James Cheng CPA, Investment Director at China Everbright Limited, on the importance of Hong Kong’s asset management ecosystem, and navigating investment decisions in an era of high inflation
What are the biggest lessons in your career so far?
After experiencing the many ups and downs, I started to know how to dig my way out of frustration. The first thing to do is to make a fair and honest assessment of the situation, and admit mistakes. Only when we admit our own mistakes can we improve. Then, we should focus on the things we can change. If we actively focus and work on things we can control, then we will feel like we’re in the driver’s seat. Lastly, see difficult situations as a learning experience, and remember that it will be over. Looking back, I realize that I have always learned something and emerged stronger after getting out of a bad situation. If we cannot change the external environment, we can at least change the way we see things.
What do you like most about specializing in asset management?
I always enjoy meeting new people, and my role lets me do this. As an asset manager managing a private equity fund, I spend most of my time understanding investment targets before a transaction, and managing portfolio companies after. I therefore regularly work with different people from diverse backgrounds, bringing new perspectives and ideas every day. Asset management also brings a sense of achievement, since the decisions I make have direct consequences to business performance and investment return. A bad decision can cost money, and since these are sizeable businesses, thousands of jobs are also at stake. That being said, I get a huge sense of satisfaction when I see businesses grow and improve as a result of my decisions.
In what ways has your CPA training helped you in your career?
It has given me the ability to link numbers with business operations. More importantly, the exposure to different businesses in different industries and countries helped me to form my own view on what makes a business good and another bad. I do believe this is an important skill when deciding whether to invest in a company, and what should be done after acquiring it.
How is Hong Kong maintaining its status as an asset management hub?
Of course, Hong Kong’s attractiveness to asset managers has always been the ease of doing business, and our proximity to Mainland China, and no doubt these will continue to be key to Hong Kong’s status as an asset management hub. Many service providers form symbiotic relationships with the asset management industry, like investment banks, debt lenders, lawyers, accountants, fund administrators and trustees. I find it much easier to get the support I need as an asset manager in Hong Kong, compared to many major cities in the world. In my view, if we can maintain a vibrant ecosystem, Hong Kong can continue to be the asset management hub of Asia. Accountants, as part of that ecosystem, have an important role to play as well.
What should asset managers focus on in the next 12 months?
To me, it is definitely inflation, governments’ and central banks’ reactions, and the resulting cascade of financial market turbulence. The impact is so pervasive that effectively all economies in the world will feel its impact. For over a decade, the world has not seen interest rate at this level. Since we are used to low-cost funding in the era of quantitative easing, it is easy to make mistakes in our investment decisions now that cost of funding is no longer that low.