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Phuket Lifestyle – jury is still out on litigation funding

Legacy Phuket Gazette

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PHUKET: One very exciting new asset class available to individual investors that I have been looking into is litigation funding. When I first heard about some notes attached to this I thought it sounded too good to be true and dismissed it, but as sometimes is the case, extraordinary opportunities can arise.

The asset class is currently only accessible via structured notes, but these work very differently than most other forms of investment, which I usually think are a rip-off. I have heard a fund structure is currently being put together for listing on the Irish exchange and this really excites me.

Litigation is expensive and often fairly clear-cut cases are not tried because the costs of going to trial are prohibitive. We all know the story of David and Goliath, and many big corporations often get away with misdeeds simply because it is too difficult to fight a “Goliath” team of high-paid of lawyers.

Litigation funding levels the playing and helps David. The notes I have looked into have always been commercial litigation, so it is not helping lowlifes chase frivolous cases hoping for a quick buck.

The interesting thing is that insurance companies will actually insure cases they consider to be clear-cut. The costs are included in the structure and insurance costs are even covered in the insurance. So, if the case is lost, the insurance company is on the hook and the investors have their capital protected.

I am not a big fan of guarantees, but this one appears to hold water. Insurance companies are not big risk-takers, and they only insure cases that are “sure” wins. As such, the win ratio of funded litigation is very high – and the premiums collected are pretty large as well, as insurance companies aren’t charities, either.

Despite the costs of insurance and financing, the potential take from profitable lawsuits can be large, as well as participation in the award amount.

Apparently the market for unfunded litigation is enormous. As it stands now, the cases never move forward because the companies can’t afford them and the litigation funding market is still relatively small.

I am not yet convinced of the actual way this opportunity is packaged, but I am still doing my homework and waiting to see how things unfold for some people who I know are willing to be investor guinea pigs.

However, I am convinced of the concept, but in the investing world that isn’t enough. You may have known computers were the future 25 years ago, but if you threw all of your money into Tandy you’d probably be kicking yourself now.

The reason I believe this asset class could become exciting very quickly is that it is completely unrelated to traditional and even almost all other alternative asset classes. It doesn’t matter what is happening in the stock markets, bond markets, economy or elsewhere.

Litigation funding could be a great addition to a portfolio to lower overall volatility and increase returns. I will continue to see how this market grows and will most likely be writing about this again in the future.

I would be very careful, however, of sticking a large percentage of your portfolio into a new asset class – at least “new” in terms of being geared towards individual investors, as there has been corporate litigation funding for quite some time.

David Mayes MBA provides wealth management services to expats around the globe, specializing in UK pension transfers. He can be reached at david.m@faramond.com

— David Mayes

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Archiving articles from the Phuket Gazette circa 1998 - 2017. View the Phuket Gazette online archive and Digital Gazette PDF Prints.

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Approval sought for multi-billion-baht Phuket medical hub

Maya Taylor

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Approval sought for multi-billion-baht Phuket medical hub | The Thaiger
Mai Khao beach in north Phuket - PHOTO: www.makemytrip.com

Industry officials are seeking the go-ahead for a project to transform over 140 rai of government land in Phuket into a world-leading medical hub. The project is budgeted at 3 – 4 billion baht, depending on which report you read. Kitkong Tantijaraswarodom, from the Federation of Thai Industries, believes the development of a medical and wellness hub in the sub-district of Mai Khao, north Phuket, will help revive the southern island’s battered economy. Phuket has become increasingly reliant on a steady flow of tourists over the past 2 decades.

The southern division of the FTI covers Phuket, Krabi, Phang Nga, Nakhon Si Thammarat, Trang, Patthalung, Surat Thani, Ranong, Satun, Chumphon, and Songkhla.

“The FTI will ask the government to green-light the project during the scheduled mobile cabinet meeting on the island on November 3.”

Kitkong says businesspeople in the south are anxious for the government to approve the project, which will provide both locals and foreign medical tourists with state-of-the-art medical care. The facility is expected to include long-term care, hospice and rehabilitation services, in addition to a dental hospital, sports therapy centre, and a medical training school for doctors, nurses, pharmacists and medical laboratory scientists.

The chair of the FTI’s southern chapter is also calling on officials to provide small and medium-sized businesses with additional support, in the form of access to loans, in order to deal with cash shortages.

“In the short term, the FTI wants the government to help SMEs, especially those in the tourism sector.”

SOURCE: Bangkok Post

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Up to 5,900 jobs to go as Hong Kong carrier Cathay Dragon shuts down

Maya Taylor

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Up to 5,900 jobs to go as Hong Kong carrier Cathay Dragon shuts down | The Thaiger
PHOTO: Kwok Ho Eddie Wong / Flickr

Hong Kong airline Cathay Pacific is set to close its subsidiary, Cathay Dragon, with the loss of up to 5,900 jobs. The carrier, that used to be called Dragon Air before being absorbed by Cathay, has become yet another casualty of the Covid-19 pandemic that has decimated the aviation business.

The Bangkok Post reports that 5,300 jobs are expected to go in the airline’s Hong Kong base, with a further 600 axed overseas, accounting for 17% of Cathay’s total workforce. Cathay Dragon primarily operated short-haul routes within Asia, including direct flights from Hong Kong to Bangkok and Phuket.

Cathay Pacific bosses have hammered out a HK$2.2 billion restructuring plan that involves thousands of job cuts, pilots and cabin crew having to sign cheaper contracts, and total closure of its subsidiary carrier. The South China Morning Post describes the plan as, “life or death”, reporting cuts to a total of 8,500 jobs across the group. The parent airline is understood to be applying for approval to absorb Cathay Dragon’s routes into the Cathay Pacific network, as well as that of its low-cost carrier, HK Express.

Cathay Pacific CEO, Augustus Tang, says the restructuring plan is essential to Cathay’s future survival as the effects of the Covid-19 pandemic show no sign of abating.

“The global pandemic continues to have a devastating impact on aviation and the hard truth is we must fundamentally restructure the Group to survive. We have to do this to protect as many jobs as possible and meet our responsibilities to the Hong Kong aviation hub and our customers.”

SOURCE: Bangkok Post| South China Morning Post

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Thailand’s media spend shrinks as brands shy away from ‘bad’ news

The Thaiger

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Thailand’s media spend shrinks as brands shy away from ‘bad’ news | The Thaiger
PHOTO: Thailand Business News

Young protesters, who use social media and messaging intuitively vs Thai officials and police who try and track those messages to keep up with the plans of the protest movement. Although Thai police have water cannons and brute force, the Thai youth at the core of the current protest movement also have a valuable weapon. And it’s being used more than ever at the moment. But this increased traffic is not transforming into increased media spending from Thailand’s main brands.

Social media analyts Wisesight say social media is being ‘weaponised’, not only to plan and communicate with fellow protesters, but also “spread the word” of the issues behind their campaign and share their stories with friends. Posts on social media have nearly doubled to 40 million messages a day over the past week. The daily average of posts in past months are around 20-22 million a day.

“Some 40 million messages were posted on social media in Thailand on Oct 15, mainly driven by political strife,” according to Kla Tangsuwan, CEO of Wisesight.

But the increased traffic on social media hasn’t meant that brands are increasing their spending to take advantage of the additional ‘reach’.

In fact, Wisesight say brands are pausing digital media spending after the political conflict ramped up this week. Usually digital media spend spikes in Q4 with the approaching festive season, a peak buying time for consumers. Media were hoping that sentiment would rebound as the world “pandemic” started the settle in October, but fresh political protests, and a surge in new global Covid-19 cases, have caused brands to “pause or wait and see”.

“Brands have begun to hold back on digital media spending in the fourth quarter as political messages flood online platforms, drawing attention away from commercial activity.”

According to the business director of Media Intelligence, Pawat Ruangdejworachai, businesses are pausing their media spend.

“They lack confidence and are hard to gain attraction from audiences that have more interest in political movements.”

The report also notes that Thailand’s social media landscape, and broader media landscape generally, are entering a new paradigm where usage is driven mainly by Generations Y and Z who use their media intuitively and consume it in real time, the vast majority on their smartphones.

Gen Y. Gen Y, or Millennials, were born between 1980 and 1994. They are currently between 24-39 years old.

Gen Z. Gen Z is the newest generation to be named and were born between 1996 and 2015. They are currently between 5-24 years old.

According to Media Intelligence, media spending is expected to fall 20% in Thailand to 71.2 billion baht this year. Internet channels are forecast to be the only media which will see growth this year, up 0.5% to 19.7 billion baht.

SOURCE: wisesight.com

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