“There is nothing so stable as change.”

– Bob Dylan - American singer-songwriter and cultural icon

AFC Funds Performance Summary

The year began positively for the AFC Uzbekistan Fund while the AFC Asia Frontier Fund started 2025 with another monthly gain. We conducted our regular quarterly webinar on 23^rd January 2025 which was, as usual, well attended by our existing and prospective investors. If you would like to learn more about the 2025 outlook for our AFC Asia Frontier Fund, AFC Iraq Fund, AFC Uzbekistan Fund, and AFC Vietnam Fund you can watch the recording of the webinar or view the presentation below.

AFC Uzbekistan Tour 2025

AFC is planning to host its 4^th AFC Uzbekistan Tour from 25^th to 27^th May 2025, bringing existing and prospective investors to experience the reality of Uzbekistan on the ground. If you are interested in participating, please email us at This email address is being protected from spambots. You need JavaScript enabled to view it. to express your interest and we will follow-up with you.

UK Tax Reporting

We are pleased to inform you that all AFC Funds for non-US investors will commence “UK Tax Reporting” as of the beginning of 2025. We have engaged the necessary service provider for this process. This is a significant development for UK taxpayers as it will reduce their tax rate on gains from as high as 45% to 24%.

Performance Awards

We are proud to announce that our work has been recognized with three awards from BarclayHedge. The AFC Asia Frontier Fund was ranked third in the categories of “Emerging Markets – Asia” and “Emerging Markets Equity – Asia” in December 2024, when the fund achieved a return of +6.3%. This performance highlights its low correlation with other markets, as the MSCI World Net Total Return Index declined by 2.6% during the same period. The AFC Vietnam Fund was also given an award by BarclayHedge, this time for a top 10 spot in the category “Emerging Markets Equity – Asia”. These awards serve as validation for the investment thesis of the AFC Asia Frontier Fund, emphasizing its effectiveness as a diversification tool for equity investors.

February 2025 Subscription Cut-Off Date

The next cut-off date for subscriptions for our funds will be 24^th February 2025. 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 January 2025.

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 Uzbekistan Fund - Manager Comment

The AFC Uzbekistan Fund Class F shares returned +1.9% in January 2025 with a NAV of USD 1,280.48, bringing the return since inception (29^th March 2019) to +28.0%. On an annualised basis, the fund has returned +4.3% p.a.

January was a strong month for the AFC Uzbekistan Fund, driven by trading activity in the fund’s core holdings. However, there were limited updates beyond this, as we await news regarding the Tashkent Stock Exchange's integration with Clearstream and further clarity on the existing integration with Bloomberg, which is currently experiencing some data display issues. While we have seen an increase in corporate bond issues—such as Georgian TBC Bank issuing UZS 128 billion (~USD 9.8 million) at the end of December 2024—we anticipate more activity this year. The capital markets are gradually maturing, which should lead to greater liquidity in the equity market and ultimately new IPOs, likely from the private sector.

AFC Uzbekistan Tour 2025

AFC is planning to host its 4^th AFC Uzbekistan tour, bringing existing and prospective investors from 25^th to 27^th May 2025 to experience the reality of Uzbekistan on the ground. If you are interested, please write us at This email address is being protected from spambots. You need JavaScript enabled to view it. to express your interest and we will follow-up with you.

At the end of January 2025, the fund was invested in 23 names and held 7.2% cash. The portfolio was allocated to Uzbekistan (92.7%) and Kyrgyzstan (0.1%). The sectors with the largest allocation of assets were financials (44.8%) and materials (24.5%). The fund's estimated weighted harmonic average trailing 12 months P/E ratio (only companies with profit) was 4.12x, the estimated weighted harmonic average P/B ratio was 0.66x, and the estimated weighted average portfolio dividend yield was 2.99%.

 AFC Asia Frontier Fund - Manager Comment

The AFC Asia Frontier Fund (AAFF) USD A-shares returned an estimated +0.5% in January 2025 with an estimated NAV of USD 1,922.24. The fund outperformed the benchmark MSCI Frontier Markets Asia Net Total Return USD Index (+0.2%) and underperformed the MSCI Frontier Markets Net Total Return USD Index (+3.0%) and the MSCI World Net Total Return USD Index (+3.5%). The performance of the AFC Asia Frontier Fund A-shares since inception on 30^th March 2012 now stands at an estimated +92.2% versus the benchmark, which is down by 20.8% during the same period, showing an outperformance of +113.0% since inception. The fund’s annualised performance since inception is +5.2%. The broad diversification of the fund’s portfolio has resulted in lower risk with an annualised volatility of 10.5% and a correlation of the fund versus the MSCI World Net Total Return USD Index of 0.48, all based on monthly observations since inception.

2025 began on a positive note for the AFC Asia Frontier Fund with another monthly gain. Performance in January 2025 was led by Sri Lanka, Cambodia, Uzbekistan, Timor-Leste, and Georgia while the key headwinds to performance were from Pakistan and Bangladesh.

The Colombo All Share Index in Sri Lanka continued its robust run into the new year with a gain of +7.4% in January 2025, making it the best performing stock market in our universe this month. Tourist arrivals into Sri Lanka remain on an upward trajectory as the economic and political strength in the country add to the country’s attraction as a tourist destination. In January 2025, monthly tourist arrivals crossed pre-pandemic levels for the first time.

Sri Lanka Monthly Tourist Arrivals Crossed Pre-Pandemic Levels in January 2025

The State Bank of Pakistan reduced its benchmark interest rate by another 100 basis points, bringing the total cuts since June 2024 to 10% points as inflation has fallen well into single digits. This steep decrease in benchmark interest rates will not only continuing being positive for investor sentiment but also for a strong recovery in earnings growth which will support the ongoing valuation re-rating in Pakistan. Both Pakistan and Sri Lanka are our top country picks for 2025.

The State Bank of Pakistan has Reduced its Benchmark Interest Rate by 10% since June 2024 – This will be Positive for a Strong Earnings Recovery in Pakistan Going Forward

The fund’s largest stock position, FPT Corp. (FPT), a Vietnamese software outsourcing company, delivered another year of solid double-digit earnings growth with its net profits in 2024 growing by +21%. FPT has been one of the fund’s key winners in the last few years and we expect the company to continue delivering outstanding earnings growth on the back of its excellent execution capabilities.

FPT Corp. in Vietnam – the Fund’s Largest Stock Position has been a Key Winner as the Company Delivers Robust Earnings Growth

The best-performing indexes in the AAFF universe in January were Sri Lanka (+7.4%) and Mongolia (+2.0%). The poorest-performing markets were Bangladesh (−1.9%) and Iraq (−1.4%). The top-performing portfolio stocks this month were a manganese miner from Timor-Leste (+55.0%), a Pakistani pharmaceutical raw material producer (+44.4%), a Cambodian gold miner (+33.2%), a Mongolian leather producer (+22.7%), and a resort operator in Maldives and Sri Lanka (+16.5%).

In January, the fund exited a Cambodian casino operator and Pakistani consumer healthcare company and added to existing positions in Mongolia, Pakistan, and Sri Lanka. The fund also reduced existing positions in Mongolia.

At the end of January 2025, the portfolio was invested in 60 companies and 2 funds. The fund's estimated weighted harmonic average trailing 12 months P/E ratio (only companies with profit) was 7.10x, the estimated weighted harmonic average P/B ratio was 1.28x, and the estimated weighted average portfolio dividend yield was 3.21%. The fund’s portfolio carbon footprint is 0.50 tons per USD 1 mn invested.

AFC Iraq Fund - Manager Comment

The AFC Iraq Fund Class D shares returned −0.7% in January 2025 with a NAV of USD 2,038.59, outperforming its benchmark, the Rabee Securities RSISX USD Index (RSISUSD index), which lost 1.4% during the month. Since inception, the fund has gained 103.9% while the RSISUSD index is up by 47.8%, an outperformance of 56.1%. The annualised return since inception of the fund stands at +7.7% p.a.

The RSISX USD Index continued with the process of consolidating its gains that started in December 2024, following a blistering 35.9% rally since late August 2024, and spent the month in a tight range of + 1.8% and -1.4% around its year-end 2024 close. While this consolidation could continue over the next few weeks, the market’s technical picture continues to be positive, and the likely consolidation or pullback should be within its multi-month uptrend as much as the prior consolidations and pullbacks have done over the prior months (chart below). This is based on two observations derived from technical analysis of trading volumes during this multi-month uptrend. Basically, technical analysis maintains that trading volumes are an important component of analysing a market’s price trend, whether it’s an uptrend or a downtrend, in that they reflect the extent of market participation, such that high trading volumes support the market’s trend, with the reverse for low trading volumes. 

The first observation is that the market’s annual trading volumes support its multi-year uptrend, in that it was accompanied by meaningful increases in the annual average daily turnover with year-over-year increases of 39.4% and 9.8% in 2024 and 2023, respectively (note: turnover is adjusted for pre-arranged block trades whether during market hours or in the special after-market session*. The second observation follows from drilling down into the daily trading turnover as it displays a similar pattern of trading volumes supporting the overall market up-trend. This is because daily trading turnover was relatively high and increasing while prices were up trending, and relatively low and decreasing during the market’s consolidations and pullbacks within the overall uptrend (chart below).

Rabee Securities U.S. Dollar Equity Index versus Daily Turnover

Crucially, high or low trading volumes are relative to the market’s average trading volumes, and therefore, any analysis of trading volumes and price trends is subjective, especially considering the limitations of technical analysis in frontier markets with low trading volumes, such as Iraq’s nascent market. Consequently, the observations made here are considered tools to complement the fundamentals driving the market’s performance that were discussed most recently in the outlook for 2025 in “What Next After Two Gangbuster Years?” and during the AFC Iraq Fund section of Asia Frontier Capital’s latest quarterly webinar on 23^rd January 2025 providing its regular “Asian Frontier Markets Update”. 

We continue to believe that the upside opportunity for the AFC Iraq Fund will come about as the RSISX USD Index, having surpassed its 2014 peak by 5.3% by the end of January 2025, rallies further, reflecting the powerful dynamics discussed here over the last few months. However, risks remain given Iraq’s recent history of conflict, extreme leverage to volatile oil prices, as well as the risk that a widening of the current Middle East conflict will not be contained and evolve to destabilise the region – even though the temporary ceasefires in Gaza and in Lebanon, as well as the developments in Syria, have lowered the likelihood of a widening.

At the end of January 2025, the AFC Iraq Fund was invested in 8 names and had a cash level of 7.2%. 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 (91.5%), Norway (1.1%), and the U.K. (0.2%).

The sectors with the largest allocation of assets were financials (72.2%) and communications (10.8%). The fund's estimated weighted harmonic average trailing 12 months P/E ratio (only companies with profit) was 6.43x, the estimated weighted harmonic average P/B ratio was 1.81x, and the estimated weighted average portfolio dividend yield was 3.50%. The fund’s portfolio carbon footprint is 0.07 tons per USD 1 mn invested.

Note:
*) Daily market turnover is first adjusted by removing the block, pre-arranged trades conducted during the special session following the regular trading session; subsequently, it is adjusted further by removing high-volume trades during regular market hours that show a pattern consistent with those of pre-arranged trades. High-volume trades are defined as those that are significantly higher than a given stock’s average daily turnover; and as such are subjective. Moreover, trading volumes and trading turnover are used interchangeably here, and defined as the values of trading turnover in Iraqi Dinars (IQD).

AFC Vietnam Fund - Manager Comment

The AFC Vietnam Fund returned −0.9% in January with a NAV of USD 3,436.74, bringing the return since inception to +243.7%. This month, the fund underperformed the benchmark, the Ho Chi Minh City VN Index, which gained 1.5% in January 2025 in USD terms. The fund’s annualised return since inception stands at +11.8% p.a. The broad diversification of the fund’s portfolio resulted in an annualised volatility of 14.59%, a Sharpe ratio of 0.68, and a low correlation of the fund versus the MSCI World Index USD of 0.50, all based on monthly observations since inception.

The Vietnamese stock market was driven in January 2024 by investor nervousness ahead of Trump’s official presidency on 20^th January 2025. Concerns over potentially hostile tax policies impacting Vietnam’s economic growth made investors, especially local individuals, adopt a cautious approach. As a result, the daily trading value dropped to just around USD 300 m (VND 7,500 bn), the lowest in two years. This low liquidity prompted many local technical traders to sell and cut losses, further pressuring the market.

The VN-Index and Daily Turnover from August 2023 to January 2025

Market Developments

Another emotional factor affecting the stock market in January was the Tet holiday, the most significant event for Vietnamese people. Investors tend to sell stocks before the long Tet holiday (this year lasting 9 days, from 25^th January to 2^nd February) to free up cash and reduce trading activity to focus on family traditions. Preparations for Tet include house cleaning, cooking Chung cakes, decorating homes, and purchasing food and essential items.  

Tet is a cultural celebration comparable to Christmas and New Year in Europe. During this time, Vietnam becomes vibrant with flowers, red flags, and colorful decorations. In the South, it’s a popular tradition to visit flower farms for photography, an entertaining activity enjoyed by locals and even foreign tourists. These festive traditions often shift focus away from the market, contributing to lower liquidity during the period.

Sadec Flower Village

Potential Implications of Trump’s Trade Policy on Vietnam

On 20^th January 2025, Donald Trump was sworn in as the 47^th president of the United States. Known for his affinity for tariffs, famously calling them “the most beautiful word in the dictionary,” Trump has thus far refrained from imposing hefty tariffs on China, as previously threatened. At the recent World Economic Forum in Davos, he struck a more conciliatory tone, suggesting the potential for a “very good relationship” with China and expressing interest in visiting Beijing in the months ahead. This signals that the returning president may be more open to dialogue and deal-making than his campaign rhetoric suggested—at least for now.  

Naturally, this has raised questions about the implications for Vietnam, given that the United States is Vietnam’s largest export market. While tariffs may eventually be introduced, they will likely be less severe than initially feared. In line with Moody’s Analytics’ base case scenario, our analysis suggests that tariffs on Chinese goods could be set as low as 20% and Vietnamese goods around 10%. If this materializes, Vietnam could retain its competitive advantage in global trade. Furthermore, Vietnam is expected to continue attracting strong FDI inflows, which would help offset the potential economic impact of any moderate tariffs. Interestingly, a recent study from Harvard Business School and Duke University challenges the notion that Vietnam benefits significantly from trans-shipments of Chinese goods to bypass tariffs, revealing that only about 2% of Vietnam’s exports to the U.S. fall into this category. This reinforces the credibility of Vietnam’s export growth as a legitimate manufacturing hub and positions the country favourably in the global trade landscape.  

Overall, we remain confident that Vietnam’s strong fundamentals, combined with its rising role as a global manufacturing hub, will sustain its growth momentum despite potential U.S. trade policy challenges. The country’s ability to attract FDI and maintain competitive advantages ensures resilience and provides optimism for the years ahead.

Thien Long Group Corporation - a Ballpoint Pen Manufacturer

In January, the AFC Vietnam Fund underperformed the VN-Index partly due to a healthy correction in some of its top-weighted positions, which had previously experienced significant gains. For example, Thien Long Group Corporation (TLG), our second-largest position, declined more than 12% from the peak in December after surging more than 54% in the last 2 months of 2024. In our view, this is purely a technical and healthy correction, and there is no cause for concern.

TLG remains a fundamentally strong and profitable company, achieving earnings growth of over 20% in 2024. It is attractively valued with a P/E of 10x, a dividend yield of 3%, and a debt-to-asset ratio of 27%, which is relatively low compared to its peers. We remain confident in TLG’s long-term potential and view this correction as an opportunity for further value creation.

Thien Long Group Corporation from August 2023 to January 2025

Huge Economic Stimulus Package

While the National Assembly of Vietnam set a GDP growth target of 7.0% for 2025, the Government has ambitiously set its own goal at 8-10%, signalling an extraordinary commitment to economic expansion. To achieve this, the Government has announced a substantial public investment plan for 2025, with a budget of approximately USD 31 bn (VND 790 trn), marking a nearly 20% increase from 2024. This investment will focus on key infrastructure projects such as the North-South High-Speed Railway, the North-South Expressway Network, deepwater seaports, and Long Thanh International Airport, all of which are critical to Vietnam’s long-term growth trajectory.

Public investment activities were delayed in 2024 due to political uncertainties surrounding the appointment of Mr. To Lam as General Secretary. With leadership now stabilized, the Government is poised to accelerate its infrastructure initiatives to drive economic growth. The AFC Vietnam Fund anticipated this shift and strategically invested in companies positioned to benefit from the infrastructure push. For instance, Lam Dong Minerals and Construction Materials JSC (LBM), a key holding in the Fund’s portfolio, is a leading concrete provider for large-scale projects like the Dau Giay-Lien Khuong Expressway. With a solid balance sheet, attractive valuation metrics, and a projected profit growth of at least 20% annually for the next five years, LBM exemplifies the opportunities emerging from Vietnam's ambitious public investment strategy.

Net Profit of Lam Dong Minerals and Construction Materials JSC Over the Last 10 Years (VND bn)

Conclusion

We view the January market correction of the AFC Vietnam Fund as a favourable opportunity for investors to enter or increase their investments. This moment presents a chance to position for the robust economic and public investment-driven growth anticipated in 2025. With Vietnam’s strong macroeconomic foundation and a portfolio strategically aligned with key growth sectors, we remain optimistic about delivering a solid performance for our investors in the year ahead.

Ho Chi Minh City’s First Metro Line Begins Operation

After over a decade of construction, Vietnam’s largest city officially inaugurated its first mass rapid transit system. The Metro Line 1 project (Ben Thanh – Suoi Tien), spanning nearly 20 km with an investment of over VND 43,700 bn, marks a significant milestone in modernizing Ho Chi Minh City’s public transport infrastructure.  

Metro Line 1 is part of a broader urban rail network planned for the city, comprising of 8 lines with a total length of 169 km. Construction of Metro Line 1 began in 2012 and took 13 years to complete. The project faced numerous delays due to anti-corruption investigations and other challenges, but its eventual completion represents a triumph of persistence and planning.  

This metro line connects the city centre with the eastern gateway, alleviates traffic congestion, shortens travel times, and creates an essential transport axis. The 19.7-km route includes underground (3 stations) and elevated sections (11 stations) linking the central hub with inner-city districts and suburban areas.  

The Ben Thanh - Suoi Tien line runs from the city centre to Long Binh Depot in Thu Duc City. It is equipped with 17 modern trains, each capable of carrying 930 passengers, with a mix of 147 seats and 783 standing positions. Operating at up to 110 km/h on elevated sections and 80 km/h in tunnels, this metro line promises fast, efficient, and comfortable travel for commuters and tourists alike.  

The city authority is ambitious to complete the entire metro system in the next 10 years. The Vietnamese Politburo has set a challenging target for Ho Chi Minh City to finish the 8-line network by 2035. Acknowledging the scale of the task, the City Chairman confidently stated, “Nothing is impossible if the Politburo has already assigned (the mission).”  

The completion of Metro Line 1 heralds a new era of public transportation for Ho Chi Minh City, paving the way for further urban modernization and integration. With this determination and commitment, Ho Chi Minh City is positioning itself as a model of rapid urban development in Southeast Asia.

Metro Line 1 (Ben Thanh – Suoi Tien)

Map of 8 Metro lines in Ho Chi Minh City

At the end of January 2025, the fund’s largest positions were: Lam Dong Minerals and Building Materials (7.9%) – a building material supplier, Agriculture Bank Insurance (7.2%) – an insurance company, Dong Hai JSC of Bentre (6.5%) – a packaging manufacturing company, Thien Long Group (6.4%) – a manufacturer of office supplies, and Minh Phu Seafood Corp (6.1%) – a seafood company.

The portfolio was invested in 38 names and held 3.8% in cash. The sectors with the largest allocation of assets were consumer (41.2%) and financials (24.6%). The fund's estimated weighted harmonic average trailing 12 months P/E ratio (only companies with profit) was 11.26x, the estimated weighted harmonic average P/B ratio was 1.31x, and the estimated weighted average portfolio dividend yield was 4.19%. The fund’s portfolio carbon footprint is 1.55 tons per USD 1 mn invested.

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

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