THE MARKET

The stock market in Vietnam consolidated in April (-3.3%) after a long rally since the beginning of the year, reflecting concerns over the ongoing geopolitical issue regarding North Korea. Local investors reduced position to avoid the risk of an escalation into a confliction that would hurt the regional stability. Foreigners were buying stocks at more attractive valuations and where net buyers to the value of USD 99m in April. FTSE Vietnam Net (SEK) ended April 3% lower, compared to +0.7% for MSCI Frontier Market xGCC Net (SEK). Liquidity continued to be high at USD201.7m average daily trading.

Q1 results are being released, and the numbers from most blue chips such as Vinamilk, FPT Corp, Vingrop, Vietcom Bank, Hoa Phat Group, Saigon Beer, Mobile World were strong. This helped to boost sentiment in the market. The brokerage sector is now allowed to record profits from investments by mark-to-market while they previously needed to realize a transaction in order to book a profit. Thus, results of the major brokers were very positive in Q1. Fertilizer producers, in another move, submitted a request to the Government of protection against Chinese imports that are flooding the market. If approved, it would be a boost for the sector in the coming period.

Macro wise, PMI in April was high at 54.1, meaning that manufacturing is expanding at a good pace thanks to the record high export orders and new jobs. Committed FDI jumped to USD 10.4bn (+40.5%) in the first four months of 2017, the disbursed amount is more modest at USD 4.8bn (+3.2%). April CPI declined to +4.3% from 4.65 in March. Jan-Apr export rose 15.4% to USD 61.3bn, but import also accelerated 24.9% to USD 64.1bn due to higher demand for manufacturing materials and input such as machines and equipment (+39%), electronics and mobiles spare parts (+24%), and steel (+45.4%). This led to trade deficit of USD2.74bn for the first four months.

THE FUND

The fund decreased 2.8% Net (SEK) in April compared to the benchmark which fell 3.3% (SEK). Underweights in index heavy energy stocks (as oil price slipped), Financials and Industrials contributed positively to the fund outperformance. In addition, our off-benchmark bets in Real Estate and Consume Discretionary also added to the alpha. However, an underweight in Consumer Staples (mainly sugar companies), overweights in Information Technology and Materials (cements) were the negative contributors to the relative performance. The fund further reduced exposure in energy names amid increasing exposure in Consumer Discretionary and Industrials during the month.