Transcription
Welcome to the session leading to volatility, strategies for agility and resilience. Um, I want to start by just talking about what has happened in the first 58 days of 2026.
Uh, on day three of 2026, the United States launched a military operation in Venezuela that resulted in the capture of President Maduro. On day 20, Canada's Prime Minister Mark Carney delivered a sobering speech in Davos, arguing that middle power countries must work more closely together to avoid being dominated by the larger geopolitical actors, indicating a rupture between US and Canada relations. On day 21 of this year, President Trump raised the possibility that the United States was could take control of Greenland, upsetting transatlantic relations. On day 31, the world watched as a US-led oil blockade of Cuba went into effect, trying to force a regime change, and that's still an ongoing issue. And then on day 58, just 23 days ago, US and Israeli forces struck Iran, creating instability in the Middle East and in energy markets. And all of this has happened in the first 81 days of the year.
For investors and business leaders, volatility is no longer an occasional disruption. It's becoming a defining feature of the global economy. Today's conversation, we're going to explore how countries, companies, and investors are positioning themselves to remain resilient, competitive, and forward-looking in an increasingly uncertain world. Let me begin by introducing our distinguished panelists. We have Dr. Rania Al-Mashat, who is from 1 month ago, was the former Minister of Planning, Economic Development, and International Cooperation for Egypt. She has flown in for 24 hours to be here in Hong Kong with us, and we really appreciate her making the effort. Uh, thank you. And then we have Kenny Gaw, the President and Co-Founder of Gaw Capital, one of Asia's leading real estate investment platforms with investments across property, infrastructure, and growth sectors globally, with a 35 billion AUM. Last but not least, Michael Smith, who's a group CEO of Hong Kong Land, one of Asia's most established property investment and development companies. They're a 50 billion juggernaut.
So Rania, let me start with you. Um, we, I opened the session by outlining how dramatically the world has changed in 58 days. Can you give the perspective as an economist, as a policymaker, on the situation in the Middle East and what is the mood on the ground?
Well, thank you, Laura, and thank you by, you know, starting narrating everything that took place. We, we almost forgot >> [laughter] >> that we were, uh, you know, just at the beginning of '26 with all these these events. Um, I think one of the biggest challenges from all of this is that we have a fragmented global order. You mentioned what Prime Minister Carney said in Davos. And the war that is taking place now has also showed a bigger divide between the US, Europe, and other countries. And this is an issue. This is an issue when it comes to trade, when it comes to investments, and so forth. The second big outcome is that nobody likes wars. Wars are very bad for investment sentiment. Wars are very bad for relocation of capital. Uh, wars are very bad for what we are seeing as global citizens, an affordability crisis that's affecting everyone, whether you're in the US or in sub-Saharan Africa. The impact of higher oil prices on inflation is not, is not a good one, and that affects consumer sentiment and consumer spending. Uh, the other element is that this war is also affecting supply chains in a very dramatic way and lifelines with respect to oil. And if we know that Hormuz Strait is accounting for around, uh, 1/5 of global oil movement, we also have the Suez Canal, which also is being affected, and that has 12% of global trade as well. So it's, it's, it's, it's a very compounded implication. I know that we've been all talking about companies being more resilient and individuals being more resilient over time, and and that we're seeing shock after shock, but I think we were just sort of recovering from the protectionist and the trade war that was taking place, or the, the, the policies that were taking place when we are compounded and confronted with this. And as a policymaker, you have, you know, different signals. You have contraction in demand, which is expected because of the high prices, but you also have inflation expectations, which are on the rise. So here you are, you know, in between what you do on monetary policy, particularly when fiscal space also for emerging markets is sort of getting tighter. So there's, there's as much as the uncertainty affects investors and movement of capital, also policymakers are confronted with trying to be on message, trying to communicate transparently to give a convincing and coherent story so that you are able to at least mitigate the implications of the, what we're going to hear, the investor sentiment, which is also reshaping in in different ways. So it's a very, it's not an easy situation. I think anyone who's sensible wants this to be as transitory as possible, as short-lived as possible, so that we don't go into deeper structural shifts which change sentiment and behavior in a way which make it more difficult to unwind. So that's the, that's the hope, but again, um, you just mentioned what happened in 81 days. I'm, I'm dreading to think about the next 81 [laughter] days, but, but anyway, I'll leave it at that as opening remarks. Thank you.
Sounds good. Thank you so much Rania for your insights. Let's bring Kenny in and then come from the investor perspective. As a global investor, how do you see these geopolitical tensions changing your views on opportunities and challenges?
Yeah, so, so [clears throat] I think all these disruptions for me first started in Trump 1.0 when he started the trade war. Mhm. Uh, and by now, I think we all realize that the biggest certainty today is uncertainty. Mhm. So that's what we've been seeing. Um, so we have been, we've been seeing this already, and and with this, with this war, suddenly, I would say the big losers are all the major US allies in the world. And surprisingly, the big winner is Russia, of all people. Uh, so what have, what have we been doing in the past few years is, um, you know, when, when the first trade war started, we figured, "Hey, um, factories need to move, relocate from China." So we went to places like Vietnam. We started developing industrial real estate there, uh, catering to factories that which are moving from China and doing this China plus one strategy. Um, we also, when Greater China had a downturn, we also diversified to Japan, which is the biggest market in Asia outside of, uh, and now is our by far our second biggest largest market. Uh, Australia, we saw that there was a big increase in housing prices and also an aging demographic. So we invested in senior housing. Uh, we also diversified into infrastructure, especially in digital infrastructure like data centers, telecom towers. Uh, we also diversified into renewable energy infrastructure. These, we feel that are important for the future of technology and AI, because these things will drive the growth of those things. Uh, we also recently invested in a waste management business, which obviously is also important for, uh, the continued growth and expansion of human society. So that's how we've been, um, diversifying to manage risk and just be nimble and be creative.
Okay. Thank you. Thank you, Kenny, for those insights. Uh, let's bring Michael into the conversation. Michael, you work for a company, or you lead a company that's been around since 1889. Can you give us some historical perspective, uh, how your company has handled past turmoils and and challenges that we can, you know, learn from?
Sure. Um, I think at in the last 137 years, don't underestimate Hong Kong. I mean, we've been, we bought our first piece of land in Hong Kong Central in 1889. And, you know, obviously every economy has has troughs and peaks, but probably the most exciting city in the world between a trough and a peak, I think, is Hong Kong. Um, you know, it's got a great mix of, um, sort of authorities that are very, very dynamic, low, low taxes, a really deep workforce, particularly in finance and tech. Um, proximity to China, no capital controls. There's a whole bunch of of different positives for Hong Kong that, you know, us as a firm, being here for 137 years, we've never underestimated and we continue to deploy more capital in Hong Kong. Not just Hong Kong, though. I think there are other gateway cities in Asia, which is a big focus of ours. So we have a big presence in Singapore, in Shanghai. We'd love to be in Singapore, in Tokyo, in Seoul. But it's really that belief of cities that have that sort of those advantages which attract talent. I mean, ultimately, what our business tries to do is to create ecosystems where you can all work and you can attract and retain the best people in your industries and your workforces. And our belief that if you can create an ecosystem, sort of a village square of a, a gateway city, that's where people are going to want to congregate. They want to live, work, play, shop, dine, and have great experiences. So, what we've got here in Hong Kong Central and Marina Bay in Singapore, in Wan Po River in Shanghai, are examples of trying to create those ecosystems. So, we're not as exciting as Kenny's business, but it's very, very focused in trying to ensure that when you really want to attract the best people and you want to retain them, that you do it in an ecosystem of ours.
And as a leader, how do you focus on short-term challenges and then long-term horizons? How do you, you know, juggle between those two things?
Well, it's, it's a great question. I think you really do have to be proactive and not reactive. I think we've, we laid out a sort of a strategic vision when I joined a couple of years ago of who we wanted to be, which is what I just sort of stated, and really stick to that. And and I think the, the capital markets really like companies that say what they are going to do and then do what they say. And I think when we sort of launched who we wanted to be and we made some pretty bold assertions of doubling our earnings and doubling up our dividends and doing a bunch of other things, that we then went and executed them. So, I think that proactivity of being a leader of business where you actually can go out and demonstrate to the world that you have conviction about who you want to be and you really take steps to get there.
>> [snorts] >> Well, let's shift gears right now and move to another massive force reshaping the global economy. AI and tech advancements. Kenny, coming back to you. Tech is increasingly dictating where and how capital is deployed, from data centers to digital infrastructures. How is the rise of AI changing the way you approach asset investment?
Yeah, so I mentioned earlier about diversifying into infrastructure. So, I, I would say that's part of the thinking also. So, obviously, I think data center is pretty obvious. I think, you know, you know, you need data centers to power AI. Uh, and then the other one is energy. Uh, without, without energy, without power, the, those computers and the chips don't work. So, I think those are pretty obvious diversifications. But then from a real estate standpoint, um, the way I also think about it is, no matter what AI does, as long as there are human beings on this earth, we are going to need real estate. So, we just need to figure out what kind of real estate. So, I think with AI coming, we all realize that it will probably disrupt a lot of white-collar jobs. Uh, and at some point, it may disrupt blue-collar jobs as well when there are humanoid robots. Um, but on the other hand, people will have more time. Right? They, they have, because of the machines doing the work. Uh, and most likely, there will be probably a further widening of the wealth gap, because the people with the best ideas and the people with capital would get richer. Because they can execute, I mean, the, the people with the best idea will get the people with the most capital to back them, and they need a lot fewer labor to execute whatever they're doing. Um, so, I think, um, the living sector is going to continue to do well. Whether it's luxury residential in top cities, holiday, holiday homes in top leisure destinations, um, resorts, those are, those are going to do well. And then I would say experiential type of real estate, whether it is, uh, uh, retail or resorts, I think those would do well. So, so that's the way we are thinking about it.
Okay. Well, some say the, the blue-collar jobs are the new white-collar jobs. So, it'll be interesting to see how those dynamics play out. Uh, Rania, I was thinking as a policymaker, um, talking about AI and the future of the workforce, what, where do you see the biggest opportunities for emerging economies?
Um, you know, when we had the COVID hit the world in 2020, we were always saying, "Leaving no one behind." I think with AI, countries have to be mindful that we don't leave countries behind. So, you know, there's the, uh, disparity between countries and their application of AI and so forth. But if all countries want growth and jobs, and that's a theme, whether you're in a developed economy or an emerging and developing economy, everybody wants to grow and everybody wants jobs. And jobs which are related to human capital are the ones that are important. For example, healthcare. Healthcare with AI is going to create actually more jobs. So, I think that for countries with big populations, um, there needs to be, you know, a thinking of how the AI revolution can actually help you skill, help you, you know, make use of the demographic dividend that does, that does exist. So, I would say healthcare is one. We have other sectors as well, but, um, with AI today, government policy is one that should not just be, uh, you know, just education, just higher education. It's one which is more cross-cutting. Uh, and therefore, it's, it's a, you know, policies have to be a more government-wide approach, not just very specific, uh, to an education. So, I think that, you know, the more sectors that have to do or deal with services are the ones that will, will be, I would say, with a bigger impact when it comes to AI.
Yeah. And with AI, there's also the geopolitics of AI. How are you seeing that? I mean, I also love to hear from Kenny in terms of, you know, data centers and other investments. It could be only for China or for US technology. How, how are you navigating that space?
Yeah, you know, the, um, the world has been kind of moving towards a two-camp world. But actually, with what's going on now with what is Venezuela, Iran, and all that, it's starting to evolve maybe into multi-camp, right? Like Europe doesn't look like it's firmly in the US camp anymore. Uh, and Brazil got kicked out of the US camp. I think India wanted to be closer to the US, but has been pushed now to be playing both sides. Um, so, I think it remains to be seen how it's going to play out. But yes, so far, I would say data center developments have been kind of, um, your data center is either for the Chinese users or for the non-Chinese users. And and frankly, most of the hyperscalers are either Chinese or the US. They are, I mean, other countries just don't have hyperscalers anymore. So, that is happening. Um, but in terms of, uh, how the technology is going to play out is also interesting, right? You look at China. You have the US have denied China chips. Uh, but China has another big advantage. They have no power deficit. China has all the solar solar power in the world. They have the best battery technology in the world. They have wind. They are building more nuclear power plants than anyone else in the world. Uh, and they're building the biggest hydropower facility as well. So, China does not have a power problem. Also, the grid system is world-class. They are now piping solar power directly from the desert to coastal cities. Um, nobody else is doing that. Um, and and the other thing is the human capital of China. China is producing also more engineers than the rest of the world combined. Also, because Chinese Chinese students is all going into STEM and sciences. Um, so, I think despite the lack of the cutting-edge chips, as long as the chips are good enough, which I think they're getting to become good enough, um, you, you have already seen China keeping pace in the AI race, and I think nobody will be surprised if one day China actually overtakes the US. Plus, you know, all these, all the applications that they have in manufacturing, in robotics, um, self-driving cars, all that, they have a lot more applications in the, in the country. Yeah.
Absolutely. I think, yeah, China seems to be one of the most resilient economies with dealing with this current crisis of oil crisis. So, it's interesting to see that their investment on green energy has paid off. Uh, Michael, if you wanted to add something related to AI and and maybe the Chinese economy as well.
Sure, sure. So, I think probably the best example for us is we have a project in Shanghai called West Bund Central, which is, I think we're spending 9 or 10 billion US dollars on building 12 office buildings, two Mandarins, a convention center, 600 shops, 600 apartments. It's, I think the largest commercial project currently under construction anywhere, possibly in China or the world. But the opportunity for us from an a technology perspective is to put in a real flexible digital infrastructure that, you know, is maybe not, you know, something that we haven't done before, but we've got an opportunity to ensure that it has the flexibility to accommodate whatever our tenants need or whatever the occupiers need. And nobody, I don't think even the tech tycoons in the room know exactly how these things will change, but having a physical flexible infrastructure to enable that, we want to put that in. And I think going forward, all real estate owners are going to have to consider that and think about how they do that. We just have the good fortune of having this one large project under construction at one time that we will make sure is is equipped for the future.
Great. I want to shift gears again and be talk more about opportunities and things you're positive about. I mean, we talked a lot about the challenges that that facing around the world. Um, where are, um, where the, you know, the, the shiny opportunities that you think are exciting for economies? I'd love to hear from Rania in terms of, you know, as a policymaker, what are the sectors that you see that can transform economies?
Um, and I think the energy transition is very important. We, the case of Africa, Egypt, North Africa, solar winds, investments in the grids, there's, there's plenty of opportunity there. Also, I mean, we're not talking about climate finance, but you know, that is a bright spot for investors who want to actually invest in in solar wind and renewables, and also nuclear for electricity generation generation is one. Other sectors which are important, services, logistics, also anything that has to do with, you know, the, the consumer. I think is, is promising and proving to be important alternative supply chains with everything that's happening. So that is also going to be one, and stuff that we just discussed, anything that was related to AI and technology and R&D related to that are, you know, positives. But again, governments have to do their role in making sure that the environment is conducive to be able to remove barriers, have more predictability with respect to regulations, make sure that there's a, you know, opportunity for PPPs to take place when, when needed, particularly on the, on the infrastructure that is required to capitalize on everything that we're talking about.
Yeah, thank you. Thank you, Rania. So Kenny and Michael, I mean, where do you see the most resilient opportunities? And maybe Kenny, you can also talk about the United States. I know you guys do some investments in the US. We haven't talked much about the US economy.
Yeah, lately, I guess our our best ideas in the US was actually contrarian. Nobody in the US likes offices. But we saw that office prices gone down enough in certain places where there's still growth that becomes interesting. Like, for example, we bought office buildings in San Francisco and Seattle. These are economies which are which have growth from tech investments, especially San Francisco with a lot of AI money going in, right? So you can buy office buildings which are like, you know, like we bought a building in San Francisco. It's, it's a campus style complex. When we bought it, it was 55% occupied. And with 55% occupancy, we got a 10% cap rate. That means the other 45% whatever you whatever you increase in rental is going to be just gravy, right? Of course, there's a catch. The catch is you cannot get financing for me. So, but you get, you're getting paid. You're getting paid 10% for for holding it. And we, we did a few leases, now it's up to 80%, and we just got to refinance most of our equity out. Seattle, we bought a campus in Bellevue, which is where Microsoft, Amazon is also like tech tech driven. I think it's 80% occupancy and it was a 14% cap rate. But we underwrote it with no, no financing. Eventually, we did get financing to to close the deal. So you can get that kind of, um, opportunity where you really get paid for taking the risk, but the downside is very limited because you're basically getting paid for downside, for downside risk. But I want to say that sitting in Hong Kong, I must say that for me, the best opportunity right now, at least in the real estate world, to invest is in Hong Kong. It, it is the best risk to reward type of trade. Hong Kong has gone through, um, five, six years of downturn since since the 2018, 2019 government protests and then COVID and all that. Residential prices have gone down 30 to 40%. But at this 30 to 40% down level, is getting a lot of support, a lot of buyers, and very well diversified, well diversified buyer group from domestic Hong Kong people, from new new new immigrants from China. Um, And the price have gone down this much, but the rental index is all-time high. So this is the actual rental rates all-time high because the government has been very successful in bringing back, bringing in immigration through the talent scheme and also the student market. The quota for students in universities has gone from 20% to now 50%. So that's a big jump in number of students. So you see a lot of demand from that. And office sector, I think Michael can probably tell you more. Yeah, that's good. It has, has been very tough. Mhm. But hey, central CBD in Hong Kong now low, low to mid single digits. Yes. Anyone with a lease here, I would encourage to sign it quickly, cuz rents are going like >> [laughter] >> I think the best buildings like in IFC and stuff is like 1 or 2%. >> 1% vacant. Apple follows down to 5%. Crazy. But on the other hand, that this is the interesting part. It's recovering. But it's still distressed. Because the banks are not lending. The banks are only lending to residential developments. The banks are only lending to the Hong Kong Lands and Swires of the world. Most Hong Kong corporates are not getting loans. And many of many many Hong Kong companies, uh, in the past have borrowed what they thought is low LTV, but since prices have dropped, has dropped 40, 50%, suddenly the low LTV becomes high LTV, and they have cross, cross collateralization. So a lot of them needs rescue capital. So there's a lot of very good deals to be done here with private credit backed by real estate collateral or structured equity type of investments where your downside is protected, or just pure distressed rescue financing to these kind of corporates. So I would say for us around the world, this is the best risk to reward opportunity. I, I agree with Kenny. >> [laughter] >> I know. I would just go back to my point that I think for all of us in the room, where are you going to find your talent? Which city in the world do you need to find your best people that you're going to be able to attract and recruit and keep loyal to your firms? And I think that's a question that we all should answer, and we, we think these financial centers such as Hong Kong, Singapore, Shanghai, but Tokyo, Seoul, Sydney have all of the qualities that your future workers are going to want to be in. And, you know, having, having that thought, you know, you can't just be the sort of CEO saying, "We're going to be based ourselves here now." If it's data analysts or software engineers or whatever it is, they're going to tell you where they want to be. And you need to think about that and when you're planning your businesses, it's really, where is the talent going to be and where do they prefer to live?
Well, we have only a couple minutes left. So I wanted to talk about the future and kind of, we talked about all the challenges that we're facing, geopolitical, AI, tech. When you look at the horizon for 5 years from now, how do you see the future of cities, future of employment, future of talent? If you just give us like a some idea, what do you imagine the future to be like?
Rania. In the case of Egypt, for those who know, we used to occupy 4% of the land, and over the past, uh, 14 years, there's been an expansion into new cities in order to absorb the, the extra population and also to create development corridors. So to go from the Delta all the way to Sinai and and and so forth. So there's been a lot of investment in in new cities, and investment in new cities means energy, means water, sanitation, means entertainment, means schools, human capital development. So it's been a very ambitious ongoing. Now, we went from 4% to close to maybe 10% of the land with the new city. So, you know, everything else equal or ceteris paribus, as economists, which is very difficult in in today's world, this is going to be a very important engine for growth and also a way to tie in, in the case of Egypt, between the industrial and private sector development along with the residential. So it's a, it's a very, it's a very ambitious ongoing plan, and this is supposed to create the growth and jobs that I, that I mentioned, and all of this also supports the drive for renewables, supports the drive for more private capital coming into some of the key sectors, increasing, as you mentioned in your opening remarks, competitiveness for the economy.
I think, I think human beings are communal, communal animals. We would still like to live closer to other people. At least most people do. In Hong Kong, in particular. What are these dreams about people just all moving to the mountains and the beaches and all that? There'll be some, but I think cities are still where the growth is going to be because people want to be next to each other. And I think for me, investment like from the most basic thing, invest in like living sector, especially the right kind of living sector, and also in energy infrastructure. These are like fundamental and core.
I just quickly, I think, you know, the intertwine between public and private sectors, you know, having a government that really is supportive of the private sector and is agile enough to keep up with the private sector. Having low tax bases, having public security that if you're walking home at night from your office, you're not going to get mugged. I mean, there's the sort of general things that a city should have. And if that sounds like Hong Kong, it's, it's probably right. So.
Thank you. I agree with that, Michael. I think the companies and countries that will succeed, they're, they're going to be able to do agility with strategic patience, and I think that's what it takes. We covered a lot of ground today. We have a second panel coming up on sports. I wanted to end by inviting you all to the Milken Global Conference in LA, which takes takes place on May 4th to the 7th. And then we have our Singapore Summit, our Asia Summit, which is October 7th to the 9th. I hope to see you there. Thank you for being here, and thank you to the panelists.
>> Thank you, Laura.
>> Thank you.
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