COMMENTARY FROM FUND MANAGER

Q1 economic data showed a recovery, although most of growth rates remained lower than their pre- COVID levels. Q1 GDP growth reached 5.03% (higher than 4.72% in 1Q21 but lower than 6.85% in 1Q19). Notably, there were significant improvements in March data. The Industrial Production Index and nominal retail sales grew 8.5% and 9.4% y-o-y in March, bringing Q1 growth to 6.4% and 4.4% y-o-y, respectively. The Purchasing Managers’ Index (PMI) declined from 54.3 in February to 51.7 in March. The above-50 level continued to indicate manufacturing expansion, but the companies surveyed raised concerns about rising input costs due to escalating commodity prices.

While Q1 GDP growth was slightly lower than expected, we have observed a clear trend of economic improvements since Q4 last year. From April, further recovery can be expected as international flights resumed on 15 March and air travelers no longer have to quarantine upon arrival in Vietnam. COVID-19 is no longer people’s primary concern as the number of fatalities and hospitalizations has subsided significantly compared with the peak in Q3 last year. Equity investors may remain concerned about the Fed’s rate hike and inflation, but we believe the investment prospects from economic recovery and growth outweigh any risks.

In addition, the Government is determined to make the stock market more transparent and ensure equality among investors by strictly penalizingGlobal stock markets also performed better in March. The MSCI World Index and S&P 500 increased 1.9% and 3.6% in March, however their YTD returns were -5.7% and -4.9%, respectively.
Market liquidity also reflected a more positive investor sentiment. The average daily trading value increased 18% m-o-m from USD1.2 billion in February