THE FUND:

Currently in the testing stage, Hanoi’s first metro line costing USD 868m is expected to serve nearly 200,000 people daily.

The fund increased 4% (SEK) in September, outperforming the benchmark index which gained 0.5 % (SEK). Our overweight in Consumer Discretionary (Da Nang Rubber, Dry Cell & Storage Battery, TNG Investments) contributed positive relative gains due to a potential increase in exports to the US in the US-China trade war scenario. As global oil prices increased to ~4-year high, the fund’s overweight in Energy (mainly PV Drilling) also performed well. Our off-benchmark bets in Healthcare (Traphaco), Materials (HT1 Cement, Hoa Sen Group), Real Estate (LDG Investments, Dat Xanh Group) and Technology (FPT Corp) added to the alpha in September. Additionally, our underweight in Real Estate (Vincom) worked well and contributed to the out-performance of the fund. The fund did not add any new stock during the month.

THE MARKET:

The Vietnam market continued its upward trend in September gaining 0.5% (SEK) while both MSCI Emerging Markets and MSCI Frontier Markets xGCC showed negative returns of 2.8% and 3% (SEK) respectively. Foreign investors turned net buyers of USD 17m during the month while liquidity increased significantly with an average daily trading value of USD 227m. Concerns over the US-China trade war faded as the market realised that the trade war might actually benefit Vietnam when the US scouts for other potential import markets. Textiles, footwear, tires, and fishery sectors are likely to benefit the most because U.S. importers have to find alternatives. In addition, Vietnam will be the likely recipient of FDI from both China and the U.S. as companies try to avoid higher tariffs in China. Local investors tried to play on the export and FDI themes. Energy stocks also posted better returns because of increases in oil prices and the government’s plan to step up exploration activities.

FTSE announced that it would include Vietnam in its watchlist of Secondary Emerging Markets, meaning that Vietnam could possibly be reclassified as a Secondary Emerging Market within 2 years.

Macro numbers released in September depict a positive picture with GDP growth of 6.88% in Q3 and 6.98% during 9M2018. Trade surplus during 9M2018 stood at USD 5.39bn compared to a surplus of USD 328m in the same period last year. Disbursed FDI during 9M2018 grew 6% Y/Y to hover around USD 13bn. While other emerging and frontier currencies seem to be under pressure, the Vietnamese Dong remained relatively strong due to a positive trade balance and high foreign currency reserves (USD 60bn at the end of September compared to USD 52bn at the beginning of 2018).

DISCLAIMER:
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.