A sober tone from Claire Barnes in her first quarter letter to investors. She writes that “more regional companies [are suffering] from capricious action by governments” and her impression is that these incidents are becoming more frequent. She cites recent examples in both India (a government ban on alcohol near highways) and Thailand (closure of Kingsgate’s Chatree gold mine).

Last year, one of the Apollo Asia Fund’s holdings, Pure Circle (a producer and marketer of stevia), was engaged in an ongoing dispute with the US Customs and Border Protection. As a result, the company was temporarily denied access to a market that previously represented one-third of its revenue. It was finally cleared of any wrongdoing earlier this year.

She goes on to write that “the rule of law, the enforcement of contracts, predictable mechanisms for dispute resolution, logic-based regulation and the ideal of a level playing field are often taken for granted; if any or all are de-emphasized, the risks to individual businesses will rise, and I see no benefit to compensate for this higher risk in the expected returns to investors.”

You can find the full version of her letter here.