Apollo Investment Management
What was new - 2014 archive

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8 Dec 14:
The Apollo Asia Fund NAV fell a further 2.2% in November, to US$1,981.13; charts.

22 Nov 14:
The Stock Exchange of Hong Kong, not to be deterred by cogent opposition to the reintroduction of disproportionate voting rights, has issued a Concept Paper. David Webb's submission in response notes 'the naked self-interest of HKEx in continuing to push for weakening our regulatory standards', and observes that the regulatory role should be removed from for-profit exchanges - in this case, transferred to the SFC. He has launched a petition to keep 1-share-1-vote: please sign.

5 Nov 14:
The Apollo Asia Fund NAV fell 0.6% in October, to US$2,025.84; charts.

30 Oct 14:
The Post Carbon Institute suggests that US production of shale gas and tight oil will remain robust in the short term but then decline rapidly, and that EIA forecasts are extremely optimistic. One summary says 'New report casts doubt on fracking production numbers'; the full report by J. David Hughes is entitled 'Drilling Deeper: a reality check on US government forecasts for a lasting tight oil & shale gas boom'.

23 Oct 14:
Politicians resemble gangsters, says John Kay: 'Mob justice is a dangerous way to deal with bad businesses'.

19 Oct 14:
The 3Q report has been posted. As noted there, Apollo Asia Fund is changing its administrator. Apex Fund Services will take over on 1 November; we and our investors will be dealing with the Singapore office. We have retained HSBC as custodian.

Recommended reading: recent blogposts by Andrew Smithers on the divergence between underlying and reported profit trends in the US, and on Japanese v US depreciation.

17 Oct 14:
The dependence of Asian refineries on Middle Eastern supplies of crude oil is contrasted with the more diverse mix used by Australia's refineries in an article with excellent charts by Matt Mushalik pointing out the growing dependencies caused by Australian refinery closures.

3 Oct 14:
The Apollo Asia Fund NAV fell 4.1% in September, to US$2,037.55; charts.

1 Oct 14:
'Undermining Indonesian democracy: last gasp, or a sign of things to come?' asks Elizabeth Pisani, author of the highly readable and hugely informative book 'Indonesia etc'.

The front page of yesterday's Asian edition of the Financial Times proclaimed: 'Shale boom to put US on top of petroleum output league; Saudi Arabia set to be overtaken'. While US monthly production has certainly been rising, the following articles from Gail Tverberg provide essential context with great clarity: 'Making sense of the US oil story' and 'Update on US natural gas, coal, nuclear, and renewables'. Matt Mushalik notes that recent 'US shale oil growth covers up production drop in rest-of-world', and provided extraordinarily informative charts showing underlying trends for different groups of countries in this analysis of the global oil picture. The chart for Asia-Pacific casts an interesting light on the recent performance of China, where oil production has grown 29% since 2000, in contrast with the rest of the region, where it has fallen 13%. Matt notes that 'once hitherto growing countries enter the plateau phase, the underlying decline will become visible in the global curve. That will be a surprise for many governments who take oil supplies for granted.'

3 Sep 14:
The NAV of the Apollo Asia Fund crept up 0.1% in August, to another fractional new high of US$2,125.54; charts.

5 Aug 14:
The NAV of the Apollo Asia Fund rose 1.2% in July, to another fractional new high of US$2,122.90; charts.

3 Jul 14:
The NAV of the Apollo Asia Fund rose 1.9% in June, to a new high of US$2,098.23; the performance page and charts will be updated in a few weeks due to travel, but the 2Q report has been posted.

24 Jun 14:
An interesting conversation on oil palm, kindly hosted by Aberdeen, prompted me to update myself on sustainability initiatives, and the information sources now available. Sime Darby is taking this more seriously than many others. We repeat our call for improved disclosure and transparency, and explain the dangers of reliance on certification schemes, in 'Considering oil palm plantations'.

18 Jun 14:
Euan Mearns has excellent charts to illustrate his overviews of global energy trends and of 'China - the coal monster'.

12 Jun 14:
There was a typo in the income report posted yesterday, apologies: the deemed 'distribution date' for 2013 is 30 June 2014. The report now online is correct.

11 Jun 14:
UK investors please note that the annual reports of income for UK Reporting Fund purposes will be posted on this page: UK Reporting Fund Status. The 2013 report is now available, and future reports will be posted within six months of each year end, ie by June each year.

4 Jun 14:
The NAV of the Apollo Asia Fund rose 1.2% in May, edging it to a new high of US$2,058.93; charts.

30 May 14:
Fortunately we do not own CapitaMalls Asia. I am used to 'independent directors' who do not form their views independently, but I am astonished that Singapore allows directors of the parent company to be classified as independent, and to act as such despite the obvious conflicts of interest in the current takeover proposal. Michael Dee writes that the 'offer for CMA is still undervalued: minorities need to speak up for their rights'. Since that is partly behind a paywall, Michiel Wind has provided a summary of Dee's comments here.

6 May 14:
The NAV of the Apollo Asia Fund rose 1.0% in April, to another fractional new high of US$2,034.34; charts.

28 Apr 14:
Conflicted controlling shareholders and the effectiveness of independent directors are now under scrutiny in another case involving major players at the heart of the Singapore establishment: the CapitaLand offer for the minority holding in CapitaMalls Asia. Michiel Wind has provided an excellent summary of the issues and the controversy: 'Minorities' right to expect full value'.

Archaeological discoveries in recent years have shed light on Asian trade history, wealth creation, and the occasional major disruptions from political developments. Those taking a long view may be interested in an overview from the late Dr Roxanna Brown: 'Shipwreck ceramics and the fall of Melaka'.

18 Apr 14:
The 1Q report is entitled 'world in flux'.

2 Apr 14:
The NAV of the Apollo Asia Fund rose 1.7% in March, to a fractional new high of US$2,013.48; charts.

28 Mar 14:
David Webb is invaluable with his usual lucid explanation of issues at stake in the imminent votes for a downgrade of listing status at Jardine Matheson, Jardine Strategic, Dairy Farm, Mandarin Oriental, and Hongkong Land. We were unaware that Singapore, where the group shares are traded, plays no material regulatory role, and that the London listing is crucial in this regard.

The ten-year returns that the group has chosen to highlight have indeed been good. David mentions the bull market in property; I would also note the relevance of rerating following earlier dismal decades, and the possible role of paranoia and extreme risk-aversion in the recent excellence of the capital allocation, along with an element of luck involved in the Astra purchase. The interests of controlling and minority shareholders have recently been generally well aligned. We wonder whether this is true in every detail: aspects of the dividend reinvestment option deter many retail and other investors from accepting, and it may be coincidental that this tends to maximise the resultant percentage increase each year in the stake of the controlling shareholder. In any case, interests will not always be aligned in future. Meanwhile, groupthink and complacency are significant risks, and strong independent directors could be highly beneficial - but that's enough of our wishful thinking. There is a danger of low turnout, and a probability that the controlling shareholders can carry the day, but Singapore regulators are apparently still considering their options - so, shareholders, please express an opinion in the form of your vote.

26 Mar 14:
For a bracing overview of Malaysia's economic performance since 1970, listen to today's BFM interview with Professor Woo Wing Thye. He identifies the May 2000 agreement for China's WTO entry as a crucial turning point for Malaysia; after this its share of global FDI dwindled and was no longer adequate to offset the ongoing negatives of brain drain and capital flight. Importing cheap migrant labout was "not a viable strategy, cannot work, and has not worked". Prof Woo sees hope in the theoretical consensus on the need to move on from race-based policies and mobilise national talent on an inclusive basis.

5 Mar 14:
UK investors please note that Apollo Asia Fund has been notified by HM Revenue & Customs that it has been accepted for entry into the Reporting Fund regime with effect from 1 January 2013. Reporting Fund status involves a calculation of income per Investor Share in the prescribed format, allowing capital gains to be separately assessed, which may lower the tax liabilities of some of our shareholders. For 2013 onwards, the relevant report to investors will be posted on this website within six months of each year-end.

4 Mar 14:
The NAV of the Apollo Asia Fund rose 1.4% in February, to US$1,980.74; charts.

5 Feb 14:
The NAV of the Apollo Asia Fund fell 2.5% in January, to US$1,953.40; charts.

15 Jan 14:
Chandran Nair argues that governments need to be more active: 'Any plausible pathway to sustainable development must involve the state'.

10 Jan 14:
The 4Q report discusses the many changes in our assumptions over the last five years, and why past performance is definitely no guide to the future: the next three decades may be different.

3 Jan 14:
The NAV of the Apollo Asia Fund rose 2.0% in December, to a fractional new high of US$2,003.60; charts.

Claire Barnes

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