Funds lose against VN-Index as trade war escalates

Net asset values (NAVs) of the Viet Nam-focused investment funds run by Dragon Capital, VinaCapital and Pyn Elite either did not grow or made modest gains.

In the first five months, the benchmark VN-Index on the Ho Chi Minh Stock Exchange was up 9.3 per cent.

The NAV of the investment fund Vietnam Enterprise Investments Limited (VEIL), which is run by Dragon Capital, was down 0.3 per cent to US$1.4 billion.

Shares of Mobile World Investment Corp (HoSE: MWG) moved up and down in the five-month period but generally made little gains.

Mobile World is also the biggest investee company of the VEIL portfolio, accounting for 8.48 per cent of the fund’s investment.

Other large-cap stocks in the VEIL portfolio such as steel maker Hoa Phat (HoSE: HPG) and brewer Sabeco (HoSE: SAB) were up only 3.7 per cent and 3 per cent in the first five months, respectively, but their gains could not offset losses in other stocks.

For instance, Asia Commercial Bank (HNX: ACB), Khang Dien House Trading and Investment JSC (HoSE: KDH), and aquatic producer Vinh Hoan Corporation (HoSE: VHC) were down between 2.7 per cent and 6 per cent.

Since February, VEIL had been looking for investment opportunities in the local stock market as its cash-over-asset ratio fell to -1.51 per cent from 0.66 per cent during the five-month period.

The biggest investment fund run by VinaCapital, Vietnam Opportunity Fund (VOF), saw its NAV drop 1.1 per cent in the previous five months to $938.7 million.

Pyn Elite Fund also recorded a 0.8 per cent drop in its NAV, which stood at $282.7 million after five months.

Tundra Vietnam Fund was the only foreign-invested fund whose NAV made gains, growing 5.4 per cent in five months to $81 million.

It was because top investee companies’ shares of Tundra Vietnam Fund such as Vingroup (HoSE: VIC) and Vincom Retail (HoSE: VRE) had risen 20.3 per cent and 28.4 per cent, respectively.

Other stocks that also made strong gains in January-May period included tech giant FPT Corp (HoSE: FPT) and Vietcombank (HoSE: VCB), which were up 17 per cent and 25.6 per cent, respectively.

According to the funds, the escalation of the US-China trade war was the main reason for the underperformance of the majority of the funds, leading to the downturn of many local equity markets, including Viet Nam.

In June and the remaining of the months, the stock market may improve but the growth would be modest, according to BIDV Securities Corp and Viet Dragon Securities Corp.

Despite possible positive developments in the US-China trade talks, they would be short-lived, the stock-brokerage firms said.