Apollo Investment Management Ltd’s Q2 2019 Manager’s Report

Apollo Investment Management Ltd is an investment management firm registered in the British Virgin Islands. Founded by Claire Barnes, the company focuses on Asian equities and seeks absolute returns through individual stocks with intrinsic value. The firm doesn’t seek funds from the general public and acts as an adviser to AIMS Asset Management Sdn Bhd, which manages the Apollo Asia Fund.

Claire Barnes has almost four decades of experience in equity investment. She focuses on Asia and has lived in many Asian countries. She graduated from Clare College with a degree in Mathematics.

In its most recent report, Apollo Investment Management reported a 0.2% decline during the second quarter. In addition to the explanation behind the fund’s exponential decline, the firm also reported the compound growth of its investments.

“Apollo Asia Fund’s NAV fell 0.2% in the second quarter, to US$2,126.94.

It was a mercifully quiet quarter for company-specific developments from our portfolio holdings, given everything else coming over the newswires, and the potential for geopolitical realignment and the rewiring of the global economy – so let’s take a break from all that, to review part of the standard investment case for Asia, and inherent risks often ignored.

An everyday story of Asian growth

Investors in Asia routinely see graphs like the first one on the right. It could represent the past or the future, the actual or projected march of food sales, widget manufacture, or passenger throughput. Actually, this particular chart just represents 5% compound growth over time. 5% may seem a pedestrian rate to choose: we investors are often looking for the sweet spots at which much higher rates are achieved by individual industries, and tracking consumption of shampoo, smartphones, or security services. The whole Chinese economy has grown at more than 9% per annum for the last fifty years, is still growing at well over 6%, and it is easy to find individual sectors growing faster – but bear with me while I focus on the consequences of compound annual growth at this moderate annual rate of 5%. There are many Asian countries which believe that 5% is sustainable, with governments that are targetting to maintain their rate of growth at this level or more. Economic growth remains correlated with the consumption of ever more materials and Stuff: there are many industries growing volumes and footprint at this pace.

I had the good fortune to be posted to Malaysia in 1983. I arrived on the day after Henley Royal Regatta, which makes it 36 years ago this week. Over that period, statistics tell us that real GDP has compounded at an annual rate of 5.5% – so over the period, it has grown 7-fold. (It has slowed slightly over the decades, but the next two charts show that this period was no aberration: some spectacular recessions now look like mere blips in the upward march, and since 1960 the size of the economy has multiplied 35 times.)”

You can download a copy of Apollo Investment Management Ltd’s Q2 2019 Manager’s Report here:

Apollo Investment Management Ltd’s Q2 2019 Managers Report

You can also see the list of our 2019 Q2 investor letters and download them on this page.