India:

• Tariff Impact: A 26% tariff has been imposed on Indian exports to the US

• Economic Outlook: Exports to the US represent only 2.7% of Indian GDP, and are not the growth driver of the expected 6-7% GDP growth (unlike other countries)

• Portfolio Response: We have minimal US export-related exposure and have trimmed our weighting in the one holding in our india Fund that does have some US sensitivity this morning (Shilchar).

South Korea & Taiwan:

• Tariff Impact: For exports to the US, South Korea faces a 25% tariff and Taiwan a 32% tariff

• Economic Outlook: These tariffs present challenges to key export sectors, with potential short-term economic implications.​

• Portfolio Response: We are underweight Korea. Our holdings are primarily in the Technology Hardware sector, where the structural and cyclical drivers (and lack of sufficient US capacity) will mitigate the impact of tariffs. We have minimal positions elsewhere. Similarly in Taiwan (where we are also underweight), we have zero export exposure outside the Tech Hardware sector, which additionally is still benefiting from the AI-related boom.

China:

• Tariff Impact: China is subject to a FURTHER 34% tariff on its exports to the US, making 54% in total ​

• Economic Outlook: This will clearly have an economic impact, which we would expect to be offset by further domestic stimulus

• Portfolio Response: We maintain an underweight position in Chinese assets, and are heavily concentrated in domestic companies such as Tencent, Trip.com etc. We have minimal US export-linked exposure

Vietnam:

• Tariff Impact: Vietnam faces tariffs as high as 46% to exports to the US, posing challenges to its export-driven economy. ​

• Economic Outlook: These tariffs will lead to reduced trade volumes and weaker growth, although the government is pro-actively trying to mitigate this impact through negotiations with US.​

• Portfolio Response: Anticipating such developments, we proactively halved our exposure to Vietnam last year.​ Vietnam is only 0.8% of Alquity Future World fund and 1.2% of Alquity Asia fund and we have zero export exposure (we have 2 positions – affordable housing and pharma/electronics retail)

Thailand:

• Tariff Impact: Thailand, a major hub for automobile manufacturing in Southeast Asia, is subject to a 36% tariff. ​

• Economic Outlook: This situation poses risks to exports and may deter further foreign investment in this industry.​

• Portfolio Response: We have zero export exposure. Our positions are in retail (home improvement, convenience stores), banking and hotels.

Mexico:

• Tariff Status: Mexico has been exempted from the latest set of US tariffs but continues to face previously imposed 25% levies on steel, aluminum, auto parts, and products not covered by the USMCA. ​

• Government Response: In response, Mexico aims to boost compliant exports to 90% following the U.S. tariff reprieve.​

• Portfolio Response: We are monitoring Mexico’s trade policies and economic indicators to assess potential investment opportunities.​ We have minimal exposure, with just one holding (a retailer)

Brazil:

• Tariff Impact: The US has imposed a 10% tariff on Brazilian imports, which is relatively lower compared to other nations.​

• Economic Outlook: Brazil’s currency, the real, appreciated by 0.7% against the U.S. dollar following the announcement, reflecting investor optimism.​ However, Brazil faces its own set of challenges and continues to raise interest rates to cool the economy

• Portfolio Response: We do not anticipate making any changes at this time.

The recent tariff implementation was largely anticipated (albeit with a greater magnitude than expected). Our strategic focus on domestic growth sectors results in much less exposure to tariff-impacted industries than the index, and we had further de-risked the portfolio in this regard last year. Although 2025 will be a year of volatility, we believe that uncertainty regarding Trump’s policies has now largely diminished with much of the ‘bad news’ reflected in valuations. We also expect that the benefits of diversification (via uncorrelated India, or the 20-country Future World fund) will be ever more evident throughout the coming quarters, and domestic, structural growth investment opportunities that are prevalent throughout the asset class will become increasingly attractive.