This week and next.

Hello Insiders,

Hong Kong continues to be a flashpoint, both democratically and economically.

There was some very disturbing footage posted yesterday by The Guardian, of police storming a train which had stopped at an underground station.

It shows police beating people and pepper spraying them.

It is no understatement to say, Hong Kong is a mess which is extremely sad to see - a once vibrant city, tearing itself apart.

For those keen on understanding the warning signs of a capital flight from the world's fourth largest financial centre, this Bloomberg article is worth reading.

OBSERVATIONS

I noticed that Elsight (ASX:ELS), a company I visited on my last trip to Israel, has had some interesting developments over the past few months, least of which was its half yearly results on Friday.

The underpinning technology behind the company allows the transmission of data, in particular high definition video, using multiple mobile networks to transmit the one signal. In simple terms, the technology breaks one signal up, transmitting it on multiple available mobile networks, like 3G, 4g and 5G.

Elsight claim this makes it virtually un-hackable.

I like to describe it as trying to grab water running out of a tap. You might get a bit, but you'll never get it all.

The company generated US$863,655 from sales, in the first six months of the FY, although lost 1.6 million. See announcement here.

Most of its sales have historically been to the Israeli military.

But I believe Elsight's biggest achievement would have to be the launch of a new delivery system for its technology, which it has called HALO.

According to Elsight, "Halo integrates its high bandwidth totally secured data transmission technology, in a dramatically reduced form factor, weight, power consumption and heat index. The platform is offered in two main configurations: a compact standalone external device, or a lightweight internal board."

The latter is essentially, Elsight's technology on a chip.

For a company that makes drones, like a DJI or Yuneec International, two tightly held Chinese companies which are the largest drone manufacturers in the world, the Elsight application, which is light weight, hi-bandwidth, highly secure and delivers always-on data transmission, this technology could present an interesting possible inclusion into some of their products..

For Elsight, a tier one deal, while far from easy, would be transformational for the company.

I also note that Elsight has a new substantial shareholder, listed as LI KWOK PO DAVID.

A google search reveals that Kwok-po is the recently retired Chief Executive of the East Asia Bank, which is the largest independent local Hong Kong bank, and one of two remaining family run Hong Kong banks. One assumes Kwok-po is well connected and will remain as Executive Chairman of the bank.

Since the 8th of July, Kwok-po has purchased six million Elsight shares and currently holds 6.25% of the company.

The other interesting observation I note about Elsight, was the announcement, after Kwok-po became a substantial shareholder, all the major Elsight players entered into a voluntary escrow of their shares.

This means that 45.8% of Elsight shares cannot be sold on market until the 31st of March, 2020.

Why would such a substantial and significant group of shareholders agree to lock their shares up?

A fascinating question.

Have a great week.

Phil Carey.

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