Developments February - Fact sheets

In February, the broad Frontier Markets index fell 0.1%. The price development of the TCM Frontier funds was on average more positive than that of the various indices. The increase was the greatest on the stock exchanges in Nigeria (+7.5%), Kazakhstan (+7.3%) and Morocco (+6.9%). The biggest loser was Vietnam (-6.8%).

The Nigerian All Share index rose to its highest level in 16 years this month, following the presidential election. The Electoral Commission of Nigeria has declared Bola Tinubu as the winner of the election. The candidate of ruling party APC received 37 percent of the votes and his main opponents Atiku Abubakar 29 percent and Peter Obi 25 percent.

The 70-year-old Tinubu is the former governor of Nigeria's most populous state of Lagos and will succeed his party colleague Muhammadu Buhari as president. However, voter turnout was a major disappointment, with only 27% of voters turning out to vote. Tinubu will be inaugurated in May with investors hopeful that he will implement more market-friendly and necessary reforms.

In contrast to Nigeria, sentiment was under pressure in Vietnam. Investors were concerned about the risk of increasing corporate bond defaults and the impact this has on the banking system and the wider economy. For example, there was news about delayed interest and principal payments. The majority of these delayed payments are attributed to real estate developers and energy companies. Payment deferrals are currently being negotiated or real estate companies are offering shares as an alternative form of payment. The majority of the property companies in arrears are related to Thinh Phat Group and Novaland (no positions in TCM funds). Thin Phat Group recently announced that it is selling assets abroad to facilitate payments and Novaland has reached an agreement with some bondholders to reduce outstanding bonds through an exchange for shares. Although it will take some time for these actions to be implemented, market confidence and positive sentiment will likely return as we see more often in Vietnam.

Talks between Pakistan and the IMF are making progress. The central bank surprised with a rate hike of 300 basis points to counter the higher-than-expected inflation rate of 31.5% in February. The rate hike and devaluation will likely please the IMF, as will increased gas and gasoline prices, along with increased taxes to reduce the budget deficit.

After all, Sri Lanka has closed an IMF deal of $2.9 billion after support from China. According to Sri Lankan President Ranil Wickremesinghe, the economy is climbing out of the slump, but there is still insufficient foreign currency for the import of goods, which made the IMF deal crucial, so that other creditors could also release money. The deal will ultimately be positive for the economy, with the export sector and tourism in particular benefiting. Moreover, foreign investors are coming back again with this low exchange rate.

More news about Vietnam, Africa and the Global Frontier fund can be found in the latest fact sheets of the equity funds:

TCM Global Frontier High Dividend Equity

TCM Vietnam High Dividend Equity

TCM Africa High Dividend Equity