Monthly updates, News, Vietnam


Consumers choosing from a wide range of Vinamilk products in a local supermarket.

The fund decreased 2.3%(SEK) in June compared to the benchmark index that increased 0.2% (SEK). Our natural underweights in Vingroup (VIC) and Vinamilk (VNM) were the key contributors to the fund’s relative underperformance. The share price of VIC increased 12.1% thanks to the quick progress made by Vinfast, a new car manufacturing business arm, that intends to produce 500,000 automobiles under the Vinfast brand each year. VNM, on the other hand, attracted buying by foreign investors which improved the share price performance. F&N, a major shareholder, registered to buy 14.5 million shares in this period increasing its stake in the company. The correction of some of our off-benchmark bets such as FPT Corp (FPT), LDG Group (LDG), HD Bank (HDB), and Phu Nhuan Jewelry (PNJ) also contributed negatively to the overall performance. Our overweight in Material and Consumer Discretionary and underweight in Industrials added positively to the relative performance of the fund. We did not add or divest any companies in the month.


The market was weak in June due to concerns over external factors that had the potential to affect Vietnam’s macro stability. The key worries were: (1) an escalation of a possible trade war between the US and China, (2) a risk of currency devaluation as the US Dollar kept getting stronger, and (3) poor performance by regional and world markets. With this in mind, most local investors took a cautious view and did not rush into buying unless the market was oversold. The market was also let down by an update from MSCI stating that Vietnam would not be included in the Emerging Market watch list in this review. MSCI did point out that although Vietnam has made progress in the last 12 months, several quantitative requirements have yet to be fully met. It is much more likely that Vietnam will be included in next year’s review.

The market completed the month with a modest gain of 0.22% Net (SEK), compared to 2.4% decline in MSCI Emerging Market Net (SEK) and down 4.0% in MSCI Frontier Markets xGCC Net (SEK). However, apart from an increase in Vingroup (VIC VN) which is the single largest stock of the Index, most of the market experienced a correction in June. VIC’s share price reacted positively to the news that Vinfast’s progress had accelerated when it acquired General Motor’s factory and its distribution system in Vietnam. This enables VIC to produce affordable cars based on current product lines that are GM’s forte.

Foreign investors net sold USD 6.1m during the month, including a one-off transaction in Yeah1 Group (YEG) which is newly listed on the Ho Chi Minh Stock Exchange (HSX). Excluding that, total net sell amount was roughly USD 105m. We noticed a continuous net buy in the last few days of the month indicating that the heavy foreign-led sell-off trend from May might have come to an end. This also tells us that the weak market in June was mainly caused by local investor panic rather than foreign strong sell in May. Liquidity in the market reduced to USD 242m in the average daily turnover. In terms of valuation, Vietnam is trading at FW2018 P/E of 17 and FW2019 P/E of 13.9 which is quite reasonable for long-term upsides. However, any panic over external concerns may cause volatility in the short-term.

From a macro perspective, despite external turbulence, Vietnam’s macroeconomic situation remained stable and upbeat. First-half GDP growth was reported at 7.08% (highest in 7 years), Quarter 2 GDP clocked in at 6.79%. CPI inched up 0.61% in June because of a hike in food and foodstuff prices, and transportation costs as the oil price increased. 6-monthly CPI maintained at 3.29% still below 4% – the full year target. Vietnam continued to maintain a trade surplus of USD 2.57bn in the first half of the year, in which total trade jumped to USD 225.3bn (+13%). 6-monthly credit growth was reported at 6.35% (vs 7.54% in 6-month 2017) and the lending rate remained stable given that liquidity in the banking system is healthy. The Vietnamese Dong lost some value over the US Dollar recently (1.7% year to date). This is within an acceptable range given that currencies of other peers have gone down at a much higher rate in the last few months. The healthy FDI inflow, favourable trade surplus, and strong remittances could support the Vietnamese Dong’s stability in the current situation. 6-monthly registered FDI was USD 20.3bn (+5.7%) of which USD 8.37bn (+8.5%) was disbursed. PMI in June rose to 55.9, the highest level in 8 years, signaling that the manufacturing sector is improving rapidly thanks to a high number of new orders, total production, and job demand.

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.

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