Russian invasion of Ukraine in the last week of February as well as the built-up tensions before the event have created a large divergence in Vietnam’s stock market throughout the month, as witnessed in the rallies of the Energy sector (+10%) and Materials sector (+12%), in contrast to the retreats of the Financials sector (-2.3%) and Real Estate sector (-2.7%). The VNIndex closed February +0.76% MoM and -0.54% YTD. PYN Elite NAV pulled back 2.85% MoM and 0.21% YTD, as our monthly performance was dragged down by CTG, VHM, HDB and VRE, while being supported by gains in ACV, VEA, NLG and KDH.
February macro: Despite a 1.0% MoM increase in February CPI due to rising gasoline prices, the YoY inflation remained tame at only 1.42%. Recovery is on track, with manufacturing PMI 54.3 in Feb from 53.7 in Jan, boosted by stronger customer demand and rising new orders. Meanwhile, industrial production +5.4% YoY, and disbursed FDI +7.2% YoY in 2M’22. Vietnam will bear minimal direct impact from the Russia-Ukraine war as they account for only around 1% of total trade. The inflation pressure, however, is more apparent this year yet still manageable around the government’s 4% target, since the energy-related components (excl. electricity) were only 5% of the CPI basket.
The stock of the month – ACV: Vietnam’s airport operator ACV delivered a stellar 10.2% gain in February, as the market cheered the mass return of local flyers: The number of domestic passengers through Vietnam’s airports jumped to 4 million in Jan and 6 million in Feb, with domestic traffic around Tet holiday, nearly reaching the pre-COVID levels in 2020. This is the immediate result of the government’s wise decision to lift all COVID testing requirements on domestic travel starting from January 2022. This along with Vietnam’s gradual reopening plan to international flights is expected to help ACV’s earnings return to 2019 levels by 2023.
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.