The Vietnam Fund returned +0.0% in December with a NAV of USD 1,854.02, having a return since inception of +85.4%. This represents an annualised return of +16.6% p.a. The December performance of the Ho Chi Minh City VN Index in USD was +3.7% while the Hanoi VH Index gained +1.9% (in USD terms). Since inception, the AFC Vietnam Fund has outperformed the VN and VH Indices by +5.6% and +26.4% respectively (in USD terms). The broad diversification of the fund’s portfolio resulted in a low annualized volatility of 8.89%, a high Sharpe ratio of 1.83, and a low correlation of the fund versus the MSCI World Index USD of 0.28, all based on monthly observations.
After the correction at the beginning of the month, a few selected index heavy weights such as Vinamilk (+6%), FLC Faros (+33%) and VCB (+18%) rallied strongly over the last two weeks and brought the index in HCMC to a monthly gain of +3.6%, while the broader market was almost unchanged. Banks and petrochemical stocks were the reasons for the index gain in Hanoi of +1.9%.
Market Developments in 2017
The first few years following the big bear market of 2007-2012 saw a revaluation of the completely oversold and undervalued stock market. This was especially true of small and mid-caps which were extremely undervalued and thus showed a nice recovery from a very low base. Fast forwarding to 2016, the year showed a more balanced advance in stock prices, while the long-awaited wave of privatizations started to accelerate in 2017. This was the year that foreign interest in new listings and auctions in state owned enterprises took off as brand names entered the market and foreign strategic investors replaced (often absent) value investors as the major buyers during the year. Other investors jumped onto this bandwagon and revalued many of those companies with heavy weights in the index such as Vinamilk, Vincom, and Sabeco.
In 2017, Vietnam became the most successful IPO market in the region with equities worth more than USD 7 bln (including Government divestments) successfully placed with investors