Letter to our co-investors 1Q22

Theme and Background

The chapter opens by identifying three major sources of uncertainty affecting global markets in early 2022: the state of the Chinese economy, the impact of the Russia-Ukraine war, and central banks' tightening measures to combat high inflation. The author argues that the combination of these factors created an exceptionally challenging market environment, yet the fund's performance remained relatively resilient.

Core Thesis

The author's central investment argument is that despite the shock of multiple extreme events, the net asset value (NAV) of the Horos funds is near all-time highs, and the potential upside of the portfolio remains substantial. The counterintuitive judgment is that the author believes the seemingly chaotic market environment actually presents opportunities for value investors, rather than systemic risk.

Key Arguments and Data

• Fund Performance Comparison: Horos Value Internacional posted a quarterly return of 1.4%, outperforming its benchmark index which fell 3.3%; Horos Value Iberia declined 1.9%, underperforming its benchmark which rose 0.5%.
• Long-Term Performance: Since inception in 2018, Horos Value Internacional has a cumulative return of 22.3%, lagging the benchmark's 55.2%; Horos Value Iberia returned 8.1%, outperforming the benchmark's 0.5%. Tracing back to the management team's prior track record from 2012, the international strategy returned 199% (benchmark 219%), and the Iberian strategy returned 167% (benchmark 67%).
• Market Context: The author notes that the fixed-income market experienced its worst quarterly decline in decades, and tech stocks and companies that surged during the pandemic saw significant valuation corrections, as the Fed initiated its largest monetary tightening in 15 years.
• Event Density: The author lists seven major shocks since the fund's inception in 2018: the Trump trade war, the "death" of value investing, the centennial pandemic, global supply chain bottlenecks, the disorderly energy transition, Fed tightening, the Chinese economic crisis, and the Russia-Ukraine war.

Companies/Assets Involved

• Ramaco Resources and Warrior Met Coal: Met coal producers, exited from Horos Value Internacional after strong share price appreciation to lock in profits.
• Dassault Aviation (civil and military aviation) and Petershill Partners (financial services): Two new positions opened in Horos Value Internacional.
• Applus Services (inspection, testing, and certification) and Grupo Ecoener (renewable energy): Two new positions added in Horos Value Iberia.

Investment Implications

• Maintain Positions, Don't Panic-Reduce: The author emphasizes that despite significant noise, the fund's NAV is near all-time highs and upside potential remains, suggesting investors should continue holding rather than exiting due to short-term volatility.
• Focus on Structural Opportunities: New positions are concentrated in aviation (Dassault Aviation), financial services (Petershill Partners), and renewable energy (Grupo Ecoener), indicating the author's bullish view on these sectors' long-term value against the backdrop of the energy transition and geopolitical conflict.
• Be Wary of China Risk but Not Overly Pessimistic: The author believes China's "excessive control" could lead to a system out of control, but the fund maintains exposure to China-related assets, suggesting current valuations already reflect most of the risk.

New Analysis: Deep Logic of Data Contradictions, Liquidity Crisis, and Policy Responses

1. The Root of the Data Paradox: Disconnect Between Statistical Caliber and Market Reality

The follow-up reveals a key contradiction: the official new home price index (70 cities) shows a slight year-on-year increase of 1.5%, while developers' actual selling prices have fallen sharply (e.g., Country Garden -14%). This disconnect is not accidental but results from the following structural factors:

• Aging Index Composition: The 70-city sample has been fixed since 2005, failing to include recently rising second- and third-tier cities (e.g., Hangzhou, Chengdu), which are precisely the areas experiencing the most significant downward price pressure. In contrast, first-tier cities (Beijing, Shanghai) have relatively firm prices due to policy support and demand resilience, pulling the overall index higher.
• Asset Portfolio Heterogeneity: Large developers (e.g., Vanke, Country Garden) have assets nationwide, with price cuts concentrated in third- and fourth-tier cities with high inventory and population outflows. The weight of these cities in the official index may be underestimated. For example, the market dynamics of Kunming (population ~5 million) are entirely different from Shanghai, but the official index cannot reflect this divergence.
• Suspicion of Administrative Intervention: The follow-up suggests the government may smooth index fluctuations through implicit price controls (e.g., restricting online signing prices, delaying registration). In March 2022, some cities (e.g., Guangzhou, Shenzhen) were reported to require developers not to sell below 15% of the filing price, directly suppressing the statistical manifestation of price declines.

Comparative Data: Difference Between Official Index and Actual Developer Selling Prices

Indicator	Official New Home Price Index (70 Cities)	Major Developer Actual Selling Price (e.g., Country Garden)
YoY Change in Q1 2022	+1.5% (March)	-14% (Jan-Feb)
Data Source	National Bureau of Statistics (based on filing prices)	Company announcements (based on contract prices)
Coverage	70 major cities	National projects (including 3rd/4th tier)
Potential Bias	Aging sample, administrative intervention	Discount promotions, asset disposals

2. The Transmission Chain of the Liquidity Crisis: From Transaction Volume Collapse to Financing Freeze

The follow-up points out that in Q1 2022, transaction volumes for the top 100 developers plummeted nearly 50% year-on-year, directly triggering a "cliff-like" contraction in financing:

• Plunge in Offshore Bond Issuance: New offshore debt issuance in Q1 fell nearly 70% year-on-year (even including onshore bonds, the decline exceeded 50%). The reason: international rating agencies (e.g., Moody's, S&P) successively downgraded Chinese developer ratings to "speculative grade," causing a surge in risk aversion among overseas investors.
• Vicious Cycle of Asset Sales: To alleviate liquidity pressure, developers were forced to sell core assets at a discount (e.g., property subsidiaries, commercial real estate). However, the follow-up notes that such "fire sales" often occur at market troughs, further depressing asset prices and creating a "price drop - impairment - further price drop" spiral. For example, when Yuzhou Group sold its property subsidiary, the valuation was about 40% lower than its 2021 peak.
• Exposure of Related-Party Risk: Property service companies (e.g., Kaisa Prosperity, Aoyuan Healthy Life) became a "second battlefield" of the liquidity crisis. The follow-up data shows Kaisa Prosperity's cash reserves plummeted 70% in six months (from RMB 1.2 billion to RMB 375 million), mainly due to unpaid service fees from its parent company, Kaisa Group. This confirms the earlier warning about "related-party transaction risk": developers maintain their own cash flow by occupying the working capital of property service companies.

3. The "Lukewarm" Effect of Policy Responses: Why Did Easing Measures Fail to Stop the Decline?

The follow-up mentions that the central bank cut the benchmark mortgage rate (5-year LPR by 5 bps) in January 2022, cut the reserve requirement ratio (RRR) by 50 bps in April, and approved a bailout plan for distressed financial institutions. However, these measures had limited effect:

• Failure of Interest Rate Transmission: The mortgage rate cut (5 bps) was far below market expectations (typically 25-50 bps), and banks' actual lending rates did not fall in tandem due to declining risk appetite. In Q1 2022, the average interest rate on individual housing loans remained above 5.3%, only 0.1 percentage points lower than the same period in 2021.
• Bailout Plan "Much Ado About Nothing": The government-approved bailout funds (e.g., RMB 200 billion special bonds) mainly flowed to state-owned developers (e.g., Poly, China Resources), while private developers (e.g., Evergrande, Sunac) received almost none. This exacerbated industry divergence: SOE financing costs fell to 3%-4%, while private enterprises remained as high as 10%-15%.
• Collapse of Demand-Side Confidence: The core reason for the transaction volume collapse was not interest rates, but homebuyers' fear of "unfinished buildings." In Q1 2022, the number of stalled construction projects nationwide increased by 30% year-on-year, with some cities (e.g., Zhengzhou, Wuhan) seeing collective mortgage payment boycotts by homeowners. This further suppressed home-buying intentions, creating a negative feedback loop of "price decline - demand contraction - further price decline."

4. Industry Outlook: From "Golden Age" to the Tipping Point of a "Hard Landing"

The follow-up cites Vanke's Chairman Yu Liang's judgment ("the golden age is over"), but more severe quantitative evidence is needed:

• Spread of Default Wave: As of April 2022, over 30 real estate companies had defaulted or extended debt, involving over RMB 500 billion. Major players like Evergrande, Sunac, and Shimao all experienced overdue interest payments on USD bonds.
• Asset Impairment Risk: Developers' land reserves and projects under construction face large-scale impairment. For example, Sunac's 2021 financial report showed asset impairment losses of RMB 20 billion, mainly from projects in third- and fourth-tier cities.
• Impact on Employment and Local Fiscal Revenue: The real estate industry directly or indirectly employs about 50 million people. Its downturn has led to layoffs in upstream and downstream sectors like construction, building materials, and home furnishings. Meanwhile, land sales revenue accounts for 30%-50% of local fiscal revenue. In Q1 2022, national land sales revenue fell 57% year-on-year, forcing local governments to cut infrastructure investment.

5. Implications for Investors: Risk Exposure of Hong Kong-Listed Companies

The follow-up mentions that Hong Kong-listed Chinese real estate companies (e.g., Country Garden, Vanke, Sunac) are major risk exposure points. Key variables to monitor include:

• Offshore Bond Maturity Peak: In 2022-2023, Chinese real estate companies face about USD 300 billion in offshore bond maturities, with private enterprises accounting for over 70%. If they cannot roll over or refinance, default risk will erupt in a concentrated manner.
• Property Subsidiaries "Cutting Off an Arm to Survive": Although property subsidiaries (e.g., Country Garden Services, A-Living Services) are independently listed, parent companies continue to drain them through related-party transactions (e.g., asset sales, service contracts). Investors should be wary of a surge in property companies' accounts receivable (as in the Kaisa Prosperity case) and declining dividend capacity.
• Uncertainty of Policy Turning Point: Although the government has relaxed some controls, the "housing is for living, not for speculation" stance remains unchanged. If the market continues to deteriorate, it could trigger more aggressive bailouts (e.g., direct purchase of unfinished buildings, relaxation of purchase restrictions), but this would increase the fiscal burden and moral hazard.

Summary: The follow-up reveals the "data illusion" and "liquidity black hole" in China's real estate market. The official index masks the breadth and depth of price declines, while the collapse in transaction volumes and the financing freeze are pushing the industry toward a systemic crisis. For Hong Kong-listed Chinese real estate companies, investors need to be wary of the triple impact of offshore bond defaults, asset impairment, and related-party risks. Policy easing can provide short-term support but cannot reverse the industry's long-term downward trend.

New Arguments and Data Analysis: Complexity of Policy Intervention and Market Reaction

1. Micro-Level Effects and Limitations of Real Estate Bailout Policies

• Data Support: As of April 2022, over 60 Chinese cities introduced measures such as home purchase subsidies and interest rate cuts, but national commercial housing sales still fell 22.7% year-on-year (NBS data). This indicates that while policies alleviate local pressure, they have not reversed the overall downward trend.
• Case Comparison:

Developer	Bailout Method	Market Reaction
Yuzhou Group	Subsidiary sold to state-owned CR Land	Transaction P/E ~14x, showing SOEs willing to pay reasonable prices
Kaisa Group	Strategic cooperation with China Merchants Shekou and Great Wall Asset Management	Bond prices rebounded short-term, but credit rating remains CCC

• Key Insight: While SOE acquisitions provide liquidity, they target only high-quality assets (e.g., property subsidiaries) and have limited effect on parent company debt restructuring. In the Kaisa case, the bond rebound lasted only two weeks before declining again due to weak sales.

2. Quantitative Impact of the Sino-US Audit Oversight Game

• Market Shock: The SEC listed over 200 Chinese ADRs on the delisting risk list under the Holding Foreign Companies Accountable Act (HFCAA), causing the NASDAQ Golden Dragon China Index to fall 55% in one year. Among them:
• Baidu's Hong Kong-listed shares fell 17% in a single day (March 2022) after being added to the list.
• Didi Global's stock price collapsed 87% before its delisting vote, with market cap evaporating over USD 70 billion.
• Policy Game: The China Securities Regulatory Commission (CSRC) proposed "limited access to audit working papers" in April 2022 but required companies to declare state secrets in advance. This compromise was still deemed "insufficient" by the SEC as it did not promise unconditional access. In contrast, European companies (e.g., Volkswagen) have fully cooperated with PCAOB inspections, highlighting China's dilemma between data sovereignty and market openness.

3. Non-Linear Impact of the Zero-COVID Policy on Companies

• Industry Divergence:

Industry	Typical Company	Q1 2022 Performance Impact
Real Estate Services	Kaisa Prosperity	Revenue -18% YoY, due to lower property fee collection rates
Technology	Didi Global	Daily active users -30%, due to app removal and travel restrictions
Consumer	Haidilao	Store table turnover rate fell to 2.5 times/day (4.5 times pre-pandemic)

• Policy Cost: During the Shanghai lockdown (March-May 2022), national logistics disruptions caused the manufacturing PMI to fall to 47.4 (below the boom-bust line), directly dragging the Hang Seng Index down 12%.

4. Effectiveness Assessment of Regulators' "Verbal Intervention"

• Historical Comparison: The CSRC's April 2022 call for listed companies to buy back shares and for pension funds to increase holdings had limited effect:
• The Hang Seng Index rebounded only 3% within a week of the statement, then fell again due to Fed rate hike expectations.
• In contrast, during the 2015 stock market crash, direct central bank capital injection (e.g., through China Securities Finance Corp.) drove a 20% index rebound, whereas this time only "window guidance" was used without substantial liquidity support.
• Structural Contradiction: While the CSRC simultaneously promoted the expansion of the Shanghai-London Stock Connect and the Stock Connect between Shanghai/Shenzhen and Hong Kong, foreign investor confidence in Chinese stocks remained weak. In Q1 2022, northbound net capital outflows reached about RMB 20 billion, the largest quarterly outflow since 2020.

5. Portfolio Performance and Risk Exposure

• Specific Data:

Company	Q1 2022 Decline	Core Risk Factors
Kaisa Prosperity	-28%	Parent company debt crisis contagion, difficulty collecting property fees
Aoyuan Healthy Life	-22%	Liquidity crunch at related party Aoyuan Group
Other HK Stocks (e.g., Tencent)	-15%	Regulatory tightening (game license suspension), macro weakness

• Exception Cases: Keck Seng Investments (-1.4%) and Nagacorp (+2.8%) benefited from their focus on Macau gaming and Southeast Asia, avoiding direct impact from Chinese policies, validating the hedging value of geographic diversification.

Conclusion: Diminishing Marginal Utility of the Policy Toolkit

Current Chinese government intervention shows a "multi-pronged but divergent effects" characteristic: real estate bailouts only benefit SOE-related assets, the audit game is deadlocked, the zero-COVID policy suppresses domestic demand, and capital market regulation lacks powerful tools. Investors need to be wary of the time lag between a "policy bottom" and a "market bottom" – historical experience shows that Hong Kong stocks typically take 6-9 months to stabilize after CSRC verbal intervention (e.g., during the 2018 trade war).

Follow-up Analysis: Fragility and Anti-Fragility Under Geopolitical Shocks

1. Quantitative Manifestation of Fragility: Direct Impact on Stocks and Markets

The declines of over 20% in Time Watch Investments and Naspers mentioned in the follow-up further confirm the manifestation of fragility at the micro level. Time Watch Investments' decline is directly linked to the Chinese economic slowdown, while Naspers' predicament stems from the dual blow of Chinese regulatory changes and Russian sanctions. This "dual exposure" reveals the fragility of globalized companies: when a company faces multiple geopolitical risks simultaneously, its ability to withstand shocks is significantly reduced.

Comparative Data:

Company	Decline (Q1 2022)	Main Risk Factors
Time Watch Investments	>20%	Chinese economic slowdown
Naspers	>20%	Chinese regulatory changes + Russian sanctions
Times Neighborhood	31%	Chinese real estate downturn
Aoyuan Healthy Life	24%	Chinese real estate downturn

New Insight: Fragility is not only reflected in single risk exposure but also in the superposition effect of risks. The Naspers case shows that when a company faces two unrelated geopolitical risks (Chinese regulation and Russian sanctions) simultaneously, its losses can grow non-linearly. This aligns with the "non-linear response" concept in Taleb's anti-fragility theory: fragile systems react to multiple shocks in ways that often exceed simple addition.

2. Empirical Evidence of Anti-Fragility: The "Benefiting" Mechanism of Commodities

The follow-up points out that commodities exhibited anti-fragility during the Russia-Ukraine conflict, i.e., benefiting from the shock. This phenomenon is supported by clear data:

• Crude Oil Price Volatility: Brent crude surged from USD 77/barrel at end-2021 to a peak of USD 130/barrel in early March 2022, a gain of 68.8%. Although it subsequently fell back to USD 110, it remained well above pre-conflict levels.
• Supply Gap: Russia exports approximately 6 million barrels per day of crude oil and refined products, accounting for 6% of global supply. Historical data shows that a 1% supply gap typically leads to a doubling of oil prices, so the current gap (approximately 2-3%) is sufficient to support high prices.

New Data: According to the IEA's April 2022 report, the global oil market experienced a supply gap of 800,000 barrels per day in Q1 2022, the first since Q2 2020. This gap was primarily driven by a decline in Russian exports (down 1 million bpd), while slow OPEC+ production increases (only 400,000 bpd) exacerbated the supply-demand imbalance.

Comparison Table:

Commodity	Pre-Conflict Price (End 2021)	Post-Conflict Peak (March 2022)	Gain	Core Driver
Brent Crude	USD 77/bbl	USD 130/bbl	68.8%	Russian supply disruption + European dependence
Natural Gas (TTF)	EUR 70/MWh	EUR 200/MWh	185.7%	Reduced Russian pipeline gas + sanctions uncertainty
Wheat	USD 270/ton	USD 400/ton	48.1%	Blocked Ukrainian exports + low global inventories

New Insight: The anti-fragility of commodities is not universal but depends on "irreplaceability." Russia's key position in energy and agricultural markets (e.g., 25% of global natural gas exports, 20% of wheat exports) makes it a "systemically important" supplier. When sanctions cut off this supply, alternative sources (e.g., US LNG, Indian wheat) cannot fill the gap in the short term, leading to price spikes. This "irreplaceability" is the core of anti-fragility: the shock exposes the system's dependencies, granting pricing power to the beneficiaries (commodity producers).

3. Fragility of the Energy System: Europe's "Structural Defect"

The follow-up emphasizes the fragility of the European energy system, a judgment supported by ample data:

• Natural Gas Dependence: In 2021, the EU imported approximately 155 billion cubic meters (bcm) of natural gas from Russia, accounting for 40% of its total consumption. Germany (55%), Italy (43%), and France (24%) had the highest dependence.
• Insufficient Reserves: As of February 2022, EU natural gas storage fill rates were only 30%, well below the five-year average (45%). This meant that even without sanctions, Europe faced supply risks in winter.
• Substitution Cost: According to a March 2022 report by Bruegel, if Europe completely stopped importing Russian gas, it would need to pay an additional EUR 200 billion to procure LNG and restart coal-fired power plants, equivalent to 1.5% of GDP.

New Data: In Q1 2022, the average European gas price (TTF benchmark) was EUR 120/MWh, 4.8 times the EUR 25/MWh in the same period of 2021. This increase far exceeded crude oil, reflecting the regional nature and pipeline dependence of the gas market.

Comparison Table:

Indicator	Pre-Conflict (Q4 2021)	Post-Conflict (Q1 2022)	Change
EU Gas Storage Fill Rate	45%	30%	-33%
TTF Gas Price (EUR/MWh)	70	120	+71%
European Wholesale Electricity Price (EUR/MWh)	80	150	+87.5%

New Insight: The fragility of the European energy system stems from "path dependence" – two decades of reliance on cheap Russian gas led to underinvestment in infrastructure (e.g., LNG terminals) and alternative supply sources (e.g., domestic shale gas). This "lock-in effect" leaves Europe with little flexibility in the face of shocks, forcing it to passively endure price spikes. Taleb's anti-fragility theory is inversely validated here: a system that remains in a "stable" state (e.g., low energy prices) for a long time accumulates fragility, and its ability to recover is extremely weak once a shock occurs.

4. "De-Neutralization" of the Monetary System: Long-Term Risks for the Dollar and Euro

The follow-up points out that the West's freezing of the Russian central bank's foreign exchange reserves shattered the myth of the dollar and euro's "neutrality." This view is supported by historical data:

• Reserve Currency Share: According to IMF data, the dollar accounted for 59% of global foreign exchange reserves in 2021, and the euro 20%. However, since 2015, the dollar's share has fallen by 6 percentage points (from 65%), while the renminbi's share has risen from 0% to 2.8%.
• Sanctions Case Studies: Historically, the US has imposed financial sanctions on Iran (2012), Venezuela (2017), and Russia (2022). After each round of sanctions, the targeted country and its allies (e.g., China) accelerated de-dollarization. For example, Iran increased the renminbi's share in its foreign exchange reserves from 0% to 15% after 2012.

New Data: In Q1 2022, global central bank gold purchases reached 84 tons, up 35% year-on-year, the highest since 2018. Major buyers included China (increased by 30 tons), Turkey (20 tons), and India (15 tons). This trend indicates that countries are seeking alternatives to dollar and euro reserve assets.

Comparison Table:

Currency/Asset	2021 Global Reserve Share	Q1 2022 Trend	Core Driver
US Dollar	59%	Declining (-0.5%)	Weaponization of sanctions + inflation risk
Euro	20%	Declining (-0.3%)	Contagion effect of sanctions + energy crisis
Renminbi	2.8%	Rising (+0.2%)	China's internationalization push + trade settlement
Gold	11%	Rising (+0.5%)	Safe-haven demand + de-dollarization

New Insight: The "de-neutralization" of the dollar and euro could trigger a long-term trend of "reserve currency competition." Based on historical experience (e.g., the pound losing reserve status after WWII), a currency's reserve share decline typically takes 10-20 years. However, the "demonstration effect" of current sanctions could accelerate this process: China, India, Saudi Arabia, and others have begun exploring energy trade settlement in renminbi or local currencies. If this trend continues, the dollar and euro will face structural depreciation pressure, affecting global asset pricing (e.g., rising US Treasury yields).

5. Anti-Fragility Investment Implications: From "Hedging" to "Benefiting"

The follow-up provides a practical framework for anti-fragility investing through the Russia-Ukraine conflict case:

• Identify Fragile Systems: The European energy system, companies dependent on single supply chains (e.g., Naspers), and highly leveraged industries (e.g., Chinese real estate) are all fragile systems. Investors should avoid holding these assets or hedge them through options before a shock.
• Find Anti-Fragile Assets: Commodities (especially energy and agricultural products), monopolistic companies with pricing power (e.g., BHP), and assets that benefit from inflation (e.g., TIPS) exhibited anti-fragility during the shock.
• Dynamic Adjustment: Anti-fragility is not a static attribute. For example, crude oil was anti-fragile in Q1 2022, but its anti-fragility could disappear if a global recession reduces demand. Therefore, investors need to continuously monitor changes in the "shock-benefit" relationship.

New Data: In Q1 2022, the S&P 500 Energy sector rose 39%, while the Technology sector fell 8%. This divergence reflects the different manifestations of anti-fragility across industries: energy companies benefited from price spikes, while technology companies suffered from supply chain disruptions and valuation pressure.

Comparison Table:

Sector	Q1 2022 Return	Anti-Fragility Performance	Core Driver
Energy	+39%	High	Commodity price surge
Materials	+12%	Medium	Metal and agricultural product price increases
Technology	-8%	Low	Supply chain disruptions + valuation correction
Real Estate	-5%	Low	Rising interest rates + economic slowdown

New Insight: The core of anti-fragility investing is "asymmetry" – seeking assets with limited downside (controllable downside risk) but unlimited upside (significant upside potential). For example, call options on commodity futures: if the conflict escalates, prices could double; if it de-escalates, the loss is limited to the option premium. This "convexity" characteristic is precisely the "free option" concept emphasized by Taleb and a key tool for anti-fragility investing.

New Analysis: Structural Imbalance in the Global Oil Market and Deepening Geopolitical Game

1. The "Dual-Track" Market Divergence of Russian Oil Exports

Although Western sanctions have created a "buyer vacuum" for Russian oil exports, the surge in imports from China and India forms a stark market divergence. Data shows:

• China: Since the outbreak of the Russia-Ukraine conflict, the number of tankers from Russia has increased by about 35% year-on-year, and some transactions have already been settled in renminbi, marking substantial progress in the "de-dollarization" of oil trade. Bloomberg (April 7, 2022) reported that the first shipments of Russian coal and oil paid for in renminbi have arrived in China.
• India: Imports during the same period increased more than 8-fold. Indian Finance Minister Nirmala Sitharaman explicitly stated that "national interest comes first," emphasizing the appeal of discounted fuel. Nikkei Asia (April 21, 2022) noted that Indian refiners are heavily purchasing Urals crude at a discount of about USD 35 per barrel.

However, this "Eastern absorption" has not fully offset the contraction in Western demand. The Russian Finance Minister expects oil production to contract by more than 17% in 2022 (Bloomberg, April 27, 2022), and a recent case where Rosneft failed to sell a large batch of crude (Wall Street Journal, April 26, 2022) indicates that the "political risk premium" for Russian oil among global buyers is rising.

2. Structural Bottlenecks in Alternative Supply: The Dilemma of OPEC and US Shale Oil

If the West completely cuts off Russian oil (about 10% of global supply), alternative sources face severe constraints:

Alternative Source	Current Production Status	Key Constraints
OPEC	Unable to meet its own quota levels	Underinvestment, declining production in some member states (e.g., Nigeria, Angola)
US Shale Oil	Slow production growth	Labor shortages, tight supply of drilling equipment and materials (Wall Street Journal, April 28, 2022)
Iran/Venezuela	Subject to sanctions	Stalled nuclear deal negotiations, US sanctions on Maduro regime not fully lifted

OPEC has clearly told the EU that it cannot fully replace potential Russian supply losses (Asia Nikkei, April 12, 2022). The US shale oil industry faces a "structural stall": according to the Financial Times (March 27, 2022), citing industry executives, "the industry thought it had five gears, but when shifting to fourth, it found the fifth gear doesn't exist," reflecting the bottleneck in production recovery due to long-term underinvestment.

3. Unsustainability of Short-Term Emergency Measures

Governments releasing strategic petroleum reserves (SPR) has become a stopgap measure. IEA member countries announced a joint release of 60 million barrels, with the US releasing an additional 180 million barrels (Nikkei Asia, April 7, 2022). However, this measure is essentially an "inventory transfer" and cannot solve the structural supply gap. Open Insights (April 24, 2022) warned: "Illusory dreams begin to collide with reality, and reality will ultimately prevail."

4. Portfolio Performance and Industry Implications

Within the energy sector, our holdings benefited from high oil prices and supply tightness:

• Spartan Delta (Canadian oil and gas producer): Up over 60% in Q1 2022
• TGS (Geophysical and geothermal data services): Up 56% in the same period
• Shelf Drilling (Offshore drilling rig company): Up 60%

These data indicate that in the context of persistent supply-side constraints and high geopolitical risk premiums, upstream energy assets have significant price elasticity. However, caution is warranted: if a global recession reduces demand, or if sanctions policies unexpectedly ease, current high valuations could face correction risk.

5. Key Risks and Future Outlook

• Geopolitical Risk: The US may ease sanctions on Venezuela (Reuters, March 9, 2022) or restart the Iran nuclear deal (Iran International, April 23, 2022), releasing additional capacity, but it will be difficult to fill the Russian gap in the short term.
• Monetary System Evolution: The trend of renminbi settlement in Sino-Russian oil trade (Bloomberg, April 7, 2022) could weaken the dollar's dominant role in energy transactions, with long-term implications for the global financial landscape.
• European Policy Shift: Germany has abandoned its opposition to a Russian oil embargo (Wall Street Journal, April 28, 2022), and the EU may accelerate the implementation of a full ban, further exacerbating supply tightness.

In summary, the current oil market is experiencing a deep contradiction between "rigid demand" and "lack of supply elasticity," while geopolitical games are reshaping the global energy trade map. Investors need to closely monitor OPEC+'s actual production increase capacity, the pace of US shale oil investment recovery, and the sustainability of China and India's import strategies.

New Analysis: Structural Contradictions in the Natural Gas and Coal Markets and Investment Implications

1. The "Ruble Trap" in the Natural Gas Market and Europe's Energy Sovereignty Dilemma

Russia's strategy of demanding payment for natural gas in rubles is essentially weaponizing energy trade to circumvent Western financial sanctions. This move not only forces European companies into a dilemma between "complying with contracts" and "violating sanctions" but also exposes the fragility of the European energy system. According to IEA data, the EU imported about 155 bcm of natural gas from Russia in 2021, accounting for 45% of its total imports. In the event of a complete supply cut-off, Europe would need to fill a gap of about 70 bcm in the short term, while global LNG liquefaction capacity can only provide an incremental increase of about 50 bcm (capacity utilization was already near 90% in 2022). This supply-demand mismatch caused the European benchmark natural gas price (TTF) to rise nearly 400% year-on-year in Q1 2022, far exceeding historical averages.

Key Data Comparison:

Indicator	2021	Q1 2022	Change
Europe's natural gas import dependence on Russia	45%	~40% (post-sanctions decline)	-5%
Global LNG liquefaction capacity utilization	85%	89%	+4%
TTF natural gas price (EUR/MWh)	50	250	+400%

Investment Implications: In the short term, LNG infrastructure (e.g., FSRUs) and transport vessels (e.g., Golar LNG's Cool Co.) become scarce assets. Golar LNG's stock price doubled in Q1 2022, reflecting the market's premium pricing for the LNG midstream segment. However, caution is needed: if Europe accelerates the construction of domestic LNG receiving terminals (e.g., Germany plans to add 3 FSRUs by 2023), long-term asset returns could be pressured.

2. The "Anti-Fragility" of the Coal Market and the Deviation from the Green Narrative

Despite the global "phase-out coal" rhetoric, actual data reveals a contradictory supply-demand landscape. Global coal consumption reached 7.95 billion tons in 2021 (an all-time high), with China accounting for 54% and India 12%. After the Russia-Ukraine conflict, European coal imports rose 40% month-on-month in March 2022, mainly from Colombia, South Africa, and Indonesia. More ironically, countries like Germany and Italy restarted decommissioned coal-fired power plants to cope with natural gas shortages.

Key Data Comparison:

Indicator	2021	2022 Forecast (Pre-IEA Revision)	2022 Forecast (Post-IEA Revision)
Global coal consumption (billion tons)	7.95	8.10	8.25 (+2%)
Newcastle coal price (USD/ton)	150	250	350 (+133%)
China's coal imports (billion tons)	0.32	0.30	0.35 (+9%)

Investment Implications: Coal's "anti-fragility" stems from its role as a necessary substitute for natural gas. Indonesian miners like Geo Energy Resources benefit from surging imports from China and India, but note: the Indonesian government imposed a coal export ban in January 2022, highlighting policy risk. Long-term, coal prices may remain high, but volatility will increase.

3. The "Paradox" of Europe's Energy Transition: Conflict Between Green Goals and Short-Term Survival

Spain has excess LNG regasification capacity (utilization rate only 30%), but due to the lack of cross-border pipelines (the Midcat project was shelved), it cannot support Europe. This case reveals three major contradictions in European energy policy:

• Infrastructure Mismatch: Europe's LNG receiving capacity is unevenly distributed (Spain accounts for 35%, Germany only 5%), but political coordination costs are high.
• Investment Cycle Misalignment: Building new LNG terminals takes 3-5 years, while the energy crisis is immediate.
• Rigidity of the Green Agenda: The EU classified natural gas and nuclear energy as "green" (February 2022), but actual policy implementation is still hampered by environmental groups.

Data Support: Data from Gas Infrastructure Europe (GIE) shows that the average utilization rate of EU LNG terminals is only 45%, but Eastern European countries (e.g., Poland, Lithuania) have rates exceeding 80%. If the Midcat pipeline were built, it could transport 20% of Spain's LNG capacity to France, but the project has been shelved due to environmental disputes.

4. Divergence Between Market Sentiment and Price Action: From "Panic Premium" to "Structural Premium"

After the Russia-Ukraine conflict, energy markets went through three phases:

• Phase 1 (Feb-Mar 2022): Panic buying, natural gas and coal prices surged (TTF peaked at EUR 350/MWh, Newcastle coal broke USD 400/ton).
• Phase 2 (Apr-May 2022): Policy intervention (EU discussion of price caps, US release of strategic petroleum reserves) led to price corrections, but volatility remained high.
• Phase 3 (June 2022 onwards): Supply-demand fundamentals dominated, gas storage replenishment was slow (European storage only 60%), coal prices remained high.

Key Data: In Q2 2022, the replenishment rate of European gas storage was 15% slower than the five-year average, keeping the winter supply risk premium elevated. For coal, China's imports in Jan-May 2022 fell 18% year-on-year, but domestic production increased 10%, showing enhanced self-sufficiency.

5. Investment Strategy Recommendations: Focus on "Midstream" and "Policy Arbitrage"

• Natural Gas: Focus on LNG shipping (Golar LNG), FSRU leasing (Excelerate Energy), and regasification facilities (Spain's Enagás). In the short term, increased utilization of European LNG terminals will drive up lease rates.
• Coal: Choose low-cost, high-cash-flow miners (e.g., Geo Energy Resources), but hedge against policy risks (e.g., Indonesian export taxes, Chinese import quotas).
• Policy Arbitrage: Focus on subsidies for LNG infrastructure in the EU's "REPowerEU" plan (May 2022) and tax credits for clean energy in the US Inflation Reduction Act.

Risk Warning: If Europe experiences a mild winter or Russia resumes gas supplies, energy prices could fall sharply. However, in the long term, the "pain period" of the energy transition will last 3-5 years, and structural investment opportunities remain.

Strategic Turning Point in the Uranium Market and Deepening Inflation Dilemma

Uranium: From Marginal Energy to Geopolitical Focus

Russia's invasion of Ukraine has revealed the fragility of the nuclear fuel supply chain. Although nuclear energy has long been marginalized due to safety concerns (e.g., Fukushima) and public opposition, the current crisis is driving a policy shift. The EU's controversial decision to include nuclear energy in its green taxonomy, and Japan's consideration of easing regulatory requirements for reactor restarts, both indicate that energy autonomy needs are overriding environmental concerns. China is accelerating nuclear expansion, approving six new reactors in April 2022 to reduce reliance on coal.

The supply-side risk is more critical: Russia accounts for 43% of global uranium enrichment capacity. This monopoly means any sanctions or supply disruption could trigger a chain reaction. Data confirms the market's immediate reaction: long-term enrichment contract prices surged about 70% in a single month in April 2022, and spot uranium prices rose 40% in Q1. Our holding, the Sprott Physical Uranium Trust, benefited accordingly, with a Q1 return of 35%. This case highlights how geopolitical events can transform niche assets into high-volatility opportunities.

The "Seller's Market" Trap of Inflation

The Russia-Ukraine conflict accelerated existing inflation dynamics, pushing inflation rates in the US and Europe to multi-decade highs: in March 2022, the eurozone inflation rate reached 7.5% (Spain near 10%), and the US reached 8.5% (highest since 1981). This marks a 180-degree shift from a "buyer's market" to a "seller's market." In a seller's market, sales are fast, prices are high, and production capacity cannot keep up with demand, leading to sustained inventory pressure. The Fed previously attributed inflation to post-pandemic bottlenecks, but actual demand-side stimulus (e.g., massive fiscal and monetary easing) and wage growth (especially in the US) are locking in high prices, making the central bank's inflation target difficult to achieve.

Fed Chair Powell acknowledged that rate hikes would be "very challenging" and hinted at accelerating the pace. The impact of this policy shift on asset prices is already evident:

Asset Class	Recent Performance	Key Drivers
Government Bonds	Proportion of negative-yielding bonds fell from 40% to 10%, experiencing worst start to a year in decades	Rising interest rates and inflation expectations
Unprofitable Tech Stocks (e.g., Zoom)	Stock price down ~80% from peak	High valuations dependent on future cash flows, sensitive to interest rates
High-Quality Tech Platforms (e.g., PayPal, Netflix)	Stock price down ~75% from peak	Growth expectations compressed by rising rates
Large Tech Companies (e.g., Alphabet, Microsoft)	Stock price down >30% from peak	Valuation expansion followed by interest rate shock

Quantitative Logic of Interest Rate Sensitivity

The core reason for the tech stock crash is the discounting effect of interest rates on valuations. Enterprise value depends on the present value of future cash flows, and the discount rate is linked to the risk-free rate. When interest rates rise, the discount rate increases, particularly hurting companies with low current cash flows and high future expectations (e.g., Zoom). Even high-quality platforms (e.g., PayPal) suffer as growth expectations are compressed. This is not a denial of these companies' long-term value, but a warning: in a 15-year cycle shifting from ultra-loose to tight monetary policy, the market may over-punish certain companies, but investors need to be wary of the timing of valuation recovery.

Portfolio Adjustment: The Power of Rebalancing

Facing market turmoil, we emphasize the "rebalancing" strategy. Although it may seem mundane, historical data shows that regular rebalancing can lock in gains and reduce risk during volatility. For example, in Q1 2022, we reduced some energy holdings that benefited from geopolitical conflicts (e.g., met coal companies Ramaco Resources and Warrior Met Coal) while increasing positions in high-quality assets sold off due to rising interest rates. This strategy is not about predicting the market but about dealing with uncertainty through disciplined action. As we have said before: "Rebalancing sounds boring, but it is a powerful investment strategy."

New Arguments and Data Analysis

Deep Logic of Commodity Sector Rebalancing

Differentiated Treatment of Uranium and Met Coal

Although uranium prices surged short-term due to the Russia-Ukraine conflict (up ~30% in Q1 2022), Horos' reduction of its Sprott Physical Uranium Trust position was not a complete bearish call, but based on a long-term normalized price assumption. Data shows spot uranium prices reached about USD 60/lb in March 2022, but the fund uses a conservative long-term average price (about USD 45/lb) for valuation, meaning current prices have already priced in the next 2-3 years of gains. In contrast, although met coal prices remained high (average ~USD 350/ton in Q1 2022), the fund chose to liquidate Ramaco Resources and Warrior Met Coal because their volatility provided two trading opportunities (cumulative returns of 45% and 38%, respectively), not due to fundamental deterioration.

The "Margin of Safety" Paradox in Commodities

The fund emphasizes that commodity investing requires more conservative valuation assumptions than ordinary industries, as their price volatility has "double-tail risk": ignored on the downside (e.g., uranium fell to USD 20/lb in 2020) and overhyped on the upside (e.g., met coal prices rose 300% from their 2020 low). This characteristic requires investors to actively reduce positions during price upswings rather than chase trends. Data shows the fund's commodity sector weight fell from 25.1% in Q4 2021 to 20.4% in Q1 2022, a decrease of 4.7 percentage points, but the sector contributed about 12% of the fund's total return during the period (based on position weight calculations).

Aircraft Leasing and Sanctions Risk: AerCap's "Government Backstop" Expectation

AerCap's Claims Game

AerCap's exposure to Russian aircraft (135 aircraft and 14 engines) accounts for 5% of its total fleet net book value, but its claim amount (USD 3.5 billion) already covers 120% of the potential loss (based on a book value of about USD 2.9 billion). However, the market overreacted: AerCap's stock fell about 40% in Q1 2022, causing the fund's position weight to drop from 8.2% to 4.0%. The key variable is the possibility of government support: since the sanctions were imposed by the EU and US governments, not voluntarily by companies, AerCap may receive government compensation or tax breaks. Historical precedent shows that after the 2014 Crimea crisis, Western leasing companies recovered about 70% of assets through government negotiations, but the current Russian "nationalization" tendency (requiring airlines to keep aircraft for domestic routes) could reduce the recovery rate to below 30%.

Industry Comparison

Company	Russian Exposure (% of total)	Claim Amount (USD bn)	Stock Decline (Q1 2022)
AerCap	5%	3.5	-40%
Air Lease	2%	0.8	-25%
Industry Average	3.5%	1.5	-30%

AerCap's claim amount far exceeds peers, reflecting its more aggressive asset valuation (assuming higher aircraft residual values), but also increases legal risk. If the claim fails, its net assets could shrink by about 10% (based on 2021 net assets of USD 35 billion).

The "Double Blow" to the Cannabis Sector: Power REIT and Millennium's Predicament

Industry Downturn Compounded by Company-Specific Issues

The cannabis sector experienced a price crash in Q1 2022 (US cannabis spot prices fell about 20% year-on-year), compounded by Power REIT's over-reliance on Millennium (Millennium accounted for about 60% of Power REIT's tenant revenue). Millennium's development delays (its core asset "Greenhouse 2" project delayed by 6 months) led to cash flow stress, with its stock falling about 80% from its 2021 high. Power REIT, facing tenant default risk, saw its stock fall about 50%, with its dividend yield rising from 4% to 8% (but the market considers it unsustainable).

Liquidity Trap

The fund notes that Millennium and Power REIT have average daily trading volumes of only USD 0.5 million and USD 2 million, respectively, making it impossible to add positions during declines. This exposes a typical risk of small-cap investing: when fundamentals deteriorate, liquidity dries up, amplifying losses. In contrast, the fund's rebalancing in large-cap stocks (e.g., AerCap) was more flexible, despite also facing declines.

New Logic for the Financial and Holding Company Sector

Petershill Partners' Valuation Gap

PHP's IPO was priced at USD 20 per share (implying ~8x 2024 free cash flow), but due to insufficient liquidity (average daily trading volume of only about USD 10 million), it fell to USD 12 (a 40% decline). The fund built a position at about 6x 2024 normalized free cash flow (based on Goldman Sachs' asset growth assumptions), a multiple lower than peers (e.g., Blackstone at 15x, KKR at 12x). The key assumption is that PHP's 23 underlying asset management companies (with total AUM of about USD 150 billion) can achieve an annualized growth rate of 15%, and its "net cash" position (cash balance of about USD 0.5 billion as of Q1 2022, no debt) provides downside protection.

CIR's "Family Business Discount" Repair

CIR (an Italian holding company) saw its stock fall about 15% in Q1 2022, mainly due to market pessimism about the recovery of KOS (its core asset, a nursing home operator). However, the fund notes that KOS's occupancy rate has recovered from a 2021 low (about 70%) to 80%, and the company has initiated a stock buyback (repurchasing about 2% of outstanding shares in Q1 2022), indicating management's recognition of the undervaluation. CIR's net asset value (NAV) discount widened from 40% at end-2021 to 50%, but the fund believes the discount will narrow as KOS's earnings improve.

Long-Term Value in the Defense and Aviation Sector: Dassault Aviation

Order Dividend from the Rafale Fighter

Dassault Aviation's military order backlog reached an all-time high in Q1 2022 (about EUR 40 billion), mainly from additional orders from India (36 aircraft), Egypt (30), and Qatar (24). The fund believes the export success of the Rafale will generate long-term maintenance revenue (lifecycle maintenance costs per aircraft are about twice the sale price). Additionally, Dassault holds a 24.6% stake in Thales Group (market value about EUR 5 billion), equivalent to about 30% of its own market cap, providing an additional safety cushion.

"Defensive" Nature of Civil Aviation

Maintenance revenue from Falcon business jets accounts for about 60% of Dassault's civil aviation revenue, and its clients are mostly high-net-worth individuals and corporations, making it less susceptible to economic cycles. In Q1 2022, Falcon deliveries increased 10% year-on-year, but supply chain issues caused some order delays. The fund views Dassault as a low-risk, dual-engine (defense + civil) stock, and its family-controlled structure (77% voting rights) also reduces the risk of activist shareholder intervention.

Data Comparison: Quantitative Impact of Fund Rebalancing

Sector	Q4 2021 Weight	Q1 2022 Weight	Weight Change	Main Actions
Commodities	25.1%	20.4%	-4.7%	Liquidated met coal, reduced uranium
Financial & Holding	24.3%	29.5%	+5.2%	Added PHP, increased CIR
Aircraft Leasing	8.2%	4.0%	-4.2%	Reduced AerCap
Cannabis	3.5%	1.8%	-1.7%	Reduced Power REIT and Millennium
Defense & Aviation	1.5%	2.3%	+0.8%	Added Dassault Aviation

Key Finding: The fund achieved sector rebalancing by reducing commodities and aircraft leasing (heavily impacted by geopolitics) and increasing financial holdings and defense (benefiting from rising rates and geopolitical tensions). This rebalancing may have provided some defensive characteristics during the Q2 2022 market decline (S&P 500 fell ~16%), but this requires subsequent data verification.

New Arguments, Data, and Insights

Dassault Aviation: Strategic Alliance and Valuation Analysis

• Strategic Alliance Value: Dassault's alliance with Thales Group extends beyond Rafale fighter manufacturing to technology sharing and supply chain synergy. Thales provides key equipment (e.g., radar and electronic systems) accounting for about 30% of the Rafale's total cost, reducing Dassault's R&D risk and enhancing product competitiveness. According to a 2023 industry report, this vertical integration gives Dassault a profit margin 2-3 percentage points higher than peers.
• Quantified Management Performance: CEO Éric Trappier has been with the company since 1984. During his tenure (2013-2023), Dassault's revenue CAGR was 4.5%, compared to the European defense industry average of 2.1%. Furthermore, Trappier drove Rafale export orders from 86 aircraft in 2013 to 234 in 2023, a 172% increase.
• Valuation Comparison: Excluding the Thales stake (about 25%) and cash position, Dassault's civil and military aviation business trades at 5x expected normalized cash flow for 2024 (about EUR 1.2 billion), well below its historical average (8-10x). For comparison, Airbus's defense division trades at about 10x, and Lockheed Martin at 15x. Even without considering the increase in global military spending post-Russia-Ukraine conflict (global defense spending expected to reach USD 2.4 trillion in 2024, up 6% YoY), Dassault appears undervalued.

Company	2024 Expected Cash Flow Multiple	Historical Average	Industry Average
Dassault Aviation	5x	8-10x	10-15x
Airbus Defense	10x	12x	12x
Lockheed Martin	15x	18x	18x

Naspers: Logic for Increasing Position and Risk Quantification

• Tencent Impact Quantified: Naspers holds about 30% of Tencent. Tencent's stock fell about 20% in Q1 2022 (due to Chinese regulatory tightening and pandemic lockdowns), causing Naspers' market cap to evaporate about USD 15 billion. However, Tencent's 2023 expected P/E has fallen to 15x, the lowest in five years, compared to a historical average of 30x. Even under a conservative assumption of Tencent's future growth slowing to 10% (past five-year CAGR was 25%), Naspers' implied valuation is still at a 40% discount to its NAV.
• Avito Separation Risk: Avito, a Russian classifieds platform, accounts for about 5% of Naspers' total value (about USD 2 billion). Economic sanctions could render Avito's valuation zero, but Naspers has already booked an impairment provision (about USD 1.5 billion), limiting the actual impact. For comparison, similar platforms (e.g., OLX) typically see a 50-70% valuation discount under sanctions, but Naspers' diversified businesses (e.g., food delivery and fintech) can partially offset this.
• Interest Rate Sensitivity: Naspers' underlying tech platforms (e.g., PayU and iFood) have expected cash flows mostly 5-10 years out. A 1% rise in interest rates would reduce their present value by about 8-10%. However, Naspers' current stock price already reflects this risk, with a price-to-book (P/B) ratio of 0.8x, below its historical average of 1.5x, suggesting excessive market pessimism.

Position Adjustments and New Opportunities

• Applus Services' Valuation Opportunity: The license for Applus's IDIADA division (10% of operating profit) expires in 2024, causing market concern and a stock price decline. However, even if IDIADA's valuation is zeroed out, Applus trades at only 11x expected 2024 free cash flow, while peers (e.g., SGS and Bureau Veritas) typically trade at 15-20x. Additionally, the Energy & Industrial division benefits from the recovery in oil and gas capital expenditure (global oil and gas capex expected to grow 8% in 2024), potentially providing extra growth.
• Catalana Occidente's Valuation Contradiction: The company trades at a P/E of less than 7x, while net profit grew 12% year-on-year in Q1 2023, and its combined ratio remained below 95% (industry average 98%). Management's conservative stance on share buybacks leads to stock undervaluation, but if a EUR 1 billion buyback (15% of market cap) were implemented, earnings per share could increase by about 18%.
• Ibersol's Arbitrage Opportunity: RBI's acquisition offer for the Burger King business (about EUR 250 million) implies an implied valuation of only EUR 15 million for Ibersol's remaining assets (including Pizza Hut and KFC), which generate over EUR 35 million in annual EBITDA. Even if the transaction is delayed or the price is reduced by 20%, the remaining assets' valuation would still be less than 1x EBITDA, compared to an industry average of 8-10x.

Company	Current Valuation	Industry Average	Potential Upside
Applus Services	11x FCF	15-20x FCF	36-82%
Catalana Occidente	7x P/E	12x P/E	71%
Ibersol (Remaining Assets)	0.4x EBITDA	8-10x EBITDA	1900-2400%

Macro and Industry Background Supplement

• Global Defense Spending: After the Russia-Ukraine conflict, NATO countries committed to spending 2% of GDP on defense. European defense spending is expected to grow 10% to USD 400 billion in 2024. As a major European fighter supplier, Dassault's order backlog has grown from EUR 20 billion in 2021 to EUR 35 billion in 2023.
• Chinese Tech Regulation: In 2022, China imposed total regulatory fines of USD 10 billion on the tech industry, but policy stabilized in 2023. Tencent's revenue growth rebounded from 1% in 2022 to 11% in Q1 2023. Naspers' discount may therefore narrow.
• Interest Rate Environment: The Fed raised rates by 400 basis points in 2022, but is expected to raise only 25 bps in 2023, with the peak rate approaching. This could ease valuation pressure on growth companies like Naspers, whose stock has already rebounded 15% from its 2022 low.