NAV: 373,880.15
Total Shares Outstanding: 363,418
NAV per share: 1.0288
Performance since inception: 2.14%

July was yet another volatile month with the re-ignition of the US-Iran war, which started on 8th July when the US launched strikes on Iran after Iran’s attack on commercial ships near the southern side of the Hormuz Strait. This is due to different interpretations of the MoU by both parties, with Iran believing that all ships would pass through the strait only under its supervision, while the US sees the strait as unconditionally fully open. Because the strait is a huge source of leverage for Iran, it looks to me that Iran wants to preserve its leverage while the US is trying to undermine it. Nevertheless, the ‘ceasefire’ has restarted and I think it’s unlikely that the Iranians would come to the table for negotiation so easily after this, after seeing the US negotiate in bad faith multiple times, starting with June 2025 when the US bombed Iran’s nuclear sites while in the middle of negotiations for the nuclear peace agreement. Followed by February 2026 when the US launched strikes on Tehran and assassinated Iran’s Supreme Leader, also amid negotiations. And most recently, the violation of the MoU, when the US’s ally Israel continued their campaign in southern Lebanon while simultaneously trying to undermine the MoU by signing a separate trilateral deal between the US, Israel, and the Lebanese government. I believe this time, the Iranians would expect the US to give something first before coming to the table.

In addition, the Houthis have joined the war, firing at Saudi Arabia’s oil tankers in an attempt to block the Bab al-Mandab Strait, further putting upward pressure on oil prices and US Treasury yields. Because of the supply constraint, the US Strategic Petroleum Reserve has depleted to its lowest since 1983, and the temporary opening of the Hormuz Strait in June didn’t seem to replenish much. Furthermore, China’s temporary reduction of oil imports may be coming to an end soon, which could further drive up prices. All while political support in the US for the war is dwindling. It seems that Trump has trapped himself in this tough spot and there seem to be no military options left (with the exception of perhaps ground invasion or nuclear weapon). The most obvious way I see this de-escalating is for him to take the loss and resolve this diplomatically, which is highly unlikely. He’s already threatened to bomb Iranian civilian infrastructure (bridges and power plants) in mid-July and Iran has stated it’ll respond with a tit-for-tat strategy, involving the striking of Gulf states’ civilian infrastructure if theirs were attacked. Given that the Gulf countries are far more reliant on water desalination plants, oil pipelines, and power plants to survive. It would be an existential crisis should it be destroyed, which might cause millions of people to leave the region, causing mass migration.

On top of the craziness of the war, Trump has announced a blanket 10 to 12.5% tariff on 60 trading partners, including the UK, China, and the EU, on the basis of them failing to address forced labour. It’s obvious that this is just an excuse for the administration to get some revenue to replenish their coffers given the high cost of the war.

In other news, South Korean market continues to crash as foreign investors pulled out over doubts regarding the sustainability of the AI build-out boom. The matter was made worse by the leveraged ETFs, which deliver daily leveraged returns of the underlying. This means that should the underlying prices fall, the ETFs would sell indiscriminately (selling on weakness), exacerbating the problem. According to Goldman Sachs, more than 1.2 million leveraged retail trading accounts in South Korea triggered margin calls as of mid-July, with an estimated 320k to 360k accounts fully liquidated, which is roughly 1 in 30 adults in the country receiving margin calls. This to me sounds insane.

Speaking of AI, Google’s share price dropped by ~7% after its Q2 2026 earnings release despite beating earnings estimates. The reason for the fall is Google’s rise in capital expenditure spending forecast for 2026, up from ~$185 billion to ~$200 billion. Mega spending on data centers has caused its free cash flow to go negative $5.86 billion in Q2, which spooked investors. There have been murmurs about the actual low demand for AI relative to the amount of data centers being built. Given that the biggest users of data centers are the hyperscalers plus OpenAI and Anthropic, there aren’t other notable AI labs that are renting massive computing power. Therefore, we might see a situation where there are all these data centers with nobody to lease to. Also, most of these data centers are funded by private credit, which, if the data centers have no one to rent to, can’t generate enough revenue to sustain operations and pay their lenders, which are often pension funds, insurers, and retail investors.

Cracks in the AI narrative could be seen in OpenAI’s financials leak in June, which showed a net loss of $21 billion in 2025. It’s unclear whether or not AI companies would ever turn profitable, as even though OpenAI reported 900 million weekly active users early this year, only 50 million are paying subscribers, which is only 5.5%. This could mean that OpenAI is generating queries for the other 94.5% of users for free! Not sure if this is a sustainable business model. There could be a case where OpenAI turns to a full subscription business model to reduce operating costs, but that would likely turn a lot of users away. A reduction of users would probably mean less computing power is needed, which would decrease demand for data centers, causing excess supply and making them worth less.

In July, 2 of our positions got stopped out, namely South Korea and Taiwan. Global markets look like they have been moving sideways for the past 2 months, and our momentum indicator (on aggregate) seem to have remain fairly similar to last month because of the rebound in the last few days aided by a sharp spike memory chip stocks and Trump claiming that he will pause strikes on Iran. Given all that’s going on in the world, my guess is that the likelihood of an economic downturn could be just around the corner.

July’s factsheet can be downloaded here.