Fact sheets July
In July, the broad Frontier Markets index rose 6.3%. The price development of the TCM Frontier funds on average lagged slightly behind the various indices. The biggest risers were Pakistan (8.4%), Vietnam (7.9%) and Sri Lanka (+7.2%). The biggest fallers were the markets of Kenya (-1.9%) and Egypt (-1.6%).
Sentiment in Egypt was slightly under pressure due to a resurgence in inflation, partly due to a weak currency. However, there were also positive developments. For example, the Saudi Arabia Grant Management Committee (SAGMC) has invested $1.5 billion in projects in 27 regions in Egypt.
These projects are estimated to create around 17,000 jobs in sectors such as industry, agriculture, healthcare and trade. The $1.5 billion provided by SAGMC in project financing is an important milestone in the country's development cooperation, demonstrating its commitment to sustainable development and supporting businesses.
In Pakistan, the current coalition government announced that the government will be dissolved in August and replaced by a transitional interim government, which has partly eased political uncertainty. During the month, Pakistan received a total of $4 billion from the IMF and the United Arab Emirates. This sent a positive signal and was interpreted by the market that there is an acceptable plan to govern the country after the autumn elections. In addition, Pakistan announced a comprehensive plan with several projects aimed at attracting foreign direct investment from the Gulf countries in agriculture, mining, energy, IT and defense in the coming years.
The Central Bank of Sri Lanka cut interest rates for the second consecutive time in July amid a faster-than-expected decline in inflation, giving policymakers room to focus on economic recovery after the worst crisis in 70 years. Interest rates were cut by 200 basis points to 12%. Following this measure, Sri Lanka's domestic stocks and dollar bonds rose. The Central Bank indicated that these reductions will help bring market interest rates in line with inflation. Earlier, on June 1, the bank had already cut interest rates by 250 basis points. Sri Lanka is working on economic reforms and aims for price stability ahead of the first assessment of the $3 billion IMF loan program later this year.
After the upward trend of the previous month, the Vietnamese Ho Chi Minh Index made another nice gain (7.9%), breaking through the psychological resistance level of 1,200 points, with the annual gain now at 19%. Sentiment was fueled by the news that the chairman of Vietnam's stock market regulator (SSC) will meet with rating agencies in Hong Kong to discuss an upgrade of Vietnam's stock market to emerging market status. Any upgrade is expected to lead to higher capital inflows into the Vietnamese stock market.
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