Apollo Asia Fund

Cherish the reef-dwellers
Apollo Asia Fund: the manager's report for 4Q23

NAV of the Apollo Asia Fund fell 1.7% in the fourth quarter': an 8% tumble in October was partly clawed back over the next two months. For the year, NAV fell 1.2% to US$2,560.33 (Series A). It's up 22% over the four years since the COVID pandemic began, and 59% since the end of March 2020, when global markets had begun to rally after the initial pandemic slump. Over the 26 years since inception, compound annual growth has been 16.5%, and the NAV has multiplied 53-fold.

Geographical breakdown
by listing; 31 Dec 2023
% of assets
Hong Kong
Sri Lanka
Net cash & receivables

Events in the Middle East continued to shock throughout the quarter, from the Hamas attacks of 7 Oct through the unprecedented destruction wrought by Israel on the civilian population and life-support systems of Gaza.¹ After weeks of discussion about ethnic cleansing and war crimes, as the disaster continued and compounded, South Africa declared Israel to be committing genocide, submitting an application to the International Court of Justice on 29 Dec. Hearings will begin on 11 Jan, and obligations of prevention could apparently be imposed in the following week. A determination of genocide may achieve a vital ceasefire in Gaza. It would also implicate all who provided military and financial support, which may have widespread political consequences.²

That a way out of the impasse is being led by South Africa, with the support by early January of Turkey and Malaysia, seems both fitting and fascinating. The old order is changing.

The journalist John Pilger died on 30 Dec. He once wrote that "the secret and illegal bombing of then neutral Cambodia by President Richard Nixon and Henry Kissinger between 1969 and 1973 caused such widespread death and devastation that it was critical in Pol Pot's drive for power... the successful recruitment of young men... in dropping the equivalent of five Hiroshimas on a peasant society... the bombing was a catalyst for the rise of a small sectarian group, the Khmer Rouge, whose combination of Maoism and medievalism had no popular base."³ Fifty years later, both Cambodia and the US continue to suffer from the cycles of violence.

Individuals may see this clearly, while finding it hard to influence their governments. Millions of people in western countries marched unsuccessfully in 2001-3 to prevent the invasion of Iraq and Stop the War; in recent months many more have been calling for a Ceasefire Now in Gaza. With limited options available to voters, the unrepresentative nature of supposed democracies is increasingly striking.

This geopolitical chaos has given China an opportunity to present itself as the responsible superpower, with a range of PR initiatives to enhance its reputation and extend its influence in Southeast Asia even as it suppresses dissent at home.

Stories of individuals abducted or lured into slavery for online scam hubs in Cambodia, Laos and Myanmar had emerged over the last few years. Escapees reported on individual operations; by September the scale was apparent, and several Southeast Asian governments were ready to welcome Chinese help to release their citizens along with the the many PRC victims. The ousted National Unity Government of Myanmar declared its support for collaboration on transnational crime, and Operation 1027 was launched. By November tens of thousands of captives had been freed, and hundreds of non-Chinese citizens repatriated. China, rather than the US or ASEAN, was reported to have brokered peace talks.

Indonesia's first high-speed train, launched in October, attracted a million passengers in its first couple of months, and increased Jakarta-Bandung frequency to 48 trips per day. Network connections now need to catch up, but this is an impressive proof-of-concept that puts China in the lead for discussions of longer lines in Indonesia, as it is already in mainland South-East Asia given network-logic - and the wow factor prompts grudging admiration.

2024 is starting with record high global temperatures. Every day for almost 10 months has seen the daily mean Sea Surface Temperature at a record high, and the size of the anomaly is startling. The Guardian summarised 2023 as a year of rapid, dramatic change, with the breakdown of climate systems taking place much earlier than foreseen. It is feared that coral reefs are in imminent danger: the linked paper is paywalled, but warns that "unprecedented coral bleaching and mortality are likely to occur across the Indo-Pacific in 2024", due to the warmer temperatures expected to be brought by El Niño, which will also affect fragile mangrove forests and seabed meadows. All these are barriers against coastal erosion, and vital habitats, important for the food security of nations.

The authors fear that there may be no coral reefs after the next few decades, and that we may lose 25% of ocean biodiversity.

If planning some diving, don't delay: enjoy otherworldly beings while we have them! & then, see what each of us can do to increase their chances of survival. Asian scientists are campaigning for marine protected areas and curbs on pollution, as well as erecting shade canopies and preserving coral species in labs and aquaria.

Best wishes to our investors for the Dragon Year. May it prove as peaceful as the leafy seadragon.

Claire Barnes, 8 January 2024

  1. Israel has also created new grievances in the West Bank.
  2. Former British ambassador Craig Murray wrote on 13 Nov about the ability of 149 states to invoke the Genocide Convention, and how a determination of genocide by the International Court of Justice would imply the responsibility of states and individuals to prevent it. After puzzling over delays, he concluded on 13 Dec that an ICJ application seemed so certain to succeed that the implications of criminal liability for powerful individuals had made diplomats wary of action.
  3. 'How Thatcher gave Pol Pot a hand', The New Statesman, 17 Apr 2000. (Henry Kissinger also died this quarter, on 29 Nov.)
  4. Reduced information flows and confidence-to-discuss are now barriers to foreign investment in mainland PRC entities, and increasingly in Hong Kong.
  5. The overall situation in Myanmar remains complex. See David Scott Mathieson's recent summary, 'Analytical Blind Spots and Armed Conflict in Myanmar', and Bertil Lintner 'Putting the Myanmar Military's Recent Losses in Perspective'.
  6. Meanwhile COP 28 agreed on "transitioning away from fossil fuels in energy systems", leaving industry plans to triple plastics capacity quite unconstrained. Much of that expansion will be in Asia... but microplastics in any case have global reach.
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