“Let me tell you the secret that has led me to my goal. My strength lies solely in my tenacity.”

– Louis Pasteur - Renowned French Chemist and Microbiologist.

AFC Funds Performance Summary

AFC Iraq Fund is the World's Best Performing Long-Only Equity Fund in 2023

With a return of 110.4% in 2023, the AFC Iraq Fund has not only posted a stellar return, but more importantly, it is, according to our research, the best-performing, long-only, actively managed, unleveraged equity fund globally in 2023. This kind of performance only goes to show the outsized returns that Asian frontier markets can generate. This performance by the AFC Iraq Fund strengthens our conviction that Asian frontier markets are an outstanding diversification tool for any sophisticated investor with a long term view.

The AFC Iraq Fund is the Best Performing Long-Only Fund Globally in 2023 – Staying Invested in Asian Frontier Markets is Important (Total Returns in USD)

AFC Asia Frontier Fund Reports its Best Ever Annual Return

The diversification benefits of Asian frontier markets are further solidified by the excellent return of +27.1% for the AFC Asia Frontier Fund, which outperformed all global benchmarks by a large margin thus making it the second-best performing frontier fund globally based on our research. Furthermore, this was the best-ever annual return reported by the AFC Asia Frontier Fund since its inception in March 2012.

Regular readers of our newsletters would recall that our view at the start of 2023 was for the AFC Asia Frontier Fund to see a large re-rating due to key headwinds like higher inflation and higher interest rates turning the corner in our universe. Historically low valuations backed these tailwinds for the AFC Asia Frontier Fund.

Despite a very strong 2023, we expect the positive momentum for the AFC Asia Frontier Fund to continue in 2024 due to:

• Continued monetary easing in our fund universe and the start of an interest rate easing cycle by the U.S. Fed should be positive for investor sentiment, especially in frontier and emerging markets
• A strong earnings recovery in some of our key markets like Bangladesh, Pakistan, Sri Lanka, and Vietnam
• Discounted valuations (even after a +27.1% return for fund in 2023) – the AFC Asia Frontier Fund’s P/E ratio still trades at an extremely low 6.8x, the lowest year-end multiple since inception of the fund.  

You can read a more detailed analysis of the above through our AFC Asia Frontier Fund 2023 Review and Outlook for 2024.

The AFC Asia Frontier Fund posted its Best Ever Annual Performance in 2023 and also Outperformed Global Benchmark Indexes (Total Returns in USD)

AFC Quarterly Webinar on Thursday, 18^th January 2024

We will be hosting our regular quarterly webinar to update existing and potential investors on the performance and outlook for our funds, especially for the AFC Iraq Fund and AFC Asia Frontier Fund which have posted extremely strong returns in 2023. 

The webinar will be held on Thursday, 18^th January 2024, at 8:00am NY, 1:00pm UK, 2:00pm Swiss and 9:00pm HK/SG time and will be recorded for viewing at your convenience.

The speakers on the webinar will be:

• Thomas Hugger, CEO & Fund Manager
• Ruchir Desai, Co-Fund Manager of the AFC Asia Frontier Fund
• Ahmed Tabaqchali, Chief Strategist of the AFC Iraq Fund
• Scott Osheroff, CIO of the AFC Uzbekistan Fund
• Vicente Nguyen, CIO of the AFC Vietnam Fund

The webinar will highlight the following key points:

• Drivers of performance for the AFC Asia Frontier Fund in 2023
• Key triggers for our positive view on 2024 for Asian frontier markets
• Top stock picks for the AFC Asia Frontier Fund
• Longer-term structural trends benefitting Asian frontier countries
• Outlook for the AFC Asia Frontier Fund / AFC Iraq Fund / AFC Uzbekistan Fund / AFC Vietnam Fund

The webinar will run for an hour and include a 15-minute Q&A session after the fund managers' presentations.

Please click on the button below to register for the webinar. If you are interested but unable to attend, please register, and we will send you a link to the recording afterwards.

January 2024 Subscription Cut-Off Date

The next cut-off date for subscriptions for our funds will be 25^th January 2024. If you would like to know more about 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. 

Please find below the managers’ comments on each of our four funds for December 2023.

AFC in the Press

Upcoming AFC Travel

Thomas Hugger, Ruchir Desai, and Peter de Vries are based in Hong Kong, while Andreas Vogelsanger is based in Bangkok, Vicente Nguyen in Ho Chi Minh City, Scott Osheroff in Tashkent, and Ahmed Tabaqchali in London and Iraq. If you have an interest in meeting with our team at their homeports or during their travels, please contact Peter de Vries at This email address is being protected from spambots. You need JavaScript enabled to view it..

AFC Travel

AFC Iraq Fund - Manager Comment

The AFC Iraq Fund Class D shares returned +6.6% in December 2023 with a NAV of USD 1,430.45 versus its benchmark, the Rabee Securities US Dollar Equity Index (RSISUSD index), which gained 6.2% during the month. For the year, the AFC Iraq Fund is up 110.4% making it the best-performing long-only, actively managed, generalist, unleveraged equity fund in the world according to our research, outperforming the index’s increase of 97.2% (which represents a #1 ranking amongst the best-performing markets in the world). Since inception, the fund has gained 43.0% while the RSISUSD index is up by 3.6%, an outperformance of 39.5%.

After such a gangbuster year, the obvious question is what is in store for the Iraqi market in 2024? The answer lies with the drivers of the market’s performance in 2023 and their continuation going forward. The key driver was a significant fundamental development that promises to accelerate the adoption of banking and bring about a transformation of the sector and its role in the economy, as discussed a few months ago in “Banks to Fuel the Market’s Next Phase”. The catalyst for this development was the Central Bank of Iraq’s (CBI) new procedural requirements for its provisioning of U.S. dollars for cross-border transfers in mid-November 2022. These were part of an ongoing process of encouraging the economy’s increased adoption of banking; they nevertheless represented a seismic shift to the country’s cash-dominated economy, in which large informal sectors drive the bulk of economic activity. As such, their introduction had an immediate detrimental effect on the volumes of cross-border transfers conducted through the CBI, which led to a dollar supply-demand mismatch and consequently to the currency’s upheaval.

In the ensuing months, the CBI introduced a raft of measures to further regulate cross-border transfers, accelerate the adoption of banking and the use of the banking system for settling commercial transactions instead of cash. These measures, coupled with the unintended consequences of the currency’s upheaval, created the economic incentives for informal companies to transfer to formality and to access the banking sector for the first time. The CBI followed these with two key measures that would substantially strengthen the banking system and advance its development. The first measure was the mandate that all banks should increase their capital by up to 60% by the end of 2024, after which the CBI would initiate a merger, an acquisition, or a liquidation of banks that fail to comply. The second measure was that all cross-border-transfers in 2024 would be through banks that have foreign correspondent banking relationships, bringing the process fully in-line with that of the rest of the world. 

These two measures, on top of the earlier ones, have disproportionally benefited the top-quality banks, who have the wherewithal to increase their capital bases, already have correspondent banking relationships with major international banks, and whose infrastructure is able to deal with the meaningful inflows of new banking customers and the subsequent increased volumes of cross-border transactions. A preview of the resultant boost to the earnings growth of four of the top-quality banks that are among the AFC Iraq Fund’s holdings, as CBI’s measures came into effect throughout 2023, can be seen in the last three quarterly reports for these banks. The extent of this boost can be appreciated by considering these reports, i.e. the first quarter of 2023 (Q1/23) to Q3/2, in the context of the growth profiles over the last five years. The first graph is that of trailing 12-month earnings in Q4/19 - Q3/23, while the second graph is that of trailing 12-month book values in Q4/19 - Q3/23. Both have been normalised, with Q4/19 figures set at 100 to allow for a review of the growth of these two key measures during this period, and for an easy comparison between the four banks.

Normalised Trailing 12-Months Earnings

Normalised Trailing 12-Months Book Values

Among the four banks, the Bank of Baghdad (BBOB) and the National Bank of Iraq (BNOI) experienced a sharp acceleration in both earnings and book values throughout 2023, reflecting the successful strategies pursued by each over the course of the last few years as reviewed here last year in “The Opportunity in Retail Banking” and in “Banks and the Predictability of Earnings”. Mansour Bank (BMNS), to a much lesser extent, experienced faster growth throughout 2023, while the Commercial Bank of Iraq (BCOI) lagged, but still had higher growth during the year. For these banks, this acceleration builds upon the gradual multi-year recovery in the banking sector following the 2014-2017 economic crisis that devastated the sector, as reviewed in “Private Sector Deposit & Loan Growth Continues”.

While this acceleration in quarterly earnings growth has turbo-charged the recent trends in earnings growth, its intensity should moderate meaningfully over the course of the next few quarters. Nevertheless, both earnings and book values should continue to grow strongly from a higher base, as the full effects of the CBI’s measures unfold over a long time given the economy’s still high levels of informality. This provides a boost to the AFC Iraq Fund’s investment thesis for the banking sector, which is that increased adoption of banking will come with growth in bank lending, resulting in an expansion of the money circulating in the economy and consequently to an increase in non-oil GDP. Over time, banks’ earnings should grow substantially, leading to meaningful increases in their valuations, and ultimately feeding into much higher market multiples.

Among other drivers for the market’s performance in 2023 was the cumulative positive effects of the relative stability that the country has enjoyed over the last few years, which provided a more stable and predictable macroeconomic framework for businesses and individuals to operate in and plan for capital investments on a scale not seen in the prior decades of conflict. Another driver was the positive macro backdrop that allowed the government to pursue expansionary policies that should boost economic growth and, ultimately, corporate profits, as discussed in “Government Starts Implementing Expansionary 2023 Budget”.

We see the drivers for the 2023 developments continuing, albeit moderating, in 2024. However, risks remain given Iraq’s recent history of conflict, extreme leverage to volatile oil prices, as well as the risks of a potential widening of the current Middle East conflict that could destabilise the region – as reviewed recently in “Assessing the Risks of a Wider Middle East Conflict”.

In conclusion, the Iraqi equity market, while beginning to discount the fundamental developments discussed above, is in the early phases of emerging from a brutal seven-year bear market in which the RSISX USD Index was down 25.4% in 2014, 22.7% in 2015, 17.4% in 2016%, 11.8% in 2017, 15% in 2018, 1.3% in 2019, and -5.4% in 2020 – for a cumulative decline of 66.6%. Even after the 97.2% increase in 2023, it is still 26.2% below the all-time high achieved in early 2014 before the onset of the bear market. As such, we believe that the upside opportunity for the AFC Iraq Fund will come about as the RSISX USD Index regains that peak and rallies further, reflecting the expected increase in banks’ earnings driven by the fundamental developments discussed earlier.

Rabee Securities U.S. Dollar Equity Index

At the end of December 2023, the AFC Iraq Fund was invested in 14 names and had a cash level of 3.8%. The fund invests in both local and foreign-listed companies that have the majority of their business activities in Iraq. The markets with the largest asset allocation were Iraq (94.7%), Norway (1.3%), and the UK (0.2%).

The sectors with the largest allocation of assets were financials (78.1%) and consumer staples (10.5%). The fund's estimated weighted harmonic average trailing 12 months P/E ratio (only companies with profit) was 8.12x, the estimated weighted harmonic average P/B ratio was 1.49x, and the estimated weighted average portfolio dividend yield was 3.13%. The fund’s portfolio carbon footprint is 0.08 tons per USD 1 mn invested.

 AFC Asia Frontier Fund - Manager Comment

The AFC Asia Frontier Fund (AAFF) USD A-shares returned +3.6% in December 2023 with a NAV of USD 1,553.10 bringing the full year 2023 return to +27.1%. In December 2023, the fund outperformed the MSCI Frontier Markets Asia Net Total Return USD Index (+3.4%), the MSCI Frontier Markets Net Total Return USD Index (+3.0%) and underperformed the MSCI World Net Total Return USD Index (+4.9%). The performance since inception on 30^th March 2012 now stands at +55.3% versus the benchmark, which is down by 23.7% during the same period. The broad diversification of the fund’s portfolio has resulted in lower risk with an annualised volatility of 10.7% and a correlation of the fund versus the MSCI World Net Total Return USD Index of 0.52, all based on monthly observations since inception.

December closed out an extremely strong year for the AFC Asia Frontier Fund with the best-ever annual performance in the fund’s history. Such a strong performance does not surprise us since we were convinced that our market universe bottomed out at the end of 2022. 

A large re-rating was on the cards as our fund’s P/E ratio was at an all-time low at the start of 2023 and, more importantly, we believed the key headwinds of higher inflation and higher interest rates would reverse in our universe in 2023, providing a huge tailwind for our markets. 

Even after such a strong performance in 2023, we remain very positive on fund performance for 2024 for the following reasons:

• Continued monetary easing from central banks in our fund universe and, more importantly, by the U.S. Fed (this will be very positive for frontier and emerging markets in general)
• Strong earnings recovery in 2024, especially in Bangladesh, Pakistan, Sri Lanka, and Vietnam, which will drive investor sentiment and a continued re-rating upwards
• Discounted valuations – even after a robust 2023, the AFC Asia Frontier Fund’s P/E ratio is at an extremely low 6.8x, the lowest year-end multiple since inception of the fund.  

These three important triggers above have all aligned nicely, and we therefore believe that Asian frontier markets in general, and the AFC Asia Frontier Fund in particular, are well positioned at the right time and right place. As written in our 2023 Review and Outlook for 2024, - click here to read – we would not be surprised if the AFC Asia Frontier Fund once again reaches its all-time high NAV by the end of 2024.

The AFC Asia Frontier Fund posted its Best Ever Annual Performance in 2023 and also Outperformed Global Benchmark Indexes (Total USD Returns)

The best-performing indexes in the AAFF universe in December were Mongolia (+11.8%) and Iraq (+6.2%). The poorest-performing markets were Bangladesh (+0.4%) and Kazakhstan (+0.5%). The top-performing portfolio stocks this month were a Mongolian coking coal producer (+81.4%), a Mongolian junior miner (+60.0%), a technology company focused on Asian frontier countries (+27.9%), a Mongolian convenience store operator (+24.5%) and a Mongolian technology company (+12.5%).

In December, the fund invested in a Sri Lankan bank, added to existing positions in Mongolia, Pakistan, and Sri Lanka, and reduced existing positions in Mongolia.

At the end of December 2023, the portfolio was invested in 68 companies, 2 funds and held 4.8% in cash. The two biggest stock positions were a fintech company in Kazakhstan (4.7%) and a bank in Kazakhstan (4.4%). The countries with the largest asset allocation were Iraq (17.6%), Mongolia (15.4%), and Vietnam (12.0%). The sectors with the largest allocation of assets were consumer goods (18.0%) and materials (15.1%). The fund's estimated weighted harmonic average trailing 12 months P/E ratio (only companies with profit) was 6.83x, the estimated weighted harmonic average P/B ratio was 1.39x, and the estimated weighted average portfolio dividend yield was 3.31%. The fund’s portfolio carbon footprint is 0.53 tons per USD 1 mn invested.

AFC Vietnam Fund - Manager Comment

The AFC Vietnam Fund returned +2.4% in December with a NAV of USD 3,145.01, bringing the year-to-date return to +9.0% and return since inception to +214.5%. The Ho Chi Minh City VN Index gained 3.2% in December 2023, gained 9.3% year to date, and is up by 93.2% since inception of the fund, in USD terms, showing the fund strongly outperformed the index by 121.3%. The fund’s annualised return since inception stands at +12.1% p.a. The broad diversification of the fund’s portfolio resulted in an annualised volatility of 15.00%, a Sharpe ratio of 0.71, and a low correlation of the fund versus the MSCI World Index USD of 0.50, all based on monthly observations since inception.

Market Developments

While 2023 presented challenges for the Vietnamese economy and its stock market, marked by global economic uncertainties and political concerns, the nation exhibited resilience. Following remarkable GDP growth of over 8% in 2022, 2023 faced various difficulties, resulting in lower GDP growth of 5.05%. Despite the challenges, the economy demonstrated encouraging signs, hitting a low point with 3.30% GDP growth in the 1^st quarter before gradually improving to 4.10% in the 2^nd quarter, 5.30% in the 3^rd quarter, and 6.72% in the last quarter. The consensus is that the economy has bottomed out and is poised for solid growth in 2024 and beyond.

Vietnamese GDP Growth Bottomed Out in the 1^st Quarter of 2023

Similarly, the Vietnamese stock market experienced volatility in 2023 despite a positive performance with a recovery of 9.58% in USD terms. From the low point in November 2022, the benchmark rebounded aggressively by more than 43% to reach a high of 1,255.11 in early September 2023. Subsequently, the index corrected by 18.7% over two consecutive months before witnessing a 9.77% jump in November and December.

Although the VN-Index faced challenges in 2023, it remained one of the best performers in the region, securing a yearly performance of slightly over 9% in USD. Among ASEAN countries, Vietnam holds a prominent position.

Vietnam was still One of the Best Markets in the Region in 2023

While the 9% performance in 2023 falls below our initial internal target of 15%, we are pleased with this result, especially considering our past three years of outperformance against the index. In 2023, we strategically restructured our portfolio, exiting several high dividend yield stocks to enter growth stocks, aligning with our long-term growth strategy outlined in previous reports. We also reduced exposure to the insurance and tourism sectors, which proved beneficial in avoiding the sharp declines in 2022. As a result, we have successfully restructured 85-90% of our portfolio, balancing the transition from defensive to growth while closely tracking index performance.

AFC Vietnam Fund Versus Peers and Index Performance

Peers and Index Performance/Volatility Comparison

Currently, manufacturing - especially the export and construction material sectors - comprise the largest portion of our portfolio, accounting for 42%. This allocation is based on our belief that export companies, having hit bottom due to aggressive drops in consumption in the EU and the U.S. caused by high inflation will rebound as inflation is controlled. Additionally, the Vietnamese Government's substantial investment in public infrastructure projects, particularly in roads, express highways, bridges, power, and airports, will benefit companies in this sector in the mid-term.

Looking forward to 2024, we anticipate the VN-Index to continue its growth trajectory, albeit with continued volatility. Global uncertainties such as the Russia-Ukraine conflict, Middle East conflicts, prolonged high-interest rate environment by the Fed, or the unpredictable situation between China and Taiwan all remain concerns. Regardless of global events, we maintain confidence in the Vietnamese Government's efforts to restore national economic growth to normal levels. We expect earnings growth in 2024 to reach around 10%, with several sectors poised for a strong recovery, especially exports.

Within our portfolio, one significant position is TNG Investment Joint Stock Company (TNG), the second-largest textile and garment exporter in Vietnam. At the end of 2023, TNG’s weight was 8.7% of our portfolio, boasting attractive valuation metrics with a P/E ratio of 9.2x, P/B ratio of 1.3x, and a dividend yield of 4.0%. Although TNG reported a 25% fall in net profit in 2023 due to weak consumption in the U.S. and EU, its revenue showed a strong recovery in the second half with a slight growth of 3.5%. We anticipate a robust revenue and net profit jump in 2024 and 2025 as consumption rebounds in the U.S. and EU. TNG's story, from privatization in 2013 to becoming a leading textile exporter, exemplifies its successful transformation.

Revenue and Net Profit of TNG in the Last 15 Years (VND bn)

TNG's transition to green manufacturing, showcased by its eco-friendly facilities and renewable energy adoption, has reduced its carbon footprint and positioned it as a trusted supplier to esteemed clients like Decathlon. Committed to social responsibility, TNG allocates 2.0-2.5% of its net profit annually to charities and community projects, contributing to diverse and inclusive leadership with over 54% of top management positions held by women. Additionally, TNG prioritizes employee welfare, as evident in the 12% increase in net income for employees in 2022. This holistic approach underscores TNG's commitment to sustainability, community engagement, gender equality, and employee well-being.

Vietnam earned almost USD 26bn from tourism in the first 11 months of 2023

The Vietnamese tourism industry showcased a remarkable recovery in 2023, with total earnings from tourists exceeding VND 628.3 trillion (over USD 25.8 billion) during January-November. This surpassed the entire figure for the previous year. Despite challenges in 2021, the tourism downturn presented golden investment opportunities. Investments in local tourism companies like TCT and DSN proved fruitful as net profits strongly recovered in 2022. In a similar vein, we believe that the negative growth in export revenue in 2023 is a short-term correction, and export companies, purchased at favorable valuations, will rebound as other sectors have, including tourism.

Tourist Arrivals to Vietnam in 2023 Strongly Recover (m)

Chinese President Xi Jinping visits Vietnam in December 2023

China's Party General Secretary and President Xi Jinping's December visit to Vietnam underlines the warmth in bilateral relations. Vietnam's adept handling of its ties with China and the U.S., its largest trade partner and export market, respectively, is evident in the strengthening of strategic exchanges during this visit. In 2023, Vietnam achieved diplomatic milestones, upgrading its relationship with the U.S. to a strategic partnership and reaching similar agreements with Australia, Indonesia, Singapore, and Japan, contributing to its sustained FDI inflow over the past decade.

Vietnam Welcomes President Xi in December 2023

The warm relations between Vietnam and China were manifested in President Xi's gesture toward General Secretary Trong, showcasing the success of Vietnam's diplomatic strategy. Vietnam effectively navigates its relationships with the U.S. and China, emphasizing cooperation. Marking 15 years of partnership, Vietnam and China committed to a shared future, envisioning a harmonious community between the two countries. This commitment is reflected in numerous cooperation documents exchanged between ministries, agencies, and localities of both nations, underscoring their collaborative spirit for global peace and prosperity.

President Joe Biden Visits Vietnam in September 2023

Positive outlook for the Vietnamese economy

The World Bank and ADB offer positive assessments of Vietnam's economy for 2024. Despite a global economic slowdown, Vietnam is praised for its resilience and sustained growth, outperforming many other countries. They believe Vietnam is an appealing destination for international investors because of its economic and political stability and its capacity to integrate with the global economy. The recovery in late 2023 is attributed to external demand, increased public investment, and robust private consumption. Both institutions highlight the need for Vietnam to strengthen its business environment, accelerate infrastructure investment, and proactively support enterprises to navigate global challenges. The ADB projects a 6% GDP growth rate in 2024, driven by public investment, domestic consumption, and export recovery, with Vietnam's economic resilience commended in the face of global uncertainties.

At the end of December 2023, the fund’s largest positions were: TNG Investment and Trading JSC (8.3%) – an apparel manufacturer, Thien Long Group (8.0%) – a manufacturer of office supplies, Minh Phu Seafood Corp (8.0%) – a seafood company, Lam Dong Minerals and Building Materials JSC (7.8%) – a building material supplier, and Ha Do Group JSC (6.7%) – a real estate services company.

The portfolio was invested in 56 names and held 4.8% in cash. The sectors with the largest allocation of assets were consumer (57.3%) and financials (12.5%). The fund's estimated weighted harmonic average trailing 12 months P/E ratio (only companies with profit) was 12.12x, the estimated weighted harmonic average P/B ratio was 1.28x, and the estimated weighted average portfolio dividend yield was 3.89%. The fund’s portfolio carbon footprint is 2.50 tons per USD 1 mn invested.

AFC Uzbekistan Fund - Manager Comment

The AFC Uzbekistan Fund Class F shares returned −1.5% in December 2023 with a NAV of USD 1,738.59, bringing the return since inception (29^th March 2019) to +73.9%, while the return for the year stands at +0.1%. On an annualised basis, the fund has returned +12.3% p.a. with a Sharpe ratio of 0.75.

December saw two state-owned enterprises IPO, both of which were oversubscribed. We are hopeful this is the start of a new leg of higher activity in the capital markets, and this should be supported by some catalysts we await in the New Year.

AFC Uzbekistan Fund Valuations as of 31^st December 2023:

Two small but successful IPOs in December

We have been saying for several years that the government of Uzbekistan needs to privatize SOEs at attractive prices to create some “wins” among local investors to entice more capital into the ecosystem and, in due course, accelerate market activity and develop a robust alternative mechanism to bank financing, which remains prohibitively expensive at over 20%. 

On 15^th December, 2% of both Uzbek Telecom, with 83% market share in broadband and 24% in mobile, and UzbekInvest, the largest state-owned insurer with a 15% market share, were sold to 11,100 investors for a total of USD 3.9 million. The former’s offering was 131% oversubscribed, while the latter was 128% oversubscribed. This is a small but necessary step in capital markets development, and we are pleased with the success of these two IPOs and look forward to others, as well as the eventual secondary offering of shares in Uzmetkombinat (TSE: UZMK), planned for 2024 after a delay in 2023.

Looking to 2024 and beyond

With inflation in the single digits at 8.8% in November 2023, foreign direct investment (FDI) reaching USD 7.5 billion in the first nine months of 2023, and foreign exchange reserves standing at USD 32.9 billion, Uzbekistan’s economy continues to benefit from solid growth. 

In December, President Mirziyoyev signed the law on the state budget for 2024. GDP is projected to grow 5.6% to 5.8%, while inflation is expected to remain in check at 8% to 10%. The budget deficit is expected to fall from ~5.5% of GDP in 2023 to 4% in 2024 and 3% in 2025 as the government tightens its belt, presumably on social programs, in a bid to balance the budget and help support the currency. 

On the capital markets, we have talked ad nauseam about the visibility of opportunities on the Tashkent Stock Exchange. In the first quarter of 2024, a friend of ours is expected to launch a market database platform, which will include aggregated financial and valuation data, historical prices charts, and economic news on Uzbekistan. Along with several foreign brokers preparing to enter the market, and several upcoming corporate debt and public equity secondary offerings, this should make 2024 a much more active year for the AFC Uzbekistan Fund after a quiet 2023. 

While the AUF Uzbekistan Fund ended 2023 just in positive territory, we are optimistic that the above catalysts will drive accelerated market activity and lead to a better year of performance for the fund in 2024.

AFC Uzbekistan Tour 2024

For those interested in visiting Uzbekistan with us, we are planning our third AFC Uzbekistan Tour, which will be held from Sunday 19^th May 2024 to Tuesday 21^st May 2024. We will begin on the 19^th with a day tour of Tashkent, followed by company meetings and site visits on the 20^th and 21^st. If you are interested in joining, please write us at This email address is being protected from spambots. You need JavaScript enabled to view it..

At the end of December 2023, the fund was invested in 24 names and held 7.9% cash. The portfolio was allocated to Uzbekistan (92.09%) and Kyrgyzstan (0.04%). The sectors with the largest allocation of assets were financials (40.8%) and materials (33.8%). The fund's estimated weighted harmonic average trailing 12 months P/E ratio (only companies with profit) was 4.82x, the estimated weighted harmonic average P/B ratio was 0.96x, and the estimated weighted average portfolio dividend yield was 3.40%.

I hope you have enjoyed reading this newsletter. If you would like any further information, please get in touch with me or my colleagues at This email address is being protected from spambots. You need JavaScript enabled to view it.

With kind regards,

Thomas Hugger
CEO & Fund Manager

This email address is being protected from spambots. You need JavaScript enabled to view it.

Disclaimer:

This Newsletter is not intended as an offer or solicitation with respect to the purchase or sale of any security. No such offer or solicitation will be made prior to the delivery of the Offering Documents. Before making an investment decision, potential investors should review the Offering Documents and inform themselves as to the legal requirements and tax consequences within the countries of their citizenship, residence, domicile and place of business with respect to the acquisition, holding or disposal of shares, and any foreign exchange restrictions that may be relevant thereto. This newsletter is not intended for distribution to or use by any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law and regulation, and is intended solely for the use of the person to whom it is intended. The information and opinions contained in this Newsletter have been compiled from or arrived at in good faith from sources deemed reliable. Opinions expressed are current as of the date appearing in this Newsletter only. Neither Asia Frontier Capital Ltd (AFCL), nor any of its subsidiaries or affiliates will make any representation or warranty to the accuracy or completeness of the information contained herein. Certain information contained herein constitutes “forward-looking statements”, which can be identified by the use of forward-looking terminology such as “may”, “will”, “should”, “expect”, “anticipate”, “project”, “estimate”, “intend”, or “believe” or the negatives thereof or other variations thereon or comparable terminology. Due to various risks and uncertainties, actual events or results or the actual performance of Funds managed by AFCL or its subsidiaries and affiliates may differ materially from those reflected or contemplated in such forward-looking statements. Past performance is not necessarily indicative of future results.

For Switzerland only: This is an advertising document. The state of the origin of the fund is the Cayman Islands. This document may only be provided to qualified investors within the meaning of art. 10 para. 3 and 3ter CISA. In Switzerland, the representative is Acolin Fund Services AG, Leutschenbachstrasse 50, 8050 Zurich, Switzerland, whilst the paying agent is NPB Neue Privat Bank AG, Limmatquai 1 / am Bellevue, 8024 Zurich, Switzerland. The basic documents of the fund report may be obtained free of charge from the representative. Past performance is no indication of current or future performance. The performance data do not take account of the commissions, if any, and fund transfer costs incurred on the issue and redemption of units.

AFC Asia Frontier Fund is registered for sale to qualified/professional investors in Japan, Singapore, Switzerland, the United Kingdom, and the United States. AFC Iraq Fund and AFC Uzbekistan Fund in Singapore, Switzerland, the United Kingdom, and the United States. AFC Vietnam Fund in Japan, Singapore, Switzerland, and the United Kingdom. 

By accessing information contained herein, users are deemed to be representing and warranting that they are either a Hong Kong Professional Investor or are observing the applicable laws and regulations of their relevant jurisdictions.

© Asia Frontier Capital Ltd. All rights reserved.

Privacy Policy