VFMVF4 – 10/2016
In October 2016, Net Asset Value per share (NAVPS) of VF4 has decreased 3.3% compared to a market-wide decline of 1.5%. The deterioration occurred mostly in the sectors that have had high growth since the beginning of this year such as Pharmaceuticals and Consumer Durable Goods with a decrease of 10.5% and 9.4% respectively. Moreover, the defensive sectors also decline by an average of 3%, in which, Utilities sector declined by 5.3%, Transportation sector decreased 5.3% and Technology dropped by 6.2%. The market-wide deterioration in stock prices reveal the cautious sentiment of investors before significant events that are about to happen, including the United States Election and the rate hike by FED in December that will affect asset prices globally.
In November 2016, the main reason for investors’ caution is the effect of the US election on global financial market where both candidates of the two major parties had announced their opposition to the Trans-Pacific Partnership (TPP) in this year election, even though it might become the largest trade partnership, accounted for 40% of global GDP with higher standards than WTO. Vietnam would be considered to receive the most significant benefit among 12 members of the TPP if the agreement was passed.
However, with regards to results of companies within VF4 portfolio, there were numerous positive information in October. The 3rd quarter results of Hoa Phat group (HPG) has shown impressive growth with net profit after tax increased by 59.5% compared to Q3 2015 due to a surge in consumption volume and extended profit margin. In retail sector, Mobile World Group (MWG) also recorded revenue and net profit growth rate of 78% and 64% respectively in the first 9 months of 2016 compared to 9 months of 2015, which are all the results of the successful expansion of the stores chain.
In October, VF4 has increased its cash holding from 21.2% to 28.8%, the highest cash allocation in 2016. The large amount of cash would enable VF4 to take up better opportunities when the market is negatively affected by external information. At the end of October, VFMVF4 has accumulated a return of 18.2% since the beginning of this year, higher than the increase of 16.7% of the market.