Apollo Asia Fund
What was new - 2021 archive

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23 Dec 21:
Bursa Malaysia last week announced an updated Corporate Governance Guide, adding to the SC's efforts to improve listed companies' interactions with investors. "Shareholders should exercise their rights to ask questions, provide views and vote at general meetings", per the MCCG, so we've submitted advance questions and look forward to the required 'meaningful responses' at Daibochi's Christmastide AGM.

16 Dec 21:
The AGM of Daibochi has been scheduled for the fifth day of Christmas, 29 Dec. It is a virtual meeting, with complicated procedures for registration, so it seems advisable for investors to make arrangements early - especially given the public holidays, and an early deadline for the advance submission of questions which will otherwise have to be submitted realtime through a query box. Last year Apollo Asia Fund registered early but was unable to participate in the AGM; regular readers will know that we had a similar experience at the Scientex investor briefing in September. Few shareholders accepted the lowball offer from Scientex, so it would be timely for the management and board of Daibochi to update us all on the long-term strategy of the independent company, a national and regional leader in the high-growth business of flexible packaging. The annual report falls short, and recent announcements and proposals beg many questions, yet our suggestion of a special investor briefing was deemed unnecessary; we've been told that the AGM is to be the next opportunity for discussion. Virtual meeting formats have required some trial and error around the world, and shareholders have been on a steep learning curve to make the most of the new arrangements and to minimise their idiosyncracies and pitfalls. We hope that most shareholders will participate online in Daibochi's AGM, both to gain practice and to assist in achieving the 'robust interactive discussion' now expected by the Securities Commission Malaysia, whose updated codes and guidelines and AGM checklist may be found at https://www.sc.com.my/regulation/corporate-governance.

15 Dec 21:
#CovidIsAirborne and the rapid transmission of Omicron is highlighting the importance of ventilation as well as masks and vaccination. Understanding of the virus has been evolving over the course of the pandemic; regulatory guidance has not universally kept up, and the torrent of advice of varying quality seems to have caused some to tune out. In the 3Q report I noted misallocation of resources to hygiene theatre; ventilation is harder to photograph for the annual report, but more important for safety and productivity. Please encourage everyone inside buildings (factories, offices, accommodation, shops...) to consider air flow in the spaces for which they're responsible, or over which they have any influence. Simple measures such as opening doors or windows to improve cross-ventilation can make a big difference, and inexpensive CO2 monitors can help with analysis. Studies in schools have shown that good ventilation improves concentration and general health, so managers minimising the risks of Covid downtime, fatalities and disruption may also gain productivity benefits. Here's an excellent infographic on Safer Indoor Air for Workplaces, embedded in a short guide from OzSAGE; the version in note form is here. More infographics and other resources may be found at www.covidisairborne.org.

"Ensuring a safe workplace is an economic imperative", and factories and worker accommodation have been past drivers of infection at various stages, prolonging disruption. We therefore urge the managers and directors of our holdings to cut down on the spraying of chemicals which may damage health and environment, and to pay attention to air quality. Please follow advice from Dr Tedros to "prevent the spread of Omicron with measures that work today. It's not vaccines instead of masks, distancing, ventilation or hand hygiene. Do it all. Do it consistently. Do it well."

1 Dec 21:
The NAV of the Series A shares fell 2.4% in November to US$ 2,782.67; charts.

29 Nov 21:
Lynas Rare Earths held its AGM in Australia today. We don't own the shares, which are up more than 8-fold in the 20 months since the market low coincided with a change of government in Malaysia, but I found the chairman's statement and presentation so interesting that I looked up the 40-page ESG report. These are wonderful examples of a problem discussed here before: leaving companies to self-select ESG issues is a gift to PR agencies but a disservice to the public. The chairman opens with COVID hygiene protocols and the vaccination of Malaysian employees, before mentioning global demand. The CEO highlighted gender diversity. The ESG report adds concerns for modern slavery, and the reporting of greenhouse gas emissions. In January I suggested that governments wishing to nudge capital allocation towards sustainability should consider environmental scrutineers with the expertise to ask more relevant questions and the authority to expect accurate answers on the record at AGMs. Outsiders might have suggested questions from Friday's list by Sahabat Alam Malaysia (Friends of the Earth) on the controversial Environmental Impact Assessment now in the last days of public consultation: concerns over groundwater contamination, peatlands, modelling, floods, stability, subsidence, local partner, legal process, differential waste classification, misinterpretation of the International Atomic Energy Agency...

Another thing I noticed is that Bloomberg's compilation of news on the company includes few of the sources on which Malaysian residents may rely. Simple internet searches also seem prone to missing major issues and important online analysis (even if not using a search engine which customises the results to assumed interests). Are investors in Australia aware of the level of environmental and procedural concern about this company in Malaysia? It highlights the knowledge delusion: because we now have so much global data at our fingertips, there is a risk of assuming that we have the same information as other stakeholders, instead of recognising ongoing limits to our knowledge, the influence of different filters, and major differences of perspective. This may seem obvious - but the omissions in the corporate news stream startled me today.

3 Nov 21:
Snowflakes in Glasgow? I appreciate the environmental cartoons of Rohan Chakravarty, and am astonished to read that a collection drawn up for COP 26 was deemed too outspoken to be presented there. Psychological blindspots are potentially important to investors, so any sensitivities that may blind us to alternative views are worth examining. Which of these concepts would be too much for the delegates sent to discuss practical responses to rapid and extreme change? We can consider tbe possibilities for ourselves, as Rohan has made his COP 26 collection available here.

1 Nov 21:
The NAV of the Series A shares rose 3.4% in October to a new high of US$ 2,852.33; charts.

4 Oct 21:
The 3Q report discusses healthy markets, current buoyancy, and psychological perils below the surface.

2 Oct 21:
The NAV of the Series A shares rose by an insignificant smidgeon in September, to US$ 2,759.13; charts.

29 Sep 21:
The scheduled briefing by Scientex generated one surprise, and not in any way that we had expected. Update!

28 Sep 21:
The World Bank estimated in July that the economy of Myanmar would shrink by 18% in the year ending this month, to a size 30% smaller than expected before the pandemic and coup. Vicky Bowman of MCRB and John Morrison and Salil Tripathi of IHRB have co-authored helpful comments for governments and companies trying to decide what to do next, and briefly setting out principles which may be useful in other contexts: 'Staying or Leaving Myanmar? What's needed is a Human Rights-led Approach'.

Daibochi reported results, and the attempt by its controlling shareholder to privatise it on the cheap has been the subject of some discussion. We have updated the page on this proposal, which we consider opportunistic and antisocial at a time of such upheaval. Daibochi is trying to roll out more ecologically responsible products to meet customer demand; Scientex talks ESG so we hope it may start to pay more attention to the S & G.

25 Sep 21:
At CIMB's Cooler Earth Sustainability Summit this week, a climate change action plan was laid out for oil palm plantations and government. It's a model of brevity and clarity; we hope it's adopted, and provides inspiration for other sectors. 5 recommendations for companies, 5 for government & authorities.

17 Sep 21:
Update: another investor has followed Mr Lim's lead and bought more Daibochi shares rather than selling out to him: transactions on 15 Sept.

16 Sep 21:
'Here we go again...' new article on the latest attempt at a squeeze-out delisting, this time by Scientex for Daibochi. Inadequate price, unnecessary distraction. Surely in a pandemic it would be better to maintain good relationships and trust with all parties, rather than trying to take advantage of your own investors? Sigh. Minorities please note, the insiders think the shares undervalued... they want to buy...

12 Sep 21:
I have not read the book, temporarily out of stock, but this review may provide some idea of the issues with which Malaysians are grappling, and the background to the political crisis of the last 18 months which I am unqualified to discuss. Political changes have led to decisions which appear to be undermining the economic model of decades, without much policy debate. The stakes seem high; the floodwaters uncharted. Many people are working hard on mitigation and a rethink. Cyril Pereira on the new book by Dennis Ignatius. Thanks Asia Sentinel.

2 Sep 21:
The NAV of the Series A shares rose 6.4% in August, to US$ 2,758.31; charts.

2 Aug 21:
The NAV of the Series A shares fell 1.9% in July, to US$ 2,592.19; charts.

1 Aug 21:
Freedom of expression, honest criticism, and a fair legal system are vital for the maintenance of democracy, and to provide the necessary checks on corruption to enable long-term investment with confidence. Deficiencies and regression are often noted among the risk factors for emerging and frontier markets, but as a British citizen I am appalled by the jailing in the UK of Craig Murray. I have followed his thinking for many years, since he was ambassador in Uzbekistan. His judgment has been vindicated time and again, and he has given sterling service to society by reporting with unusual clarity and integrity on issues of vital importance. The precedent that this legal case sets is very dangerous. Jonathan Cook has stepped up to explain some of the background (the archives of Craig's blog provide more), and sees it as 'the latest move in a battle to snuff out independent journalism'.

Britain has now drawn the attention of the UN Special Rapporteur on Torture: 'if anyone in Scotland deserves to be called a «proper journalist» whose writing & integrity actually make a difference, it is @CraigMurrayOrg', and a Craig Murray Justice Campaign has been established: https://twitter.com/cmurrayjustice.

First they came for Craig Murray... fellow citizens, please take note.

18 Jul 21:
The National Unity Government of Myanmar (in exile) hopes for an independent non-political body to coordinate the Covid-19 response, and would engage with the junta to work on this crisis. For health professionals not previously familiar with Myanmar, the announcement by Dr Sasa will also provide some indication of the great and unusual challenges.

17 Jul 21:
Doctors in Myanmar have been bracing for Covid, and it has hit with the force of a tsunami. Very few of the casualties will be counted in official statistics; access to healthcare was always limited and many hospitals closed after the February coup. Supplies of medicine and equipment are scarce, and prices have been soaring. Please read today's article by Dr Mary Callahan. She quotes public health experts on the ground who predict that 50% of the population will be infected within three weeks, and that the ultimate Covid death toll could be 10-15 million people. The title speaks of 'Myanmar on the brink of decimation', and this seems all too feasible - but on a population of 55 million, 10-15m eventual deaths would represent a higher 15-30% of the population.

Twitter remains a good source for news, although often now relayed: Dr Callahan, #WhatsHappeningInMyanmar. The staff at Medical Action Myanmar are working around the clock. Please help if you can: support is so valuable.

16 Jul 21:
The 2Q report discusses 'Sustainability claims and delusions'.

The health situation arising from the Covid pandemic is alarming in much of the world, including South and Southeast Asia. Of the many charities rising to the occasion, there are two in particular that Apollo Investment Management has supported recently and that I'd like to bring to the attention of readers. Both seem highly effective, can put new money to immediate good use, and are of a scale where our readers can make a big difference. I'd be happy to discuss them with fellow donors - and to hear about your own priorities.

Medical Action Myanmar: https://mam.org.mm/
Adara Development: https://www.adaragroup.org/

1 Jul 21:
The NAV of the Series A shares rose 0.6% in June, to a fractional new high of US$ 2,641.82; charts.

1 Jun 21:
The NAV of the Series A shares rose 4.1% in May, to a new high of US$ 2,624.89; charts.

27 May 21:
The 2020 report of income for UK Reporting Fund purposes for the Series A shares is here. Despite COVID, the fund's income jumped last year due to the special dividend from Convenience Retail Asia, mentioned in our 4Q report. The page listing all of the income reports (starting 2013) is www.apolloinvestment.com/UKreportingfund.html.

14 May 21:
A 10-minute video from CNBC on sand mining, with speakers from the Global Resource Information Database of the UN Environment Programme, GRID-Geneva, and Kiran Pereira of Sand Stories. (We still recommend Kiran's book).

7 May 21:
I first wrote about Medical Action Myanmar after a visit six years ago, and noted the comment of Professor Sir Nick White that it was the most effective health NGO he had ever encountered. The endorsements of other supporters are well worth reading; Mercury Phoenix Trust has several short video reports on its YouTube channel. Regular health programmes are mostly funded by grants for specific purposes; private donations can be used more flexibly, wherever the health needs are greatest. As our readers will be able to imagine, those needs have multiplied by an order of magnitude, and steep increases in COVID cases in neighbouring countries suggest more challenges ahead. I have followed MAM's activities with admiration since 2015, have been more frequently in touch in recent months, and am ever more impressed. Please consider donating; feel free to contact me with donor-questions.

3 May 21:
The NAV of the Series A shares rose 3.3% in April, to a new high of US$ 2,520.60; charts.

Freedom of expression is vital for good governance, and investors deprived of reliable information will be severely handicapped. There has been much to worry about in Asia Press Freedom Day is an opportunity for reflection. Visit the ASEAN Human Rights Cartoon Exhibition online - starting with the Myanmar Solidarity Gallery as a reminder of how much is at stake.

22 Apr 21:
The 1Q report discusses 'Rips in the fabric'.

4 Apr 21:
The NAV of the Series A shares fell 1.5% in March, to US$ 2,439.32; charts here.

18 Mar 21:
As reporting from the ground in Myanmar dwindles, with repression of the media and longer internet cutoffs, readers may wish to follow the occasional statements of Dr Sasa, Special Envoy to the United Nations of the CRPH, the committee representing the elected & ousted NLD government-in-exile. After escaping the country, this is his eloquent defiance and denunciation of the junta.

In an excellent overview, Thant Myint-U explains the historic background & asks 'What next for Burma?'

15 Mar 21:
There are many political and social developments in Asia on which we no longer comment. Official sensitivities, and in places draconian gagging restrictions, encourage reticence; in any case it is usually easy to find commentators who are closer and more expert. However, the situation in Myanmar, very bad since the military coup on 1 Feb, has deteriorated drastically in the last couple of days, and I notice that the coverage in the newspapers on which some of you rely seems inadequate. The fund has no investments in Myanmar, but it is a country of immense strategic importance, summed up years ago in the succinct title of Thant Myint-U's book 'Where China Meets India'. Myanmar is a member of ASEAN, where today's rapidly changing editorial headlines show the diplomatic anxieties of governments themselves accustomed to suppressing dissent, and nervous about offending China or opposing commercial interests. Observers on the ground report casualties much higher than some newspapers are reporting, and there are allegations that false-flag provocations preceded the current brutal crackdown on protests which have for six weeks been determinedly peaceful. If only on human rights grounds, but also because these events may ultimately prove to have practical importance for us all, please pay some attention to https://twitter.com/hashtag/WhatsHappeningInMyanmar - and if you pray, include my friends at Medical Action Myanmar, still operating and grateful for donations, and their patients and the clinics I visited in the township of HlaingTharYar, today unfortunately seeing action.

2 Mar 21:
The NAV of the Series A shares rose 5.3% in February, to a new high of US$ 2,475.81; charts here.

22 Feb 21:
Apollo Asia Fund has a new administrator, ASCENT Fund Services (Singapore) Pte Ltd, with effect from 1 February; an e-mail was sent to investors on that day. The Fund's custodian is unchanged, Northern Trust.

2 Feb 21:
The NAV of the Series A shares fell 1.0% in January, to US$ 2,350.97; charts here.

17 Jan 21:
A report for 4Q has been posted: 'Sustainability Stories'.

12 Jan 21:
Malaysia has declared a state of emergency, attributed to COVID-19. Given global newsflow, investors pressed for time may wish to glance at the work of leading cartoonists for quick reflections of local sentiment. Apollo Asia Fund has less than 10% of NAV invested in Malaysia, in two companies. We do not expect these companies, or the investment manager (AIMS Asset Management Sdn Bhd), to be directly affected. Malaysians are understandably concerned about constitutional, political, social and economic consequences of the declaration, and long-term investors in assets such as infrastructure have already been unnerved by the cancellation of the high-speed railway link to Singapore, as well as by financial scandals and legal developments over the years. However, given the nature of AAF's two investments, we do not believe that AAF investors should worry unduly about this particular twist in the Malaysian political saga. If any investor in the Fund has particular concerns, please contact the fund manager, Claire Barnes.

5 Jan 21:
The NAV of the Series A shares rose another 4.7% in December, to a new high of US$ 2,375.43, so far undaunted by new Covid variants; charts here.

Claire Barnes

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