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Annual General Meeting season has begun with companies reporting strong growth and dividends.

 AFC Uzbekistan Fund August 2020 Update


Dear Investors and Friends,

August saw broad-based price appreciation amongst the fund’s holdings as the Tashkent Stock Exchange continues to mature and attract new market participants. The August NAV of the fund increased to an estimated USD 1,111 (+7%), according to internal calculations.

AFC Uzbekistan Fund valuations as of 31st August 2020:

Estimated weighted harmonic average trailing P/E (only companies with profit): 3.75x
Estimated weighted harmonic average P/B: 0.73x
Estimated weighted portfolio dividend yield: 5.87%


Market depth and liquidity continue to mature

August was quiet on the macro news front with no notable events. However, the broad-based rally among the fund’s holdings continued, from consumer goods to materials and financial services, and new market participants entered the market as the competition to accumulate quality companies at attractive valuations continued while liquidity increased. This is in line with our thesis for how an eventual broad-based re-rating across the stock market and broader economy should unfold.

The fund's largest holding, Qizilqum Cement (TSE: QZSM), saw continued strength and accumulation during August with its share price rising 16.6% for the month. QZSM’s share price has continued its multi-month price rise as the company continues to benefit from strong cement prices and a deficit of supply in the local market. During the last week of August there were rumours of the company possibly announcing a dividend for FY 2019 at its annual general meeting which will be held on 19th September. If QZSM was to pay a dividend similar to other state-owned companies, the payout ratio could be as high as 85%, which equates to a dividend yield of 21.3% as of 31st August. Regardless of whether dividends are paid, QZSM’s share price is in an uptrend as it sees increasing accumulation by new market participants. This has led the share price to appreciate by 52.7% year to date.

The other significant market news during the month was the 3:1 share split for the Uzbek Commodity Exchange (TSE: URTS). Supposed to have occurred in the third quarter of 2019, in preparation for the government’s privatization of 12% of the company to minority investors, it has finally happened, albeit with a delay. For the month of August, URTS’s share price rose 50%, attributable to the share split and ensuing increase in liquidity. The price action as a result of the share split is further confirmation that as liquidity in high quality listed companies increases, re-ratings in their prices and valuations should be expected in due course.

Hopefully, this is only the beginning of a consistent and prolonged trend of enhanced liquidity and new market participation which creates a positive feedback loop, accelerating the re-rating we are expecting. No doubt, one of the key contributors to this will be an increase in liquidity throughout the broader economy which is likely to be led by foreign inflows into the financial system. This will lower the cost of capital and enable consumers and corporations alike to leverage their balance sheets, a trend that occurs in most early-stage economies and which should see accelerated inflows into listed equities.

Uzbek Commodity Exchange

(Source: Asia Frontier Capital)


AFC Uzbekistan Investor Tour

Due to the ongoing challenges with international travel, the investor tour we had originally planned for May 2020 and then postponed to October 2020 is further postponed tentatively to May 2021 assuming international travel regains a semblance of normalcy and ease. We will provide an update on the situation and plans for the tour during the first quarter of 2021.

For further viewing here are some interesting, relevant news links related to Uzbekistan: 

Gold reaches 39.8% of exports

Uzbekistan to remove bureaucratic hurdles for doing business


The next cutoff date for new subscriptions will be 24th September 2020. If you would like any assistance with the subscription process please get in touch with us at This email address is being protected from spambots. You need JavaScript enabled to view it.

Best regards,

Scott Osheroff

CIO AFC Uzbekistan Fund