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| CEO's MESSAGE |
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Dear Shareholders,
The state of the
global economy is generally a mixed picture. We observed
increased bifurcation across regions and sectors over the last
several months, resulting in clear divergences of performances
among the commodity complex and related equities.
Looking into
2024, falling inflation in developed markets will allow
recalibration of policy stances by central banks, leading to
potential rate cuts in the latter part of the year, albeit this
process may be milder and take longer than recent market
expectations, given the continued resilience of US's labour
market and consumer spending. The US Federal Reserve is expected
to cut interest rates during 2024, but the timing and pace of
those cuts will impact expected growth rates and therefore stock
market valuations. The markets expectations for a soft landing
scenario are increasing, but we still expect growth to moderate
nonetheless, shaping our views on select commodities.
China, on the other hand, has seen increased economic
volatility since the Covid-19 pandemic. However, in recent
months, we are pleased to see more proactive policies to
stimulate aggregate demand, including further monetary easing,
increased fiscal spending, and a slew of policies to support the
housing and equity markets. We anticipate the intensity of
stimulus measures to pick up pace, in light of continued
softness in domestic consumption, deflationary pressures and
challenges in the property sector. The prospect of a cyclical
recovery of the Chinese economy may become increasingly topical
among commodity and equity investors throughout the year, and
this will bode well for commodities.
2024 will also be characterised by increased geopolitical
tensions and many elections globally, most notably the US
election in late 2024, leading to increased risks of further
dislocations of supply chains, energy supply and changes in
policies. These present opportunities and risks, and we are
ready to capitalise should they arise. What will remain certain
are secular trends such as energy transition and
electrification, and we continue to find ample structural and
cyclical opportunities across our investment universe.
It’s hard to predict the course of geopolitical events,
but at the time of writing there are still ongoing conflicts
between Russia-Ukraine and Israel-Hamas. These issues aren’t
easily resolved, especially given recent escalation of violence
in the Red Sea threatening to spill into a broader issue in the
Middle East region. These conflicts are likely to impact
inflation and broader economic growth, adding another layer of
uncertainty to the outlook.
In the six months ended on 31 December 2023, we are
pleased to report a net profit attributable to shareholders of
the Company of HK$593,272,000, primarily driven by our Resource
Investment segment, which delivered a segment profit of
HK$237,951,000 and share of profit from Mount Gibson Iron
Limited of HK$265,908,000. Our Commodity Business segment also
generated a segment profit of HK$69,373,000.
It is our long-held belief that shareholders should
receive a return, however given the current uncertainty in the
global outlook, we have not declared a dividend. We will
continue to reassess our dividend policy based on our
expectations of the economic outlook. As ever, I would like to
thank you all for your continued support for, and faith in APAC
Resources.
Andrew Ferguson
Chief Executive Officer
23 February 2024
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