THE FUND:

The fund increased 2.3% Net (SEK) in March, compared to the benchmark index which gained 4.5% Net (SEK). A strong rally in a few large caps, especially Vingroup (VIC VN), Masan Group (MSN VN), and Vinamilk (VNM VN), where the fund has natural underweight is the key contributor to the relative underperformance during the month. Our off-benchmark bets in Phu Nhuan Jewelry (PNJ VN), VNDirect Securities (VND VN), and Vietnam Electrical Equipment (GEX VN) had a good run owing to general improvement in the economy, surplus income, and consumer spending. Our overweight in Consumer Discretionary, Financials, and underweight in Industrials and Materials also contributed positively to the relative performance. Valuations of the large caps continue to widen compared to the mid-caps. The fund is tilted towards growth stories at reasonable valuations in mid-cap stocks. There was no inclusion or exclusion to the fund portfolio during the month.

MARKET:

Vietnam’s market continued its upward momentum in March, supported by robust macro-economic conditions. The Index crossed its all-time-high at 1,170 last achieved in 2007. FTSE Vietnam Net (SEK) increased 4.5% during the month compared to 1% loss in MSCI Emerging Market Net (SEK) and 1.7% gain in MSCI Frontier Markets xGCC Net TR (SEK). Foreign investors turned net sellers of USD 45m, mainly in HD Bank (HDB VN), and Hoa Phat Group (HPB VN). Liquidity remained high at USD 368m in average daily trading value. Large-cap tickers such as Vingroup (VIC VN), Masan Group (MSN VN), and banking stocks were the key market movers while the rest remained range bound. Vingroup intends to IPO its largest business arm, Vinhomes, which develops all Vingroup residential projects (villas, townhouses, condominiums, etc.) across Vietnam. Company management is hinting at a target valuation of USD 12bn. VIC will continue to own the majority stake. Techcombank, 20% of which is held by Masan Group, is also in the process of pre-listing transaction a for institutional buyers, valuing the bank roughly at USD 5bn. Corporate actions by these two companies have been the primary driver of stock prices lately. At various annual general meetings, companies are coming up with ambitious earning targets for 2018, especially in the banking sector. Higher liquidity in the market increased margin lending, and new products in the market are driving the Brokerage sector.

In terms of the macro-economy, Vietnam had a good run in quarter one. GDP growth accelerated to 7.4% (vs 5.1% in quarter one, 2017), mainly from strong performances by the industrial and construction sectors. Consumer Price Index remains benign at 2.8%. The registered foreign direct investment was down 25% to USD 5.8bn because no significant projects were announced during the period. The amount disbursed, however, increased 7.2% to USD 3.88bn. Exports jumped 23% year-on-year to reach USD 33.6bn. Trade surplus clocked in at USD 1.1bn as imports grew at a slower pace (13.6%, USD 32.5bn). On the negative side, the suspension of a key oil field project led by PetroVietnam named “Ca Rong Do” due to strong pressure from China had an adverse effect on sentiment in Oil & Gas production and its associated sectors.

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Capital invested in a fund may either increase or decrease in value and it is not certain that you will be able to recover all of your investment. Historical return is no guarantee of future return. The Full Prospectus, KIID etc. are available on our homepage. You can also contact us to receive the documents free of charge. Please contact us if you require any further information: +46 8-5511 4570.