Apollo Asia Fund

Maintenance & mitigation
Apollo Asia Fund: the manager's report for 1Q24

NAV of the Apollo Asia Fund rose 1.4% in the first quarter, to US$2,596.27 (Series A). It's up 24% over the four-and-a-quarter years since the COVID pandemic began, and 62% since the end of March 2020, when global markets had begun to rally after the initial pandemic slump. Over the 26-plus years since inception, compound annual growth has been 16.4%, and the NAV has multiplied 54-fold.

Geographical breakdown
by listing; 31 Mar 2024
% of assets
Hong Kong
Sri Lanka
Net cash & receivables

In the six months since the Hamas attacks of 7th October, the extraordinary brutality by Israel against defenceless civilians in Gaza, and the willingness of the US and other allies to provide funding, weaponry and political cover in defiance of the United Nations and the International Court of Justice have caused shocks which seem far-reaching. Apart from the dangers of conflict widening regionally or globally, and of various forms of blowback:

However, new awareness of imperiled democratic freedoms, and of the role and value of institutions such as the various UN bodies and the International Court of Justice, may contain the seeds of rejuvenation. Around the world, more citizens are engaging, trying to constrain their own governments. New conversations are starting, for example in the expanded BRICS group. Countries like South Africa and Ireland appear to be gaining in stature, and potential influence, as they differentiate their foreign policies.

An immediate practical effect has been seen in Malaysia, which relaxed visa requirements for many short-term visitors and has seen a surge in foreign arrivals, providing relief to local shops and restaurants after several difficult years.

This contrasts with Hong Kong, where international (non-PRC) visitors have not returned to previous highs, partly because of travel warnings, but difficulties for the performing arts also suggest changes in the character of the city. Meanwhile weekends now see many locals heading to Shenzhen for cheaper shopping and recreation, reducing footfall and pricing power for Hong Kong retailers. The efficiency of transport links does at least demonstrate the planned integration of the Greater Bay Area.

One infrastructure project on which work may start soon is the proposed Funan Techo Canal in Cambodia. Since Vietnam is concerned about the environmental and military implications, this may be worth keeping an eye on.

So too is the whole country of Myanmar, where the junta has been losing territory and control, and sudden regime change seems possible.

The World Health Organisation finally acknowledged in March that COVID is airborne, four years after this should have been clear, although unfortunately still using confusing language. Research during the pandemic has demonstrated the value of clean air, which improves concentration and increases productivity while lowering rates of infection (for many diseases, not just COVID). A major wave of investment to improve indoor air quality would be justified. Customers and tenants may reward building owners who pay attention.

The Baltimore bridge collapse drew attention to vulnerabilities in physical infrastructure, as cyberattacks did for the virtual infrastructure. Ageing assets call for more spending on maintenance and replacement, while environmental damage and natural disasters are requiring more spending on mitigation. These will be trends for the long term.

There should be growing demand for inspection and maintenance services, better ventilation, energy efficiency, and genuinely circular and sustainable processes. Unprecedented environmental change, and ongoing pollution, suggest that an increasing share of public and household spending will also go to mitigation. Demand growth is no guarantee of attractive cashflows, but we'll keep a look out for good investments in these sectors, and reader suggestions will be very welcome.

Maintenance of international law and cooperation, and the mitigation of psychological and physical war damage, are also urgently needed. As friends and colleagues celebrate the end of the fasting month, I have been reading an article about a plant that grows in my garden - and all along the maritime trade routes connecting Asia to the Mediterranean and Africa, planted to supply rope and emergency sailcloth as well as a favourite food. Variations in its cooking spark passionate loyalty in Egypt. It's extraordinarily nutritious, with intriguing medicinal properties. It's a wonder crop, known by many different names.² I collected and sowed seeds yesterday, not realising that it may be especially valued by diners in Ramadan. I will treasure it all the more after 'Revisiting molokhia amid war and displacement in Gaza'.

Claire Barnes, 10 April 2024

  1. Apart from the cases at the ICJ about obligations under the Genocide Convention of Israel, its allies, and all 153 State Parties, the UK's contention that it can choose which terms of a treaty to observe is raising eyebrows in the Assange case. If a growing number of people around the world believe that western nations apply laws selectively, their confidence in such law and willingness to adhere to it will be affected. Their calculations on behaviour, safe havens and investments may change.
  2. Corchorus species, jute, saluyot, molokhia... Wikipedia; medicinal properties.
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