SINGAPORE (June 15): Nearly four out of 10 or 38% of disgruntled workers in Singapore and Hong Kong have plans to leave their companies in the next six months, says the latest Randstad survey.

In Malaysia, the figure is slightly lower at 35%.

The 2017 Randstad Employer Brand Research report also revealed that young male employees across the three markets were most likely to leave. 

The two main reasons that are driving the employees away are poor salary and benefits along with the lack of career progression. The third largest factor in Singapore and Malaysia was a lack of appreciation from management, while Hong Kongers complained about a poor workplace atmosphere.

The report also revealed that sentiments were consistently represented across all demographics and markets, but younger employees were more concerned about their salary and benefits.

Michael Smith, Managing Director, Randstad Singapore, Hong Kong and Malaysia, says, “While organisations look at improving their employer brands to attract the best new talent into their ranks, management needs to be wary of the high risk of losing their staff."

“Our latest research highlights the unsettling number of employees planning to leave their jobs in the near future. This reinforces the need for organisations to not only look out at new talent, but also inwards to ensure the retention of their best staff. Research has shown that the cost replacing a lost employee can be very high in terms of time and money."

“While bringing in talent with great salaries and promises of career progression opportunities, organisations must not rest once those individuals have settled in. These companies must consistently monitor the advancement of these factors as the individuals grow within the organisation,” adds Smith.

SINGAPORE (June 16): It might not feel like it but the future is bright. And, rather than seek the safety of bonds or dividend-yielding blue chips, investors ought to reach for stocks on the vanguard of change and progress.

It seems clear that we’re on the cusp of a massive wave of innovation and invention that is reshaping many industries in unexpected ways. Some people are calling it a new industrial revolution, and saying that it will change the world the way the steam engine did back in the 1700s. In reality, the global economy been steadily changing with new technological trends. After the steam engine came the smokestacks and factories that drove mass production of goods during the late 1800s and early 1900s, which is sometimes called the Second Industrial Revolution. Then, came the rise of computers in the late 1960s, which some people refer to as the beginnings of the Third Industrial Revolution.

Now, with the Internet, 3D printing and even artificial intelligence, it seems that a Fourth Industrial Revolution is upon us. Song Seng Wun, an economist at CIMB, sees this new wave of technological advancements bringing more efficient manufacturing and workflow processes that will allow companies to do more with fewer resources. A digital revolution also “creates extra business opportunities enabled by technology that was not there before”, he adds.

Bob Allen, an economic historian, says that advancing technology also typically bring better labour productivity and higher incomes. In his study of the First Industrial Revolution, Allen found a self-reinforcing spiral of higher wages leading to more investment in labour-saving technology, which in turn leads to even higher wages.

However, that relationship between productivity and higher wages appears to have crumbled in recent times. In fact, global real wage growth has decelerated from 2.5% in 2012 to 1.7% in 2015, the lowest pace of growth in four years, the International Labour Organisation said in its latest Global Wage Report 2016/17. Excluding China, where wage growth was faster than elsewhere, wage growth fell from 1.6% in 2012 to 0.9% in 2015.

Why isn’t improving labour productivity translating to higher wages? One reason is globalization. Pulitzer prize-winning columnist Thomas Friedman, in his book The Lexus and the Olive Tree, notes that an increasingly interconnected global economy makes it hard for wages in wealthy countries to stay up. “Globalisation is not a choice. Basically, 80% of it is driven by technology. And, the technology exists to blow away walls and to tie you together, and to get access to the best technology and the cheapest wages of Taiwan, Mexico, or Mississippi.”

So, what should investors do in the face of all this? Firstly, it’s important to recognise when change is about to happen. For instance, in the public transport sector, it seems clear that ride-hailing companies like Uber and Grab are in the process of changing everything, perhaps at the expense of the traditional players.

Secondly, it’s important to act early. For instance, it was clear for years that the telecoms companies would suffer lower call volumes as mobile broadband services improved. It was also only a matter of time before lots of alternatives to the traditional pay-TV services would emerge. Yet, the high dividend yields offered by companies like StarHub kept investors from selling. In February, StarHub shocked the market when it said it would pay a quarterly dividend of four cents per share in 2017. That is 20% lower than the five cents per share it paid as a final dividend for 2016.

Abandoning safe haven blue chips like StarHub might seem foolhardy, especially in the face of looming uncertainty. But it is better to look for stocks that are set to benefit from the change that’s unfolding than hope that things will stop changing.

The latest issue of The Edge Singapore looks at traditional defensive stocks that are being disrupted, and offers some views on where the new crop of winners might be.

Click on this week's cover page to subscribe to The Edge Singapore

(June 17): For Amazon.com Inc., the blockbuster deal to buy Whole Foods Market Inc. is a giant step toward dominating every part of a consumer’s shopping experience. Amazon is already in your mailbox, with all of the items you’re purchasing with your Prime membership; your living room, with its Echo device and Prime television services; your library, with its Kindle; and your closet, with Zappos. Now it wants to fill your fridge.

“This is an earthquake rattling through the grocery sector as well as the retail world,” Mark Hamrick, analyst at Bankrate.com, said in an email.

The US$13.7 billion ($18.9 billion) acquisition ties in with The Edge Singapore’s cover story this week on how new technologies and shifting consumer behaviour are destroying the reliable returns once offered by some widely owned heavyweight stocks.

But these same trends of new technologies and shifting consumer behaviour are creating a new crop of winners.

Against this backdrop, narrow groups of global technology and internet companies seen to be at the forefront of new disruptive trends have seen their shares outperform, partly on the back of expectations of fast growth but also because of their scarcity value.

(See also: Heavyweight stocks disrupted by new technologies, shifting consumer behaviour)

Amazon agreed to pay US$42 a share in cash for the organic-food chain, including debt, a roughly 27% premium to the stock price at Thursday’s close. John Mackey, Whole Foods’ outspoken co-founder, will continue to run the business -- a victory after a fight with activist investor Jana Partners that threatened to drive him from power.

With the Whole Foods deal, Amazon Chief Executive Officer Jeff Bezos is acknowledging that, after a decade-long foray marked by scattershot experimentation, he couldn’t go it alone in the US$800 billion grocery business. The company tried to compete with several offerings: Amazon Fresh, available in 20 cities; Amazon Pantry, which lets consumers buy crackers, paper towels, and other non perishables; and Prime Now, which delivers groceries from local stores in some cities. Its Dash buttons allow easy ordering of household items, and Subscribe & Save gives discounts to customers who commit to regular deliveries of products like tampons, toothpaste or dish soap.

But the many options confused customers, and a major gauntlet remained: Fresh food. Selling produce online is hard. Waste is inherent, and shoppers have long been reluctant to buy a cantaloupe they can’t squeeze.

Big Footprint
The Whole Foods purchase gives Amazon hundreds of physical stores, the footprint the company knows it needs. More than that, Whole Foods has mastered fresh food: The company gets two-thirds of its sales from perishables like fruits, vegetables and meats, while most supermarkets get only about 25% of sales from those categories, according to Kurt Jetta, CEO of consumer products research firm TABS Analytics. And the Whole Foods deal gives Amazon strong industry knowledge, something it knows it’s lacking, according to a person with knowledge of the matter.

“Amazon clearly wants to be in grocery, clearly believes a physical presence gives them an advantage,” said Michael Pachter, an analyst at Wedbush Securities Inc. “I assume the physical presence gives them the ability to distribute other products more locally. So theoretically you could get 5-minute delivery.”

What Amazon brings is engineering prowess. The company will look for ways to use automation and other technologies to streamline checkout at Whole Foods and sell groceries at lower prices, said the person, who asked not to be identified discussing non-public plans. To do that, it’s considering selling fewer items and integrating tools from the cashierless store Amazon Go into checkout stations across Whole Foods. Amazon also wants fewer employees in each store, with those who remain providing product expertise, rather than performing mundane tasks. The idea is to gravitate away from the "Whole Paycheck" perception for high prices that has dogged Whole Foods, the person said.

Amazon spokesman Drew Herdener said the company has “no plans” to deploy no-checkout technology in Whole Foods locations.

“This will be a good deal for consumers, including those who might not have been doing business with Whole Foods in the past, either because of its positioning in the organic branding space or because prices have been seen as high," Hamrick said. “Amazon can be expected to work to deliver better value to grocery customers, both online and within the brick-and-mortar space.”

Long Consideration
Amazon’s talks with Whole Foods began three years ago, when Amazon was developing fast delivery service Prime Now, according to a person familiar with the talks who declined to be identified disclosing private information. Whole Foods was receptive, the person said, but went dark and then announced a deal with Instacart Inc.

The Whole Foods idea resurfaced again in 2016, Bloomberg reported earlier this year, and it took a lot of convincing for the notoriously frugal Bezos to be persuaded to cut a deal this size -- more than ten times bigger than his largest acquisition so far, according to a different person familiar with the matter.

Even so, the announcement sent shockwaves across industries, from payments to retailing. Grocery chains plunged on Friday -- Wal-Mart Stores Inc. fell 4.7%, while Kroger Co. tumbled 9.2 percent -- as investors worried that woes will mount in the increasingly cutthroat industry. Payments companies Square Inc., Vantiv Inc., Blackhawk Network Holdings and Verifone Systems Inc. also took hits Friday on concern that the deal will lessen demand for traditional methods of paying for goods at checkout.

Another Offer?
Some of Whole Food’s largest investors think it’s possible that another retailer will come back with a higher bid. Wal-Mart, Target Corp. and Kroger may make offers to push Amazon to spend more, according to Karen Short, an analyst for Barclays.

Amazon and Whole Foods weren’t always seen as obvious partners, but Mackey has been under pressure to find an acquirer after Jana disclosed a more than 8% stake and began pushing for a buyout. That prodding irked Mackey, who has referred to Whole Foods as his “baby” and to Jana as “greedy bastards.” By enlisting Amazon, he gets to keep his job as chief executive officer of the grocery chain while giving the stock price a jolt.

Whole Foods shares surged 29% to US$42.68 in New York, above the agreed-on price, a sign that some investors are indeed speculating that a rival may try to outbid Amazon. Shares of Amazon gained 2.4% to US$987.71.

S&P said it may cut Amazon’s AA- rating, since Amazon’s leverage will increase as a result of the Whole Foods purchase. If S&P does, it would be the first time Amazon’s rating has been changed by the agency since 2012.

The transaction will have big implications for Instacart, a startup that has delivered grocery orders from Whole Foods stores in more than 20 states and Washington, D.C. Last year, the San Francisco-based company signed a five-year delivery partnership with Whole Foods, according to a person familiar with Instacart’s business who was not authorised to talk publicly about it. The contract remains in place, this person said.

Before the Whole Foods purchase, Amazon’s biggest announced buyout came in 2014, when it agreed to buy video-game service Twitch Interactive Inc. for US$970 million in cash, according to data compiled by Bloomberg. The Seattle-based company had about US$21.5 billion of cash and equivalents at the end of March, the data show.

“Millions of people love Whole Foods Market because they offer the best natural and organic foods, and they make it fun to eat healthy,” Bezos said in Friday’s statement. The takeover is slated to be completed in the second half of the year, with Whole Foods’ headquarters remaining in Austin, Texas.

Goldman Sachs Group Inc. advised Amazon on the deal and Evercore Partners Inc., advised Whole Foods.

SINGAPORE (June 19): Singapore Exchange is teaming up with a unit of Agency for Science Technology and Research to help startups and SMEs tap R&D expertise and capital markets.

SGX and ETPL – the commercialisation arm of A*STAR – today announced that they will be signing a two-year MOU to help startups and SMEs tap on innovative technologies and capital more efficiently.

This is the regulator’s latest move to boost its profile as a market for such firms in the region. Three weeks ago, SGX said it signed a deal with the local IT regulator to help companies in that sector tap the market.

SGX and ETPL will jointly identify companies with growth potential to help them access growth capital from private or public capital markets in Singapore efficiently. The partnership is expected to drive business growth and capture greater value for Singapore’s economy.

The partnership also seeks to help startups and SMEs better translate their inventions and intellectual capital into marketable products, processes and services.

The enterprises can leverage on A*STAR’s multi-disciplinary R&D capabilities, while ETPL will provide guidance in productisation and business development.

The partnership targets companies in the technology sector. SGX and ETPL will raise awareness among these fast growing innovative companies on the technology transfer opportunities in Singapore, and SGX will organise forums on how they can raise capital and expand their business in the Asia-Pacific region.

Medtech, biotech and cleantech are among the targeted areas, SGX notes, adding, "Singapore's capital markets as a source of funding and a platform to expand their businesses globally."

To facilitate the collaboration, six market professionals – Catalist sponsors SAC Capital and UOB Kay Hian, law firms Virtus Law LLP and WongPartnership LLP, and audit firms Deloitte Singapore and PwC Singapore – have committed to come on board to provide professional support to the companies identified by ETPL and SGX.

Liquidia is one of the companies that can potentially benefit from the MOU signed between SGX and ETPL to expand its capabilities into Singapore’s specialty and biopharmaceutical space, as Liquidia’s ability to precisely engineer drug particles of nearly any composition, size and shape through its PRINT® technology bears significance in the realm of therapeutics not just in Singapore, but worldwide. 

Chew Sutat, Head of Equities and Fixed Income of SGX, said, “By marrying our capital markets expertise with ETPL’s technology commercialisation capabilities, we look forward to playing a part in nurturing competitive and future-ready companies and strengthening Singapore’s position as a technology hub.”

Philip Lim, CEO of ETPL, said, “Access to finance and in-house technological capabilities continue to be key challenges for entrepreneurs in today’s increasingly competitive business environment. The SGX-ETPL partnership will leverage each other’s complementary strengths to address these challenges, and help grow a pipeline of quality enterprises and promising intellectual properties that deliver greater economic impact for Singapore.”