Indranil Ghosh

Court dismisses former employee’s claims for discretionary bonus and unvested bonus awards In Yang Zhizhong v Nomura International (Hong Kong) Limited [2024] HKCFI 2192, the Court of First Instance dismissed the claims by a former employee for discretionary bonus award, annual base salary and loss of unvested bonus awards. The Plaintiff was employed by the Defendant bank as a senior investment banker. During an on-site inspection, the SFC identified a “three-way meeting” held amongst the Plaintiff, a potential IPO applicant, and the bank’s research analyst, during the final stage of the bank’s pitching for the IPO transaction, and without notifying the bank’s control room. This gave rise to a potential conflict of interest between the bank’s investment banking division and its independent research division, and a risk that the latter would be perceived as helping to solicit IBD business. After conducting an internal investigation and a disciplinary committee review, the Defendant considered that the Plaintiff did not take sufficient steps to manage any perceived conflicts of interest, and issued a written warning to the Plaintiff. The Defendant also decided to grant the Plaintiff a zero discretionary bonus for the performance year 2016/17, and exercised its contractual right to terminate the Plaintiff’s employment on the ground of redundancy in May 2017. The Plaintiff brought claims against the Defendant for breach of the employment contract in issuing him the written warning, in failing to grant a discretionary bonus award, and in terminating his employment on the ground of redundancy. Cheng J dismissed the Plaintiff’s claims, holding (amongst other things) that: ·      The implied duty of mutual trust and confidence cannot apply to the termination of employment relationship, and cannot be used to water down the employer’s contractual right to terminate employment without cause. The only qualification to the employer’s right of termination is that it cannot be exercised in order to avoid the employee becoming eligible for or receiving a bonus award.   ·      On the facts, the Defendant’s issuance of the written warning was for reasonable and proper cause, and not calculated to destroy or seriously damage the relationship of trust and confidence. ·      The Defendant’s decision to grant a zero bonus award was not irrational or in breach of contract. ·      Although the Court held that the employment was not terminated by reason of redundancy, it was terminated in exercise of the Defendant’s contractual right by giving three months’ notice, and it was not for the purpose of avoiding payment of a bonus award to the Plaintiff. The full judgment can be viewed here: https://lnkd.in/gmc_23JC Eva Sit SC and Sheena Wong were instructed by and acted for the Defendant. Bernard Man SC also acted for the Defendant during earlier stages of the proceedings. 

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Profit from Law of Scarcity. #fomo In-N-Out Burger recently held a pop-up event in Singapore, offering only 350 burgers for sale from 10am onwards, limited to one burger per customer. Despite this, they managed to sell 500 burgers, exceeding the intended sales volume by 142.8%! This event exemplifies the Law of Scarcity, where a limited supply of a highly demanded product creates a surge in demand. The success of this strategy was evident as eager customers queued as early as 3.30am. From an economic perspective, offering discounts can have a significant impact on consumer behavior. Behavioral economist Dan Ariely's experiment showed that changing the price from $0.01 to free for a product increased its desirability. The introduction of the word "free" can completely reverse consumer choices. As businesses, understanding the value your product offers and maintaining a balance in the market can drive profitability. For salespersons, focusing on providing irreplaceable knowledge in a knowledge-based economy is key to success. p.s: Do you know that In-N-Out Burger is only available to the west and NOT the east of USA? The long queues even at 11pm highlight the allure of scarcity and quality. Have you encountered other instances of the Law of Scarcity in action? Share your experiences! #LawOfScarcity #Economics #ConsumerBehavior #BusinessStrategy #SalesTactics #QualityControl #InNOutBurger #Singapore #LimitedEdition #DemandAndSupply

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It is a perennial chicken-and-egg issue - Do we bring in the investors or the IPOs first to energize the SGX? Second Minister of Finance, Chee Hong Tat, provides the solution that the government will support local based companies to IPO on the SGX. I have no doubt of the intentions of the government, but it speaks of a different scene on the ground. For the startup scene, I have a number of TRIVE's companies planning IPOs for exits in the coming years. And we spoke to a variety of M&A advisors for options of the SGX, HKSE and Nasdaq. It boils down to the same consideration - liquidity, valuation, ease of international investors buying into the stock and brand association. The portfolio companies will drop the consideration of the SGX and usually head for the Nasdaq listing, despite whatever grants, support that the government might provide. It is with good intentions of SVCA and Parliament to offer solutions to revitalize SGX. I for one, am a believer that we need a regional stock exchange that serves the upcoming SEA unicorns. Let's press on to develop deeper conversations.

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“Amid a persistent slowdown in the property market, Nomura Securities has given a cautious forecast for China’s economic growth, expecting it to be limited to 4.5% in 2024 and 4.0% in 2025, slower than the 5% growth in the first half of this year. Nomura Securities joins a number of global banks expecting China’s economy to grow more slowly in the second half, with UBS the latest to slash its forecast, following in the wake of Goldman Sachs Group Inc. and JPMorgan Chase & Co. On August 30, UBS lowered its forecast for China’s GDP growth in 2024 to 4.6%, down from 4.9%, citing the ongoing real estate downturn as a significant factor. Wang Tao, chief China economist at UBS, highlighted the property market’s failure to recover as exacerbating the economic headwinds. Lu Ting, Nomura’s chief economist for China, echoed these concerns, warning that the downward pressure of the property slump on China’s economy cannot be underestimated.“ “Data from the National Bureau of Statistics show that investment in real estate development fell by 10.2% year-on-year in the first seven months of 2024. Sales by the top 100 housing enterprises also dropped by 36.5% over the same period. This has led to a cold land auction market and declining local government revenues, directly affecting business confidence and future development expectations, Lu said. The ripple effect of the property slump is also being felt in consumer spending. Retail sales growth slowed to only 2.7% year-on-year in July, with Lu attributing this to the decline in housing prices, high unemployment in the construction sector and low wage growth among lower-income groups. The ‘new three’ sectors — electric vehicles, lithium batteries, and solar cells — which once buoyed China’s economic growth, now face their own challenges. Overinvestment has led to oversupply, causing prices to fall and profits to shrink. Financial markets are not faring much better.” “The scale of equity financing in both the IPO and secondary markets has dropped by more than 80% in 2024, limiting the ability of private companies to raise funds, Lu said. Lu emphasized that the economic challenges facing China are complex and multifaceted, with a significant difference between the access to credit of state-owned enterprises and private companies. The latter are finding it increasingly tough to secure finance, contributing to a broader decline in business confidence. In response to these challenges, China’s central government has rolled out a series of policies to support growth. However, Lu expressed skepticism about their effectiveness. He suggested that increasing central government fiscal expenditure could be more effective. Lu proposed bolstering social security to stimulate consumption. By increasing pensions for lower-income people, the government could promote social equity and enhance spending, revitalizing economic growth, he said.”

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