Fact sheets June

In June, the broad Frontier Markets index fell 0.4%. The price development of the TCM Frontier funds on average lagged slightly compared to the various indices. We found positive results on the stock markets in Morocco (5.8%), Sri Lanka (+1.8%) and Vietnam (+1.5%). The biggest declines were the markets in Nigeria (-35%) and Pakistan (-3.2%).

June was an eventful month with major price swings, with the 33% devaluation of the Nigerian Naira dominating the news. While this decision is painful in the short term, it represents an important step towards making Nigeria attractive as an investment again. Nigeria has a difficult payment system for foreign investors who wish to repatriate money. This has reduced foreign interest in both the country's bond market and stock market. At the moment, investors are still a bit hesitant and want to make sure that the measures are not reversed. However, that chance seems very limited and in all likelihood Africa's largest economy will re-emerge as a promising investment for foreign investors.

After months of uncertainty, Pakistan and the International Monetary Fund (IMF) have finally reached a crucial $3 billion bailout deal. This last-minute Stand-By Arrangement (SBA) deal, which releases more than $1.1 billion, comes at a welcome moment for Pakistan, which is struggling economically. The deal with the IMF not only provides immediate financial relief, but also provides Pakistan with a roadmap for the first nine months. With the assurance of the IMF, Pakistan can now move through this critical period with greater stability and confidence. The government will strengthen the implementation of long-term structural reforms of the economy. In a show of commitment to the IMF framework, Pakistan left additional taxes in late June, cut its development budget and raised its key interest rate to a new all-time high.

Sri Lanka is also working towards economic growth. As part of the country's external debt restructuring, it has also had to review its debts. At the end of June, the plan for improving the disabled debt was announced. Investors took a positive turn when the bonds held by the banks in LKR were excluded from the restructuring plan. In addition, the combination of falling inflation and expectations of interest rate cuts creates optimism.

In Vietnam, sentiment was positively influenced by the government to stimulate the economy through monetary and fiscal policy. For example, the current legal obstacles in the real estate market and government spending policies have partly been solved. In addition, lower interest rates are driving capital inflows into the stock market and the economy is also expected to pick up as a result of this measures. Finally, VAT (mainly on food) was reduced from 10% to 8% on 1 July to improve consumer purchasing power.

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