Will Sea’s investments in Malaysia yield?

Opening Bell 🔔 is Tech in Asia’s free newsletter that brings you the biggest news and latest trends around Asia’s publicly listed tech companies. [Read from your browser]( Opening Bell 🔔 Welcome to the Opening Bell! Delivered every Monday via email and through the Tech in Asia website, this free newsletter breaks down the biggest stories and latest trends on Asia’s publicly listed tech companies. If you’re not a subscriber, get access by [registering here](. --------------------------------------------------------------- Written by Simon Huang Journalist Hello {NAME} Singapore and Malaysia have a complex relationship - which I frequently experience first hand. Some of this is harmless rivalry (who has the better food?) But much of it is also driven by Singaporeans' misplaced sense of superiority. At a friend’s wedding in Kuala Lumpur recently, I kept rolling my eyes at some Singaporean guests who repeatedly reminded their Malaysian counterparts that one Singapore dollar was worth three ringgit. Singapore’s Sea is putting some of those Singapore dollars to good use with its investments in a mega warehouse and data center in Malaysia, as my colleague, Emmanuel, analyzes in this week’s [featured story](. This is part of a trend of data center firms establishing their campuses in Southeast Asian countries that offer lower operating costs and are outside of more developed and expensive markets like Hong Kong and Singapore. Yet, as Emmanuel discovers, Sea may face the same hurdles that other tech giants, such as Microsoft, have. Despite announcing the building of a data center in Johor in 2014, the Microsoft project has yet to be completed. As Singaporeans, we may view such delays as “typical Malaysia,” a country not exactly known for its efficiency. But we should instead hope for the best: that Sea’s investments pay off and it invests even more in Malaysia going forward. After all, we are two close neighbors that share a common history, culture, and destiny, with deep friendships and family relationships on both sides. -- Simon  ---------------------------------------------------------------  THE BIG STORY [Sea Group enters choppy waters with latest Malaysia deals]( The tech titan’s ambitious plans have been panned by Malaysian analysts and former bureaucrats. ---------------------------------------------------------------  3 TRENDS TO KEEP EYE ON 1️⃣ Temu goes north: Temu, the US-based shopping app owned by PDD Holdings (PDD, NDAQ), is [rolling out its services in Canada](. It’s the sister company of Pinduoduo, which is famous in China for connecting farmers directly with consumers and promoting group buying - a business model in which the prices of an item go down as the number of people purchasing it goes up. Temu is replicating model this in the US, where shoppers are eligible for discounts when they share links to items with friends. This expansion in North America comes even as tensions between China and the West remain high. For all the talk of decoupling, business relationships between China and the United States - as well as the wider West - continue to grow, although perhaps in less sensitive areas, such as ecommerce. PDD Holdings is up by over 9o% over the past six months, far outpacing Alibaba (BABA, NYSE), which is up by 11% over the same period. Investor excitement around Temu may have something to do with this. 2️⃣ SLoan me the money: Shopee, the ecommerce arm of Sea Group (SE, NYSE), launched a new financial services product called [SLoan]( for select Malaysian users. Eligible users can obtain loans at an interest rate of 18% per annum, with options to repay in three, six, or twelve months. The credit limit is based on Shopee’s internal credit assessment data. Once the cash hits their ShopeePay wallet, borrowers can use it to shop, send to others or even withdraw via a bank transfer. Despite the recent struggles faced by Southeast Asia’s tech firms, this demonstrates that their financial services ambitions are still alive and well - Grab (GRAB, NDAQ) recently launched [Partner Cash Advance]( offering its driver-partners cash advances of up to US$7,600 at an interest rate of 18%. Interest rates of 18% are high, but still lower than the [average of 25%]( charged by credit cards in Singapore. With growth in some of their other businesses, like gaming and food delivery, slowing sharply post-pandemic, much of the recent renewed investor enthusiasm for these tech giants may depend on how well the firms profitably monetize their data to offer financial services to consumers. 3️⃣ Foodpanda layoffs: here we go again: Foodpanda, the Singapore-based food delivery platform, [laid off]( an undisclosed number of staff - many of whom were based in Malaysia. Following an initial round of cuts last September, this is the second round of layoffs that the subsidiary of Frankfurt-listed DeliveryHero (DHER, ETR) has undertaken recently. But the DeliveryHero’s stock price is still struggling and is down by 8% year to date, even as peers such as DoorDash (DASH, NYSE) and Deliveroo (ROO, LON) have seen gains over the same period. Foodpanda is a decent runner-up to Grab in Singapore, the Philippines, and Malaysia, although it comes in third in Thailand. Research by Momentum Works shows that Grab has a share of over 50% in all four markets. The question is whether second best is good enough to build a sustainable business. More layoffs introduce further uncertainty and can’t be good for employee morale, making it even harder for Foodpanda to keep fighting. Could an acquisition of its business be on the cards? 2 EYE-POPPING NUMBERS Tech in Asia scours the internet to bring you head-turning numbers from the world of business. [US$ 42 million]( The consolidated loss that India-based foodtech giant Zomato (ZOMATO, NSE) incurred in its most recent quarter, with the company exiting Indonesia and the Philippines. [US$20 million]( The amount raised by Indonesian digital content distributor Mig in a round led by media conglomerate MNC Group (BHIT, IDX). THE ONE YOU DIDN'T SEE COMING We spotlight the story that had everyone talking and social media buzzing during the past week. Berkshire, the trader: Over decades, US conglomerate Berkshire Hathaway (BRK.A, NYSE) has built a reputation for itself as a long-term investor, with its CEO Warren Buffett famously [saying]( that its “favorite holding period is forever.” It was a bit of a surprise then that Berkshire was reported to have [disposed]( of most of its stake in Taiwan Semiconductor Manufacturing Company (TSMC) (2330, TPE) despite having disclosed a position in the firm in only November 2022. Berkshire pocketed a 9% return after only three months - nothing to sniff at, but leaving observers with many unanswered questions. Did Berkshire make an error in its initial assessment? Has something in the industry or macroeconomic environment changed in the interim that affected the investment case for TSMC? Did Berkshire simply find better opportunities elsewhere? Or perhaps (gasp) today’s Berkshire is in the business of making opportunistic trades when the situation warrants. In any case, Buffett and his business partner, Charlie Munger, are no longer the only ones making investment decisions at Berkshire - this responsibility is now shared with Todd Combs and Ted Weschler. Food for thought for anyone tempted to mimic Berkshire’s trades. That’s it for this edition - we hope you liked it! Not your cup of tea? You can unsubscribe from this newsletter by going to our preference center at the bottom of this email. Happy investing and see you next week! Disclaimer: This content is for informational purposes only. Kindly do not construe any such information as legal, tax, investment, financial, or other advice. [ADVERTISE]( | [SUBSCRIBE]( | [HIRE]( | [FIND JOBS]( P.S. Don't miss out on the biggest tech news and analysis. Add newsletter@techinasia.com to your address book, contacts, or safe sender list. Or simply move us into your inbox. Too many emails? Switch to a different frequency or get new content through our [preference center]( or [unsubscribe](. 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