P R E M I U M
Monday, June 17

The Moby Offshore Fund: June Update


Wow, the last year was rough for many companies in emerging markets.

While our portfolio did well (more on this below), we say this because 2023 was marked by economic uncertainty in China and hesitant consumers worldwide -- leading to slower growth and shrinking profits for many companies in the region.

However, things look to be changing halfway through 2024 as company earnings are stabilizing across the board and a newfound consumer confidence shines through.

But the risks aren't fully over yet.

  1. For example, the currency outlook is less certain. Unlike the emerging market currency strength seen in late 2023, we've mostly observed weakness so far this year -- likely due to Fed moves here in the US.

  2. Also, interest rates are changing, with many central banks in emerging markets lowering rates as inflation remains largely under control. While this doesn’t apply to countries like Turkey and Argentina, as they've long struggled with inflation for decades, we also don't have a major position in either of these markets -- therefore their uneasy economies don't really factor into our strategy's performance.

  3. Furthermore, China, one of the largest markets in our coverage, still faces several challenges -- including a heavily indebted property sector, a state-controlled banking sector, regulatory crackdowns, and abrupt/hard-to-forecast changes. These issues make it hard to predict how Chinese companies will perform as a group this year. However, despite these challenges, our AI is still investing in China -- but doing so cautiously.

Long story short, the risk/reward in EM is "large" this year to say the least.

However in markets like this, performance above the benchmark (e.g. alpha) "can" be easier to find -- albeit the benchmark as a whole may be down significantly.

So with that context out of the way, let's just get straight into it.

However, if you're new to this strategy and want to see how it works, we highly recommend checking it out: here

But if you're a regular, let's push forward 👇

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