THE FUND
The fund gained 5.9% Net (SEK) during September, compared to the benchmark which increased 5.4%. Our off benchmark bets in Consumer Discretionary and bounce back in Materials (especially cements) were the primary drivers of positive relative performance. Our pre-IPO investment in Kido Frozen Foods started trading on the exchange at end September yielding positive returns. On the negative side, increased interest in index heavy Real Estate and Consumer Staples (Masan) performed negatively for the fund. No new stocks were added to the fund during the month.
THE MARKET
In Vietnam the market advanced in September with 5.4% gain of FTSE Vietnam Net (SEK), compared to the return 4.9% and 2% of MSCI Frontier Market xGCC Net (SEK) and MSCI Emerging Markets Net (SEK) respectively. Key blue-chip companies such as Masan Group (MSN VN), Saigon Beverage Company (SAB VN), Hanoi Beverage Company (BHN VN), and Hoa Phat Group (HPG VN) contributed to the Index performance, while the rest of the market is still moving sideways. MSN VN announced that they would buy back 115 million shares (worth ~USD 283m) in the market as a result share price increased 16%. The government stepped up its efforts to sell its stake in top brewery companies i.e. SAB VN and BHN VN. Their respective share prices rose 4% and 51%. The increase in steel selling price helped Vietnam’s biggest steel producer HPG VN improve its gross margin. HPG’s share price ran 11% for this reason. Foreign investors turned net sellers with total value USD 19.3m, focusing on Tien Phong Plastic (NTP VN). A major foreign investor of NTP VN divested fully (USD 22.7m) to local shareholders. Liquidity remained at a decent level of average daily trading value of USD 199m during the month.
The macroeconomic situation remained upbeat. GDP numbers in the third quarter were better than forecasted standing at 7.46% (vs 5.15% in Q1 and 6.28% in Q2). Manufacturing (+ 12.8%) and Services (+9.2%) were the key drivers. 9 month GDP was, therefore, lifted up to 6.41%, not too far from 6.7% full year target. With government’s resolve to target 21% credit growth, the Q4 GDP is likely to be achieved. 9M CPI stayed rather low at 3.4%. Core inflation was much lower at 1.45%. Committed FDI hit a record high of USD 25.5bn (+34.3%), in which disbursed investment is USD 12.3bn (+15%). The total 9 month trade balance was USD -442bn (+21.5%), while September trade balance recorded a surplus of USD 400m. September PMI surged to 5-month-high at 53.3, indicating that manufacturing sector is in a very healthy environment for expansion.
