Covid turbulence

— 25.08.2021

The Vietnamese stock market has once again taken a few steps back due to news of Covid-19. In about a week, the VN Index has declined five percent. Investors have been frightened because of the increased infections numbers and the closings of normal activities to combat the pandemic in Ho Chi Minh City. During the third quarter, the economy will slow down significantly and the earnings growth of the listed companies will also be slower. For the full year of 2021, we expect Vietnam to keep up with the growth rate of 5-6%. The listed companies will record earnings growth of more than 20% year on year.

Vietnam received the first Covid-19 vaccines only in May 2021, and the vaccination program was launched in June. After that Vietnam has developed the ability to provide more than 500 000 shots daily. Currently, the vaccination program is advancing at a rapid pace, with the first focus on vaccinating residents in the major metropolitan areas. In two and a half months, 18 million shots have already been given. In cities, coverage rates for the first jab have risen rapidly: to 80% in Saigon (HCMC) and 45% in Hanoi.

We are optimistic about the prompt progress of the vaccination program and believe that infection rates are now leveling off and will soon decline. We believe the stock market will fluctuate with the news up and down from week to week, but the main market trend for 2021 is up. We assume that the VN Index will close at higher levels at the end of 2021. The strong performance is supported by the continued earnings growth for the current and subsequent years.

Important information regarding the text and the fund

The material presented in this text is based on PYN Fund Management’s view of markets and investment opportunities. PYN Elite Fund (non-UCITS) invests its assets in a highly allocated manner in frontier markets and in a small number of companies. This investment approach involves a larger risk of volatility compared to ordinary broadly diversified equity investments. The value of an investment may decline substantially in unfavorable market conditions or due to an individual unsuccessful investment. It is entirely possible that the estimates of economic development or a company’s business performance presented in this presentation will not be realized as presented and they involve material uncertainties.