintaining that positioning through month-end as sentiment, positioning, technical and market structure began to suggest that a near-term bottom may be forming.
That said, even after yesterday’s +2.9% rally to close out the month, the S&P 500’s market structure remains negative. In practical terms, this means we would be prepared to raise cash again from current levels should the market extend its short-term rally without a corresponding improvement in market structure.
We expect volatility to persist, as it is difficult to envisage a clear and credible endgame to the Iran war. We do not view ourselves as geopolitical experts capable of predicting every twist and turn, nor do we believe anyone else can do so consistently.
Instead, we rely on a sound investment process. Our Active-on-Active framework, grounded in data rather than narrative, is designed to navigate markets through a full cycle and remains central to delivering strong long-term returns for clients. The principle is simple: anticipate and react, rather than forecast.
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This material is provided for general information purposes only and does not take into account the specific investment objectives, financial circumstances, or particular needs of any individual. You are encouraged to consult a qualified financial adviser before making any investment decisions. Historical performance and any forward-looking statements regarding the economy, stock, bond market, economic or industry trends should not be relied upon as indicators of future results. Past performance is not indicative of future returns. Opinions expressed may change without notice and should not be interpreted as personalised advice or a recommendation. Any references to specific securities (if applicable) are for illustrative purposes only. This publication has not been reviewed by the Monetary Authority of Singapore.