Update on the Vietnamese Stock Market – Fact sheets April
In April 2024, the Vietnamese stock market underwent a significant correction. The Ho Chi Minh Stock Index and the Vietnam FTSE Index Tracker fell by 7.39% and 8.83%, respectively. The TCM Vietnam High Dividend Fund limited its decline to 6.32%.
This drop was due to geopolitical tensions, persistently high interest rates, and pressure on the exchange rate between the US dollar (USD) and the Vietnamese dong (VND). Despite a 10.6% year-on-year growth in exports in April, this was below the expected 13%, a crucial factor for Vietnam's economic growth.
Despite these setbacks, the fund still managed a positive return of 7.04% for the year 2024, which is considerably better than the index tracker and the benchmark, which have fallen by 0.56% and 1.01% since the beginning of the year, respectively. Within the portfolio, FPT, our largest position, performed contrary to the market trend in April with a rise of 4.4% (measured in euros), contributing to the relative outperformance. FPT is the largest technology company in Vietnam, involved in IT, telecom, and education. First quarter results confirmed strong growth with a revenue increase of 21% and a profit increase of 20%. The announcement of a partnership with American Nvidia to build an "AI factory" played a significant role in the price increase.
General profit growth within the Vietnamese stock market is robust. HSC, one of Vietnam's largest securities firms, reported in its latest market overview that earnings per share of the Vietnamese companies they track are expected to grow by 18.8% this fiscal year and 17.2% next year. With a price-to-earnings ratio of just 10.6x for 2024 and 9x for 2025, valuations appear exceptionally low, both historically and compared with other countries in the region.
On the macroeconomic front, there were positive signals. Industrial production in the first four months of the year increased by 6% compared to last year. The purchasing managers' index climbed back above 50, which, along with a growing employment index, indicates a likely continuation of the upward industrial trend.
In April, total retail sales of goods and services reached an estimated value of about $22.3 billion, an increase of 9.04% year-on-year and 1.98% from the previous month. This was supported in part by an increase in employment, an encouraging sign for a continued revival in consumption.
The government invested $1.88 billion in April 2024, up 9.76% year-on-year and 16.04% compared to the previous month. Over the first four months of the year, the total value of public investments has risen to about $6.1 billion, representing an annual increase of 8.3%.
The consumer price index rose by 4.4% year-on-year in February, the sharpest increase since January 2023. Prices of grain, food, and fuel are expected to further drive inflation, as the comparison base for these products is relatively low. A further increase in the CPI of between 4% and 4.5% year-on-year is predicted for the second quarter.
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
