We are delighted to share with you the second part of our Q&A with Dr Johnny Hon. During part two, Dr Hon discusses the risks with sport investment, how he believes Foreign Direct Investment (FDI) brings direct benefits for domestic businesses. Plus, we get an insight into what interests him in the Entertainment industry from an investment perspective. Please comment and join the discussion below.
8. Global Group Entertainment Limited has been involved in some highly successful projects, what about this sector interests you the most from an investment point of view?
Over the last decade we have invested in a number of media projects, not only by providing financing to movies, television shows, plays and musicals, but also to innovative technologies that are changing the way content is consumed. This is where two of my great interests, film and technology, come together. Being at the cutting edge and understanding the latest industry trends, the demand drivers and overall direction of the industry is key to making successful long-term investments. There is dramatic change taking place in how the entertainment industry is doing business and much of it boils down to the internet. This type of structural change typically presents a good opportunity for innovators to enter a market and capture new ground. And this is particularly exciting in the context of Asia and the Middle East, which has yet to experience the full extent of the changes that are happening in the US and Europe. We’re ultimately seeking to make investments with partners in the west, understand where things are heading and then adapt those solutions for the Eastern markets. As with most things with Asia and the Middle East, the potential is huge and it’s very exciting.
9. As leaders and experts in both the sector and China, Global Group Capital Management Limited has delivered strategic advice to numerous clients. If you could offer one piece of advice to private investors attending the Global Group UK Investor Show what would it be?
We always look for opportunities that are undervalued, even in tough days. Private investors may consider evaluating their risk appetite, and invest in projects with discounts to the current asset value. The government recently announced match funding for startups impacted by coronavirus. This would be a good time to research and explore tech-projects with value, and we hope that private investors take this opportunity to invest in a valued price project.
10. You have a great passion and appreciation for theatre and film, and with both Global Group Films Limited and Global Group Entertainment Limited you have managed to connect Western and Eastern media projects together. What have been some of the main challenges you have had to overcome to be successful in this industry?
As exciting and interesting as the international film industry is, there are naturally many challenges we must face and overcome to be successful. The film industry has been confronted with vast changes, from technology, film production and film distribution, to cross-cultural productions and how to capture international audiences, all the way down to cinema availability and censorship restrictions, all of which vary from country to country, and so on. While at times the hurdles can seem infinite, much opportunity remains for the industry to bridge the frontiers, offer great business opportunities and, most importantly, put fascinating entertainment in front of audiences around the world.
11. Investment in Fine Art is becoming increasingly popular, and the Global Group is renowned for supporting and celebrating artists. Can you tell us more about the work that Global Group Capital does to help people invest in fine art?
Art investment is a great way for our clients to diversify their investment portfolios and our team is diligent in market analysis by tracking auction houses, curators, galleries, and by communicating with the artists themselves (when living) to identify hidden pearls and the potential for future value appreciation for our clients.
12. What is the importance of an IPO Subscription?
When a company becomes successful enough it may acquire more capital to grow further, and to enable this a company could do an IPO Subscription. Other than possible improvement in reputation and an increase in brand awareness, an IPO Subscription allows a company to source funds to support their growth and expansion. With additional equity capital, listed companies can fund for R&D or capital expenditure, among other things. This opens them up for new opportunities and connections and it further improves companies’ ability to acquire other businesses through issuing shares. Although an IPO Subscription might seem like a dream to thousands of small businesses, there are challenges in the progress of getting listed. There is never a ‘correct’ time to get listed, which means it always depends on the judgement of each company. This can be challenging as a bad listing timing could lead to failure after listing. Therefore, it is always better to look for a trustworthy corporate finance advisor to help in the process. Despite the challenges of getting listed, an IPO Subscription could be an exciting opportunity for exciting high growth companies.
13. How much power do you believe investing internationally brings to the domestic stock market?
Foreign Direct Investment (FDI) plays an important role in the UK domestic stock market. FDI brings direct benefits such as an increase in productivity, thus raising output and wages. It further brings new capabilities into domestic firms, which could help increase competitive pressure and improve productivity. FDI is positively correlated to economic growth. With the value of the UK’s FDI reaching its highest in 2017, to GBP 1.3 bn, it was seen that the GDP figure in 2017 was GBP 2.04 trillion, placing the UK as 5th in the ranking of GDP out of 196 countries. This growth extended until 2019, with a recorded GBP 2.21 trillion. This shows that FDI does play an important role in contributing to the UK’s economy.
14. The sports market is a varied high-risk high-reward market that is target based throughout, what are some major difficulties faced when investing in sports?
As exciting and interesting investing in sports sounds, there are a lot of challenges we face in finding the right opportunities. One of the challenges is how the underlying asset value can fluctuate drastically. It is sometimes difficult and hard to evaluate. Global Group has been focusing on investing in horse racing in the UK over the past decade. In order to enhance the chance of making the right decisions, we spend a lot of efforts in statistical research which help to increase the chance of success and thus, higher returns.