The fund gained 0.5% Net during October, compared to the benchmark index which increased 7.4%. The strong price run up in FLC Faros (87% in October) is the main contributor to the relative underperformance. The fund has zero exposure in the stock, given strong concerns over its valuation (P/E transparency, asset quality, and business activities. The strong performance in Consumer Staples (Masan Group) and Real Estate (Vingroup) also performed negatively for the fund due to natural underweight in these names. On the other hand, our off-benchmark bets in Information and Technology (FPT Corp) and Brokerage (SSI) were the main drivers for positive relative performance. The fund also added a bank in Vietnam; Lien Viet Post. A merger of a bank and postal company with more than 1,200 consumer touch points across Vietnam to carry out financial transactions, 200 branches and 1,067 postal offices with LPB desks. LPB is also pursuing digital banking and manages one of only three e-wallet initiatives in the country, which gained 1.5mn users within one year of its launch. A growing bank trading at a valuation of P/B ~1 and P/E ~6.5 is a good example of growth at reasonable valuations. (changes in SEK)
The Vietnam market continued to perform well in October even though there were some signs of correction at the end of the month. FTSE Vietnam Net gained 7.4%, compared to the return 5% and 5.9% of MSCI Frontier Markets xGCC and MSCI Emerging Markets Net respectively. The Index was supported by some key index movers such as: FLC Faros Construction, Vingroup JSC, Masan Group and Vietnam Dairy Company. Excluding the performance of the aforementioned, the rest of the market witnessed correction, especially the mid-cap names.
Masan announced a treasury buyback plan which rejuvenated interest in stock price amid growth in its mining business led by increasing Tungsten prices. Vincom announced that they successfully raised USD 708mn from the IPO of its retail business. The biggest IPO in Vietnam to date valued the retail arm at USD 3.4bn. Vincom retail has a 60% market share in the country through 41 commercial centres and malls in prime locations with a target of 200 locations in the next 3-4 years.
Apart from those stocks, local investors took profits across the board after a long rally, and stock prices in many cases have dropped by 5%-10% from the peak. Average daily traded value stood at USD 200mn while foreign investors continued to be net sellers of USD 4.53mn. In November, the Asia-Pacific Economic Cooperation (APEC) Economic Leaders’ Week will be held in Vietnam. Leaders from 21 members including the U.S., China, Japan, Russia, etc. accounting for 39% of the world’s population, 59% of the global GDP and 48% international trade. It is likely that new business initiatives and investment plans could be announced during the event.
On the macro front, PMI stayed at 51.6, translating further expansion in manufacturing sector. Committed FDI in fist 10 months rose to USD 28.24bn (+37.4%), in which disbursed amount was USD 14.2bn (+11.8%). Inflation decreased in October to 3% YoY compared to 3.4% in September. Total 10 month trade balance jumped to USD 174bn (+20.7%) with net trade surplus of USD 1.23bn. (changes in SEK)
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