The fund rose 1.6% (SEK) in September compared to the benchmark, which rose 1.4% (SEK). The fund’s overweight in Financials (SSI Securities, Military Bank, VietinBank, VNDirect), Information Technology (FPT Corp) and underweight in Property (Vincom Retail, Vingroup) performed well and contributed positively to the relative performance. FPT Corp (FPT) posted an upbeat preliminary 8M 2019 results in which revenue and net earnings surged 21% Y/Y and 30% Y/Y respectively, driven by their strong core business. Our off-benchmark bets in Property (Dat Xanh Group, LDG Investment) also performed well during the month on the back of earnings optimism. Dat Xanh Group achieved 75% of the full-year earnings target during 9M2019 and witnessed a revenue growth of 31% Y/Y and earnings growth of 20% Y/Y during the period. LDG Group is likely to deliver strong numbers in Q3 owing to several project transfer activities in the quarter.
Meanwhile, the fund’s underweight in Consumer Staples (Vinamilk, Masan Group) was a negative contributor as the sector bounced back followed by last month’s weak performance. The fund trimmed its weight in Information Technology and Consumer Discretionary during the month.
The market inched up by 1.4% (SEK) in September, compared to a 2% gain in the MSCI Emerging Markets (SEK) and a 0.4% in the MSCI Frontier Markets xGCC (SEK). Liquidity remained high at USD 186m in average daily trading value. Foreign investors remained net sellers to the tune of USD 17m, which is, however, lower than the previous month’s net sell of USD 135m. In terms of performance, Financials were the leaders as (1) several banks (including VPBank and HDBank) started to buy treasury shares as registered previously and (2) VCB entered into an exclusive bancassurance partnership with FWD Group Hong Kong, which is likely to boost VCB’s bottom-line. The Brokerage sector is once again a favorite as increased volumes in the market are likely to drive the profitability growth in Q3. Investors also increased their positions in Property stocks, mainly mid-sized such as Dat Xanh Group, LDG Investment, Khang Dien Housing, etc, on the back of better than expected results in Q3. The key FOL full stocks (FPT Corp, MobileWorld Group, REE Corp) continued their upward trajectory as the local fund managers move closer to introduce ETFs base on the new Indexes (VN Diamond, VNFIN Lead, VNFIN Select) that shall allow foreign investors to buy in a basket of FOL stocks.
The State Bank of Vietnam announced to cut its policy rates (refinancing rate and rediscount rate) by 25 bps, effective September 16, 2019. SBV seems to be proactive to adapt to the new global dynamics where all the major economies are easing monetary policies to spur growth. In FTSE’s annual country classification review, Vietnam retained its Frontier Market status but was added to the watch list of ‘Secondary Emerging Markets’ for its next annual review in 2020. Despite many reforms undertaken by Vietnam in previous years to get upgraded, it failed to resolve the clearing and settlement criteria to make it to Emerging Market status this year.
Vietnam’s economy remained resilient to the regional economic shocks and its Q3 GDP growth stood at 7.31%, beating even the most optimistic forecasts. This lifted the 9M GDP growth to a 9-year-high of 6.98%. Key growth drivers during 9M2019 included: Manufacturing, which grew by 11.4% Y/Y and Services, which grew by 8.3% Y/Y. High value-added sectors make up the largest components of GDP basket where Industrial & Construction and Services are 34% and 43% respectively. The deadline inflation in September remained soft at +1.98% Y/Y, mainly due to weak oil and gas prices. Total exports in the first 9 months reached USD 194.3bn (+8.2%Y/Y), while imports increased by 8.9% to USD 188.42bn. The trade surplus, therefore, clocked in at USD 5.9bn during 9M2019. Total registered FDI in the 9 months saw a 19.9% Y/Y decline in value (USD 15.7bn) due to the absence of several large-scale projects that occurred in 2018. However, FDI disbursement increased by 7.3% Y/Y to reach USD 14.2bn. Manufacturing is still attracting most of the FDI coming to Vietnam, accounting for 74.2% of the new registered inflows.
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