Despite some political and economic uncertainties in many developed economies, 2024 was marked by relative stability. Political transitions in Taiwan, France, the UK, and Japan, as well as a significant shift in the US political landscape with a Republican resurgence, occurred in a calm and orderly manner. Even the brief imposition of martial law in South Korea in December 2024 was relatively peaceful. This stability is notable, considering the ongoing geopolitical tension. The 10-year US Treasury yield fluctuated widely, rising from a low of nearly 3.6% to almost 4.6% by year-end. Similarly, Fed rate cut expectations gyrated, reflecting the shifting views on US economic growth and inflation dynamic. However, despite these challenges, the economy and the equity market remained resilient.

Through these, we never lost sight of our core investment tenets, and we were not sidetracked by capricious headlines and market narratives. The portfolio performed nearly 28.5% in 2024, outperforming many major indices.

Some key changes in the portfolio during the last quarter of the year included the following. Taking advantage of the spurt in China’s market stimulus excitement, we reduced our holdings in Pinduoduo. We hold the view that gains in Chinese equities will be held back until the deadlock in the Real Estate market is meaningfully dealt with. We initiated a new position in Illumina Incorporated. Following a prolonged period of underperformance, this life science equipment maker is wellpositioned to reap the upside from the nascent precision medicine revolution, which sits at the intersection of biotechnology and artificial intelligence. Lastly, we added some positions in both Zscaler and Micron, during a period of price weakness, as we believe that these two companies remain well-positioned to capture the long-term growth opportunities in cybersecurity and AI respectively.

Heading into the new year, we foresee yet another volatile market environment. Economic growth is expected to slow down in 2025 and it will also be the year when President Trump pushes through his pro-business agenda. US equities, especially the magnificent 7 and tech stocks, have done exceptionally well over the last 2 years. This exceptional performance that reflects the well-deserved optimism that AI promises however has resulted in those stocks now trading at higher valuations.

Macro forecasting is never easy, and even more so now when we are on the cusp of a tectonic technological revolution. However, we have great visibility on Nvidia’s Blackwell and Micron’s high-bandwidth memory ramp, and on the adoption of digital labor across enterprises. Against this backdrop, we will continue to focus on our work on investing in high-quality companies with strong secular trends, and capitalize on any short-term opportunities that the market may present us in the year ahead.

With that, we would like to close this year, and wish everyone a Happy and exciting 2025!

31 Dec 2024