Monthly updates, News, Vietnam


The fund rose 9.4% (SEK) in February, compared to the fund´s benchmark index FTSE Vietnam Total Return Index, which rose 11.9%. Strong ETF inflows resulted in price gains, primarily in blue-chip stocks, while mid-cap stocks did not match the performance. The fund’s underweight in Real Estate (mainly VinHomes and Vingroup) was the main contributor to the relative underperformance. In addition, natural underweight in Masan and Vinamilk also added to the negative relative return. On the positive side, the fund’s off-benchmark bets positions in Materials (Hoa Sen Group), Financials (VN Direct, SSI Securities, JS Commercial Bank), Information Technology (FPT group) and Consumer Discretionary (TNG Investments) contributed positively to the fund’s performance. Further on, the fund has a tilt towards ‘growth at reasonable valuations’ stocks as shown by the fund´s price-to-earnings (P/E) ratio of 12x compared to the benchmark´s P/E ratio of 21x. We believe the mean reversion will occur once corporate actions in the blue-chip stocks and passive flows normalize. The fund had no addition in February and reduced its exposure in the Energy sector.


Post Lunar New Year holidays, we saw investors heading back to the market, especially local investors who had reduced their positions before the Tet holidays. In February, the fund´s benchmark index gained 11.9% (SEK), compared to MSCI Emerging Markets, which gained 2.4% and MSCI Frontier Markets xGCC, which gained 2.8%. We saw improvements in liquidity during the month with an average daily traded value of USD 208m. Foreign investors also increased their positions in Vietnam by adding USD 91m, mainly led by strong ETF flows. Vietnam remained in the limelight globally due to the Trump-Kim summit in February. Even though no breakthrough was achieved during the meeting, Vietnam’s importance in the geo-political landscape surely took a boost. Further on, Vietnamese airline carriers signed to buy ~200 airplanes from Boeing during the Trump visit and many other business avenues were discussed between the US and Vietnam, most pertinent was the FTA with Vietnam.

The trade war between the US and China has started to ease and it is believed that they are in the final stages of resolution, which causes market relief. As far as the details are concerned, we cannot be certain until the final term sheet has been presented, but according to media, no escalation in duties on Chinese goods of 10% will take effect. China seems to be willing to lower levies on US farm, Chemical, Auto and other products’ imports in return of US relaxations.

The macro numbers in February depicted a mixed picture, where the trade numbers disappointed the market. Exports during the first two months of 2019 increased 5.9% Y/Y, while imports increased 7.5%. Vietnam recorded a trade balance of USD -84m for the first two months of 2019, however February’s balance stood at USD -900m. The main reason for the slowing in exports is due to the global slowdown of the mobiles segment, in which 25% of Vietnam’s exports are made up of (mainly Samsung). The PMI slid to a 3 year low of 51.2, indicating an expansion slowdown in the manufacturing sector, mainly due to weaker new export orders. However, inflation remained meager during the month, which could be seen by the CPI inching up 0.8% M/M and 2.6% Y/Y. Vietnam’s story of being the new manufacturing hub of Asia remains unaffected and the FDI is still on upward trajectory. Total registered FDI´s in Jan-Feb 2019 saw a massive increase of 150% Y/Y at USD 8.5bn and disbursed FDI was up by 10% to USD 2.6bn. Given the uncertainties around the trade war between US and China, many global giants are considering to shift their production facilities to Vietnam to benefit from lower tariffs and cheap labour.

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.

Tundra’s Financial and ESG team meeting one of our holding company, Hoa Sen Group.



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