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FAIR VALUE MEASUREMENTS

12 Months Ended

Dec. 31, 2021

23.	FAIR VALUE MEASUREMENTS

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value:

Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets

Level 2 – Inputs that are based on quoted prices and market observable data of similar instruments in active markets

Level 3 – Unobservable inputs that are supported by little or no market activities

The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

Derivative instruments are classified within Level 2 of the fair value hierarchy because the valuation inputs are based on quoted prices and market observable data of similar instruments in active markets, such as currency spot and forward rates.

As of December 31, 2020 and 2021, Level 3 assets and liabilities of the Company included investments in exchangeable and convertible loan, investments in sovereign bonds, investments carried at fair value and redeemable preference shares of investees and other assets.

Investments in debt securities – the carrying amount approximates fair value due to its short-term nature.

Other assets – the Company used Market approach to determine the fair value of certain assets by comparing to the sale and purchase transactions of comparable assets in the market, adjusted with differences such as size, physical condition, location and etc.

Investments carried at fair value – the Company used a combination of valuation methodologies, including market and income approaches based on the Company’s best estimate, which is determined by using information including but not limited to the pricing of recent rounds of financing of the investees, future cash flow forecasts, liquidity factors and multiples of a selection of comparable companies.

Convertible Notes – the Company used discounted cash flow method to determine the fair value of the liability component (non-recurring, Level 3). The discounted cash flow takes into account the present value of expected future cash flows from coupon interest and redemption amount, discounted by the implied credit yield as at issuance date or with reference to similar instruments that did not have associated convertible features.

Assets and liabilities measured or reported at fair value on a recurring basis are summarized below:

	Fair value measurement as of December 31, 2020
	Quoted prices in active markets for identical assets (Level 1) $			Significant other observable inputs (Level 2) $		Unobservable inputs (Level 3) $		Total $

Held to maturity investments		100,071			–		286		100,357
Available-for-sale investments		5,688			–		21,357		27,045
Equity securities		76,000			–		–		76,000
Other assets		–			–		19,024		19,024
Share appreciation rights		(11,640	)		–		–		(11,640	)
		170,119			–		40,667		210,786

	Fair value measurement as of December 31, 2021
	Quoted prices in active markets for identical assets (Level 1) $			Significant other observable inputs (Level 2) $		Unobservable inputs (Level 3) $		Total $

Held to maturity investments		937,741			–		450		938,191
Available-for-sale investments		185,929			–		34,376		220,305
Equity securities		13,184			–		–		13,184
Investments carried at fair value		–			–		178,298		178,298
Other assets		–			–		11,711		11,711
Derivative assets⁽¹⁾		–			694		–		694
Share appreciation rights		(15,401	)		–		–		(15,401	)
		1,121,453			694		224,835		1,346,982

⁽¹⁾	Included in accrued expenses and other assets in the consolidated balance sheets and not designated as hedges.

Reconciliations of assets and liabilities categorized within Level 3 under the fair value hierarchy are as follow:

	$
Available-for-sale investments
Balance as of January 1, 2019		70,374
Addition		72,000
Net investment loss included in earnings		(1,087	)
Net unrealized loss included in other comprehensive income		(12,869	)
Balance as of December 31, 2019		128,418
Addition		20,429
Conversion into ordinary shares of investees		(72,000	)
Net investment loss included in earnings		(51,000	)
Net unrealized loss included in other comprehensive income		(4,490	)
Balance as of December 31, 2020		21,357
Addition		35,298
Conversion into ordinary shares of investee		(21,340	)
Net unrealized loss included in other comprehensive income		(958	)
Translation gain included in other comprehensive income		19
Balance as of December 31, 2021		34,376

Investments carried at fair value
Balance as of January 1, 2019, January 1, 2020 and December 31, 2020			–
Addition			151,227
Net investment gain included in earnings			27,071
Balance as of December 31, 2021			178,298

Other assets
Balance as of January 1, 2019 and January 1, 2020	–
Acquisition of subsidiaries	8,860
Additions	13,340
Disposals	(363	)
Write-down included in earnings	(3,713	)
Foreign exchange gain included in earnings	900
Balance as of December 31, 2020	19,024
Additions	186
Disposals	(3,513	)
Write-down included in earnings	(3,627	)
Foreign exchange loss included in earnings	(359	)
Balance as of December 31, 2021	11,711

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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