“To succeed, stay out in front of change.”

– Sam Walton - American business magnate

AFC Funds Performance Summary

The strength continued for Asian frontier markets in August, with most AFC Funds posting another positive month, led by sharp rallies across all key Asian frontier markets. Investors can now focus on the domestic economic momentum taking place in our investment universe, given that the U.S. reciprocal tariff overhang has been removed. All of our key Asian frontier countries which count the U.S. as their largest export market have received favourable U.S. reciprocal tariffs.

Asian Frontier Markets Reported Another Solid Month (USD Returns in August 2025)

In line with our optimism on the outlook for Bangladesh and Sri Lanka, Ruchir Desai, Co-Fund Manager of the AFC Asia Frontier Fund, spoke at investor conferences in Dhaka (Bangladesh) and Singapore.

Ruchir’s participation in the BRAC EPL Foreign Investors Summit 2025 held on 13^th August in Dhaka signified our positive outlook for Bangladesh since we believe the economy and stock market have bottomed out and there are multiple positive catalysts in place in the near future to re-rate this country upwards. 

Ruchir also participated in the Invest Sri Lanka Investor Forum organised by the Colombo Stock Exchange held on 12^th August in Singapore. AFC’s participation in this panel discussion reiterated our conviction on the positive long-term investment story that is playing out in Sri Lanka.

Sri Lanka is the AFC Asia Frontier Fund’s second largest country position, while we continue increasing our weight to Bangladesh.

Ruchir Desai Speaking at the BRAC EPL Foreign Investors Summit 2025 Held in Dhaka

Ruchir Desai with an Esteemed Panel Discussing the Outlook for Sri Lankan Equity Markets at the Invest Sri Lanka Investor Forum in Singapore

September 2025 Subscription Cut-Off Date

The next cut-off date for subscriptions for our funds will be 24^th September 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 August 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 Asia Frontier Fund - Manager Comment

The AFC Asia Frontier Fund (AAFF) USD A-shares returned +5.0% in August 2025 with an all-time high NAV of USD 2,141.96. The MSCI Frontier Markets Asia Net Total Return USD Index returned +10.9%, while the MSCI Frontier Markets Net Total Return USD Index went up by +6.3%, and the MSCI World Net Total Return USD Index increased +2.6%. Year to date, the fund has delivered a +12.0% return. The performance of the AFC Asia Frontier Fund USD A-shares since inception on 30^th March 2012 now stands at +114.2% while the MSCI Frontier Markets Asia Net Total Return USD Index returned +11.3% during the same period, showing an outperformance of +102.9% since inception. The fund’s annualised performance since inception is +5.8%. The broad diversification of the fund’s portfolio has resulted in lower risk with an annualised volatility of 10.4% and a correlation of the fund versus the MSCI World Net Total Return USD Index of 0.49, all based on monthly observations since inception.

It was another robust month for the AFC Asia Frontier Fund, with all the fund’s key markets witnessing an acceleration in momentum as the overhang of U.S. reciprocal tariffs was lifted, with our key countries all receiving favourable U.S. reciprocal tariffs. Gains in August were all-around, with performance being led by Pakistan, Mongolia, Sri Lanka, Bangladesh, Kazakhstan, Vietnam, and Iraq.

This was the third month in a row of gains for the Dhaka Broad Index in Bangladesh, and this could be the start of the upward re-rating cycle for Bangladesh equities. The top-down macroeconomic situation has shown a marked improvement compared to twelve months ago, with the current account now in surplus, exports and remittance growth continuing their momentum, and both inflation and interest rates appearing to have peaked out.

This is supporting investor sentiment on the ground, and an additional positive trigger over the next two quarters will likely be the parliamentary elections scheduled to be held in February 2026. With valuations at a significant discount to history and positive catalysts in place, the AFC Asia Frontier Fund increased its weight to Bangladesh in August by purchasing one of the largest private commercial banks, which currently trades at a P/B of 0.7x. In addition to this, the fund’s other bank holding, BRAC Bank, has performed very well for the fund with its stock price significantly outperforming the broader index so far in 2025. 

Widely considered one of the best-managed banks in Bangladesh, BRAC Bank has benefited from a flight to quality given the profitability and capital issues in other parts of the Bangladesh banking sector. Furthermore, BRAC Bank’s profitability is now also being supported by its fintech arm Bkash, which has become very profitable. BRAC Bank’s net profits in 2Q25 grew by 54% yoy.

BRAC Bank Stock Price has Significantly Outperformed the Dhaka Broad Index

The AFC Asia Frontier Fund’s Sri Lankan bank holdings posted another stellar quarter of earnings growth. Commercial Bank of Ceylon and Hatton National Bank reported 2Q25 net profit growth of +103% and +37% yoy respectively.

Though both banks’ stock prices have re-rated, their earnings momentum continue to make valuations look attractive relative to history while their return on equity is back to pre-crisis levels, which we believe will be sustainable now that the Sri Lankan economy is on a firm economic footing. 

Commercial Bank of Ceylon and Hatton National Bank trade at a P/B of 0.9x and 0.8x respectively, with their latest reported return on equity at 21.3% and 17.8% respectively.

Commercial Bank of Ceylon and Hatton National Bank have been Big Outperformers for the Fund

The AFC Asia Frontier Fund’s gold mining stocks in Mongolia continue to add to overall fund performance, with August being an outstanding month for them in terms of stock price returns. This is also a reflection of some of the thematic themes in our portfolio, which can generate outsized returns.

AFC Asia Frontier Fund’s Mongolian Gold Miners have Supported Performance

The best-performing indexes in the AAFF universe in August were Vietnam (+12.0%) and Kazakhstan (+9.0%). The poorest-performing markets were Mongolia (−1.8%) and Laos (−0.3%). The top-performing portfolio stocks this month were a copper mine developer in Mongolia/Australia (+46.2%), a gold mine developer in Mongolia (+42.2%), a producing gold mine in Mongolia (+32.8%), a Vietnamese port operator (+23.0%), and a copper/gold mine developer in Mongolia (+20.5%).

In August, the fund added a Bangladeshi bank and increased existing positions in Bangladesh, Mongolia, and Sri Lanka.

At the end of August 2025, the portfolio was invested in 57 companies, 2 funds, and held 2.3% in cash. The two biggest stock positions were a cement producer in Pakistan (4.5%) and a bank in Kazakhstan (3.9%). The countries with the largest asset allocation were Pakistan (17.0%), Sri Lanka (14.4%), and Bangladesh (11.1%). The sectors with the largest allocation of assets were financials (36.8%) and consumer goods (19.9%). The fund's estimated weighted harmonic average trailing 12 months P/E ratio (only companies with profit) was 6.70x, the estimated weighted harmonic average P/B ratio was 1.30x, and the estimated weighted average portfolio dividend yield was 3.44%. The fund’s portfolio carbon footprint is 0.19 tons per USD 1 mn invested.

AFC Vietnam Fund - Manager Comment

The AFC Vietnam Fund returned +3.9% in August with a NAV of USD 3,748.73, bringing the 2025 return to +8.1% and the return since inception to +274.9%. This month, the fund underperformed the benchmark, the Ho Chi Minh City VN Index, which gained 11.3% in USD terms. The fund’s annualised return since inception stands at +12.0% p.a. The broad diversification of the fund’s portfolio resulted in an annualised volatility of 14.82%, 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.

As of August 2025, Vietnam’s stock market has staged a strong resurgence, with the VN-Index reaching a new all-time high of 1,682.21 points, driven by robust liquidity. The banking sector, which makes up over 40% of the index, has been a key driver of this rally, with the AFC Vietnam Fund allocating approximately 23% of its portfolio to the sector.

VN-Index Reached a New All-Time High in August 2025

Daily Stock Market Turnover (USD bn)

Market Developments

This liquidity boom, evidenced by daily trading values reaching almost USD 2 bn, has been driven by the Vietnamese government’s accommodative monetary policy. In the first seven months of 2025, credit growth surpassed 10%, injecting more than USD 60 bn into the economy and supporting robust GDP growth of 7.52% in the first half of the year (7.96% in 2Q 2025). Building on this momentum, the government has raised its 2025 GDP target to 8.3–8.5%, reaffirming Vietnam’s position as the fastest-growing economy in the ASEAN region. Looking further ahead, authorities have set even more ambitious targets of 10% GDP growth for both 2026 and 2027. Reflecting this optimism, analysts at major stock brokerage firms now project that the VN-Index could advance to 1,800 points in the coming months if these targets are achieved.

Vietnam is the Fastest-Growing Economy in ASEAN in 2Q-2025

Vietnam Sees Record FDI Inflows

Vietnam’s economic vitality is further reinforced by a record-breaking surge in foreign direct investment (FDI). In the first six months of 2025, total FDI registrations rose 32.6% year-on-year to USD 21.5 bn, according to the General Statistics Office (GSO). Singapore and China together accounted for 48% of this inflow, reflecting a broader trend of production shifts to Vietnam amid the ongoing U.S.-China trade tensions. This trend is particularly visible in Ho Chi Minh City, where an increasing number of Chinese-speaking investors and employees are establishing businesses and factories. Hoang Quan Corporation, for instance, reported that all available industrial park lots were sold to Chinese firms within just six months. Such robust FDI momentum highlights long-term confidence in Vietnam as a premier investment destination, laying the foundation for sustained growth into the next decade.

FDI (USD bn)

Era of Infrastructure Investment

Vietnam has entered a new era of large-scale infrastructure development. At the opening ceremony in Hanoi on 19^th August 2025, the government officially unveiled 250 projects worth USD 48 bn. The program, equivalent to 13% of GDP, is designed to sustain 8–8.5% growth despite global headwinds such as potential U.S. tariffs of up to 20%. Of this total, USD 18 bn will be state-funded — covering projects like the Rach Mieu 2 Bridge — while USD 30 bn will come from private and foreign investment, including high-profile developments such as the Saigon Marina.

In the near term, this infrastructure wave is expected to lift GDP by 0.5–1% through enhanced connectivity. Longer term, it dovetails with Vietnam’s administrative restructuring, reducing 63 provinces to 34, necessitating major projects such as the USD 15–20 bn North-South Expressway, which will cut travel times dramatically (e.g., Hanoi–Da Nang from 30 to 12 hours). The World Bank estimates such connectivity could add 1–2% to annual GDP growth. As a result, companies in the public investment sector stand to benefit significantly in the coming years.

Opening Ceremony in Hanoi on 19^th August 2025

Multi Billion USD IPOs on the Horizon

After three years of stagnation, Vietnam’s IPO market is reigniting with multi-billion-dollar offerings set to attract significant global attention and capital inflows. These IPOs are expected to broaden market depth, enhance liquidity, and strengthen Vietnam’s appeal to foreign investors. Notable upcoming deals include:

• TCB Securities (TCBS) – Scheduled for 2025–2026, offering 231.15 mn shares at VND 46,800 each, valuing the brokerage firm at USD 4–5 bn.
• Thế Giới Di Động/Điện Máy Xanh (MW) – Targeting a 2030 IPO, with ambitions to double 2025 profits and sustain 15% annual growth, supported by its commanding 50–60% retail market share.
• Bách Hóa Xanh (BHX) – Also planning a 2030 listing, aiming for USD 10 bn revenue and 15,000 stores, leveraging Vietnam’s USD 60 bn FMCG (fast moving consumer goods) market.

These high-profile listings signal a new wave of capital market development, offering both scale and opportunity for long-term investors.

MPC, Vietnam’s “King of Shrimp,” Stages a Comeback

Minh Phu Corporation (MPC), Vietnam’s largest shrimp exporter with annual revenues of USD 500–600 mn, is making a strong return after two years of losses. Following a successful restructuring, cutting costs and shifting toward high-margin products, the company posted a profit of VND 179 bn in the first half of 2025, up sharply from VND 40 bn a year earlier. CEO Lê Văn Quang now forecasts profits of VND 500–600 bn in 2025, VND 1,000 bn in 2026, and VND 1,200 bn in 2027, underscoring a robust recovery that could bolster Vietnam’s investment appeal.

Net Profit of MPC (VND bn)

At the end of August 2025, the fund’s largest positions were: Lam Dong Minerals and Building Materials (8.9%) – a building material supplier, Agriculture Bank Insurance (7.2%) – an insurance company, Thien Long Group (5.7%) – a manufacturer of office supplies, Minh Phu Seafood Corp (5.7%) – a seafood company, and TNG Investment and Trading JSC (5.4%) – an apparel manufacturer.

The portfolio was invested in 38 names and held 11.9% in cash. The sectors with the largest allocation of assets were consumer (33.8%) and financials (33.2%). The fund's estimated weighted harmonic average trailing 12 months P/E ratio (only companies with profit) was 11.02x, the estimated weighted harmonic average P/B ratio was 1.49x, and the estimated weighted average portfolio dividend yield was 3.76%. The fund’s portfolio carbon footprint is 2.28 tons per USD 1 mn invested.

AFC Iraq Fund - Manager Comment

The AFC Iraq Fund Class D shares returned +2.7% in August 2025 with a NAV of USD 2,306.20, underperforming its benchmark, the Rabee Securities RSISX USD Index (RSISUSD index), which gained 4.0% during the month. The fund gained 43.5% in 2024 on the back of a stellar performance in 2023 of +110.4%. The fund is up by 12.4% for the year versus the index, which went up by 4.3%. Since inception, the fund has gained 130.6% while the RSISUSD index is up by 56.3%, an outperformance of 74.3%, achieving more than double the performance of the index. The annualised return since inception of the fund stands at +8.6% p.a.

The World’s Surprise Boomtown: Baghdad

“The world’s surprise boomtown: Baghdad” is the title of The Economist’s article on 4th September 2025, highlighting Baghdad’s construction boom, driven by the country’s stability, which in turn is drawing foreign investment. These investments, and the points made in the article on population growth, pent-up demand, and liquidity, were the themes that have been made here in July 2023 and we further highlighted that “This private sector led construction activity was supported by funding from the Central Bank of Iraq's IQD 14 tn (USD 10.7 bn) and IQD 4 tn (USD 3.1 bn) subsidised lending initiatives.”  and noting further “… during 2021-22, about IQD 6.7 tn (USD 5.2 bn) and IQD 0.5 tn (USD 0.4 bn) were disbursed from the two initiatives for real estate financing”.

Unlike in the prior two years, the summer holidays and the 40-day Arbaeen pilgrimage did not exert their usual subduing effects on the market’s turnover, or on its trend. This came as a surprise as August is the hottest month of the year, and mid-month witnessed the climatic ending of the pilgrimage that marked the martyrdom of Prophet Muhammad’s grandson Imam Hussein. As such, this supports the thesis that the market’s technical picture continues to be positive, and that the RSISX USD Index is continuing with the process of consolidating its gains that started in December 2024, following a blistering 35.9% three-month rally. While this consolidation could continue over the next few weeks, the likely consolidation or pullback should be within its multi-month uptrend (chart below).

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

Even More of Iraq, as Seen Through a Visitor’s Eyes

As first mentioned two months ago, Thomas Hugger visited Iraq at the end of May 2025, and with me, embarked on a tour of the country that included business visits, cultural, and historic tours. Two months ago, we reviewed our visit to the Iraq Stock Exchange (ISX), the Bank of Baghdad, and Baghdad Soft Drinks, which were also featured during the AFC Iraq Fund section of Asia Frontier Capital’s latest quarterly webinar on 24^th July 2025. Last month, we reviewed our visit to some of Baghdad’s old districts (Al-Madrasa Al-Mustansiriya, Al-Mutanabbi Street, and Al-Shawaka), the ancient cities of Babylon, and Ctesiphon. This month, we review our visit to the ancient city of Ur, the Marshes, and the meeting point of the Tigris and Euphrates rivers forming Shatt Al-Arab at Al-Qurnah. Next month will cover our visit to Iraq’s third largest city, Basra, and other aspects of Thomas’s Iraq visit, which space did not allow for inclusion in the prior months. 

This leg of the visit was a trip from Baghdad to Ur, the Marshes, and Al-Qurnah. Our guide, as for the prior visit to Babylon and Ctesiphon, was Ali Ghanem Sarhan, one of my students at Baghdad Business School (BBS), who is now an independent freelance tour guide specialising in cultural and historical tours. His rich Instagram account (@alighanim.1) chronicles his criss-crossing the country with tourists from all over the world.

Our first destination, the ancient city of Ur, about 350 km south of Baghdad, was founded circa 3800 BC. While ancient, it is still about 1,600 years younger than the first Sumerian city of Eridu. Ur, along with Uruk and Eridu, was among the most significant city-states of southern Mesopotamia, which were founded circa 5400-3800 BC on the edges of the Mesopotamian Marshes. These cradles of civilisation developed complex systems for writing, mathematics, astronomy, agriculture and its related industries, and many others –some of which we use without being aware of such as the division of the year into 12 months, and of the hours into 60 minutes. Agriculture and trade with the outside world played a major part in Ur’s evolution given that Southern Mesopotamia, apart from the two rivers, the reeds that grew along their embankments, and its rich soil, had no other natural resources such as metals, stones, rocks or wood. The products of its extremely sophisticated agricultural system were traded for the materials it needed, and the city became a major regional trading hub that traded with all the known world then, as far as the peoples of the Indus Valley.

Ur, during its third dynasty, circa 2200-2000 BC, was the capital of an empire, which at its heyday was an incredibly rich cosmopolitan city, with a population of around 65,000. The dynasty’s founder king Ur-Nammu built its great Ziggurat, other major construction, and enacted the first known legal code –about 300 years before the code of the great Babylonian king Hammurabi. The city’s well-developed bureaucracy needed to run a highly centralised system of governance for the empire, built upon that of the Akkadian empire founded by Sargon the Great, circa 2400-2200 BC, following the conquering of all the Sumerian city states, Ur included –the evidence of which can be seen in the sophisticated administrative tablets, or the “spreadsheets of empire”, unearthed from the state archives of Girsu (i).

Ur’s connection with our world does not stop with bureaucracy, but extends to faith and myth as the city is believed to be the home of Abraham who is thought to have lived there circa 2000-1500 BC, as well as its connection much earlier to the story of the deluge of Noah. During the city’s excavation in 1929, sandwiched between two distinct layers marked by human habitation, an 8-12 foot thick layer of soil was discovered that showed no sign of human occupation, and was the result of soil deposits of a massive flood dating circa 3500-3200 BC. While too old to have been the result of Noah’s deluge, it nevertheless was probably an inspiration for the story of the flood. The Tigris and Euphrates brought life, prosperity and wealth to Mesopotamia, but also devastation with their irregular floods, the largest of which featured in Sumerian and Babylonian myths as punishments for human sins –in particular the great flood story in the “Epic of Gilgamesh”, in which the god Enlil, warns Utnapishtim about a deluge that would be brought by the angry gods, and instructs him to build a great boat to preserve human and animal life. It’s thus fitting that the late Pope Francis, while speaking next to Ur’s Ziggurat said “This blessed place brings us back to our origins” and “We seem to have returned home” during his historic visit to Iraq in March 2021.

Ur

Ur’s Ziggurat, much like all the great structures of southern Mesopotamia, was constructed from mudbricks utilising the rich muddy sediments deposited over the centuries by the flooding of the two rivers. However, many have not survived the thousands of years unscathed from the combination of the effects of the natural elements, neglect, conflict, and looting. Fortunately, layers of sedimentation protected the Ziggurat’s base until it was excavated in the 1920s, like many of Ur’s other remains. Despite the suffocating heat, the Ziggurat’s towering base was a magnificent sight to behold, both from a distance and while standing at the foot of the great middle staircase leading to its top. Based on the many sketches of how it originally looked, I tried to visualise how majestic it originally was with its next two successively smaller levels, and the shrine at the summit dedicated to the moon god Nana. We first walked to the base of the Ziggurat’s central staircase on the specially constructed wooden footpath, and from there to the remains of temples, palaces, the residential area, with our guide describing each including pointing out the general area that is believed to have been the home of Abraham.

Ur

Despite the rich history and the majesty of the site, we were the only visitors – it had a few signs with brief descriptions of the structures, but it did not have any tourist facilities, nor an information centre, nor even basic shops. In an effort to address these shortcomings, the authorities, a few kilometres away, developed a sort of a tourist village, which we visited, and once more were the only visitors. However, it was not obvious, at least to me, how that would work with the lack of facilities at the site itself – nevertheless it’s welcomed as a start of the mindshift needed to embrace tourism and unlock its value in contributing to job creation and economic growth.

Thomes notes: “It is impressive that this place we visited was already inhabited about 4,000 years ago and that Pope Francis visited Ur on 6^th March 2021. But it seems he had better timing than us since the temperature was around 25 degrees Celsius when he visited. That’s much lower compared with the 46 degrees Celsius we had to endure. On the other side, it was sad to see that we were the only visitors to this majestic site and the tourist village. I sincerely hope that will change and more tourists interested in heritage will visit these important sites in the future and that the Government of Iraq will continue to preserve them for our descendants.”

Tourist Village Near Ur

As we left Ur, the extreme heat, and the expanse of the desert around the Ziggurat complex, it was difficult to imagine that this was a sprawling city, teeming with life, in the middle of a lush green land, surrounded by an extensive network of canals, with the Euphrates, the Marshes, and the sea at its doorstep The Euphrates has changed course since then, the sea has receded by about 200 km, and our next destination, the Marshes, were now about 100 km away.

The Marshes formed about 11,000 to 13,000 years ago by the convergence of the Tigris and Euphrates as they branched into deltas and shallow lakes and played a major part in the development of Mesopotamia. At some point in time, they were the largest wetland ecosystem of western Eurasia. The Marshes as we know them today and that we were headed to are what is left of these ancient Marshes, which took their shape gradually as most of the ancient Marshes dried up and the sea regressed to the south. They are home to the Marsh Arabs, known as the Ma’dan, who despite the intrusion of technology such as electricity initially, and the internet recently, have largely maintained many aspects of a unique aquatic way of life that goes back to the founding of the Sumerian cities circa 5400 BC. In addition to being the home of the Ma’dan, they are the historic home of the Mandaeans, followers of probably the most ancient religion in the world, and who have preserved customs and traditions that might date back to Babylon – interestingly, remnants of the Babylonians were still living in the Marshes in the tenth century AD. Ecologically, the Marshes are home to numerous species of fish and birds, are a stop-over for migratory birds, and are considered a key bio diversity area as literally they are a water world in the middle of an arid desert.

Over the years, the Marshes gradually eroded, initially by changing weather patterns, with the erosion accelerating in the middle of the last century with the building of dams upstream on the two rivers, in and outside Iraq, that substantially reduced water flows. More serious were the drainage by successive governments to reclaim land for agriculture, and for oil exploration and development. However, it was their relative isolation and seclusion that historically provided a sanctuary for those who opposed the state over the centuries, that almost led to their extinction following the First Gulf War in 1991. Then the regime, in seeking to quash the rebellion that rose in the south of the country following the war, embarked on a spectacular feat of engineering to drain them. The flows of the Tigris and Euphrates rivers were diverted by hundreds of kilometres of embankments, dykes, and canals, which over five years drained up to 90% of the Marshes, or an area of about 8,000 square kilometres – the result was a dwindling of the population to about 20,000 from a peak of 500,000 in the 1950s. Over a decade later, following the invasion of Iraq in 2003, they were reflooded, and life, though much changed from the past, returned gradually. Happily, the Marshes were declared a UNESCO World Heritage Site in 2016(ii).

Our entry to the Marshes was through the town of Chibayish, in which we had a short walkabout, before heading to our host’s dwelling at the edge of the waters – like many of those who returned, he and his family live on dry land at the edge of the Marshes and not on the tiny islands that dotted them as in the past. We were welcomed at the Al-Mudhif, the traditional hospitality house made from the reeds that grow on riverbanks and in the Marshes, whose shape and construction have not changed for thousands of years. After a few rounds of Chai (Iraqi tea), each one of us was served a Masgouf – the Ma’dan insist that their Masgouf is the original method of this uniquely Iraqi way of grilling fish. We accepted their story and enjoyed the fish; after all, history is on their side as the Masgouf dates back over four and a half thousand years to the Sumerians, and its cooking doesn't seem to have changed much since then according to some Sumerian texts. For Thomas, expecting to eat mostly Kebab in Iraq and not a specific fish lover, it was his second fish meal, and he notes: “I once again enjoyed eating the delicious and nicely prepared Masgouf, but it was a little bit unique to eat the freshly cooked fish with bare fingers. I also enjoyed the flavour-rich rice and the sweet chai. However, I have to honestly admit that sitting in a chair and eating food from a table is much more comfortable than eating on the floor. I was glad that Ahmed and his brother were also struggling and experiencing, like me, some form of back pain.”

At the Mudhif

After our meal, and another round of chai, our host gifted us “Shemaghs” – the traditional Iraqi headgear that is also the headgear of Jordanians and Palestinians known as the “Keffiyeh”, which has Sumerian origins. Legend has it that Sumerian fishermen wore fishnets over their heads to protect them from the scorching sun, which in time evolved into today’s headgear that incorporates two lines representing the two rivers and the fishing net design through; and the Keffiyeh is etymologically derived from the Iraqi city of Kufa, and means “from Kufa” (iii). Afterwards, we embarked on a long tour of the Marshes in the traditional long narrow canoe used by the Ma’dan for thousands of years, named the Mashoof, with the only nod to modernity being the gasoline-powered motor. No amount of reading or watching videos prepared me for the beauty or serenity of the Marshes once we were deep within them – we must have spent up to two hours there lost in this magical place. I plan to come back again, and hope to spend a few days to truly appreciate the place, see more of its people and try to experience a dying way of life. Thomas notes: “It was an amazing experience. After travelling hundreds of kilometres through desert, dust and sand, suddenly these water channels opened behind the house where we enjoyed the delicious lunch earlier. It was very relaxing and peaceful, and the sunset was incredible. Also, the nature with all its different inhabitants, from simple fireflies to water buffalos was fascinating. As you can see, we took some stunning pictures but witnessing it in real life is a very different story and much more impressive. I hope this remarkable place can be preserved for the future and will not be destroyed for a few pennies profit.”

A Mashof Ride in the Marshes

The final leg of our tour of Southern Mesopotamia was a drive to the meeting point of the Tigris and Euphrates rivers forming the Shatt Al Arab river at Al-Qurnah, however, that was late in the evening and we couldn’t take a full sense of the place – but then, it’s almost impossible to appreciate anything after being in the Marshes, even though Al-Qurnah is believed to be the Garden of Eden. Once again, there were no tourist facilities apart from a garden that housed a dead tree that the locals refer to as “Adam’s Tree”– suggesting it’s the “Tree of the Knowledge of Good and Evil”. However, the site’s sign leaves this to the imagination, instead noting that Abraham prayed there a few thousand years ago and saying that there will be a tree like Adam's tree in Paradise.  Thomas notes: “The place was a little busier maybe because it was after sunset and local people and local tourists enjoyed the funfair, ice cream, and other local attractions nearby the “Garden of Eden”. However, it was sad to see that the tree was ‘dead’. Sign of life?”

The sense of the antiquity of Southern Mesopotamia, both from being close up to the remains of its structures and from experiencing the remnants of its culture, this phrase comes to life: “In the landscape of recorded history, Iraq is Everest: just as Everest makes other mountains seem small, Iraq makes ancient history seem recent by comparison” (iv).

Al-Qurnah

At the end of August 2025, the AFC Iraq Fund was invested in 8 names and had a cash level of 2.7%. 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 (95.6%), Norway (1.5%), and the U.K. (0.2%).

The sectors with the largest allocation of assets were financials (69.8%) and communications (18.0%). The fund's estimated weighted harmonic average trailing 12 months P/E ratio (only companies with profit) was 6.70x, the estimated weighted harmonic average P/B ratio was 2.05x, and the estimated weighted average portfolio dividend yield was 7.38%. The fund’s portfolio carbon footprint is 0.06 tons per USD 1 mn invested.

AFC Uzbekistan Fund - Manager Comment

The AFC Uzbekistan Fund Class F shares returned −0.2% in August 2025 with a NAV of USD 1,278.85, bringing the year-to-date return to +1.8% and the return since inception (on 29^th March 2019) to +27.9%.

With public companies in the process of filing second quarter earnings, we continue to see impressive results across the financial services industry, in particular, as the country's rapid credit boom from 2018 to 2022 has cooled down, leading to some banks returning to issuing dividends.

Two companies we watch closely and which continue to outperform off the back of the strong economy are Hamkor Bank (TSE: HMKB) and the Uzbek Commodity Exchange (TSE: URTS).

Hamkor Bank is one of the top private banks in the country, headquartered in the far eastern region of Uzbekistan in Andijan, which has a strong shareholder base of international development institutions and private equity funds. Second quarter numbers continued to be strong for Hamkor Bank, with YoY trailing twelve months (TTM) earnings growth of 22%, reaching UZS 12.93 per share. Book value grew 35% over the same period to UZS 46.88 per share. Compare this to TTM earnings from 30^th June 2020 of UZS 2.64 per share and book value per share of UZS 10.09, and the growth is phenomenal. Over the past five years, TTM EPS has grown 389% while book value per share has grown 364%.

We get asked frequently why the dividend yield of the AFC Uzbekistan Fund has decreased over the past few years, to which our response is that companies cut dividends in the past couple of years since Uzbekistan's re-engagement on the world stage in order to fund rapid growth. We have said that as operations stabilise and companies, in heavy industry specifically, conclude their capex programs, dividends should return. HMKB is one such example announcing a return to dividend payments with an extraordinary general meeting held on 29^th August 2025, where it was approved to distribute UZS 1.25 per share in dividends to both common and preferred shareholders. This is a sign to us that the banking industry is entering a state of more stable growth. Historically, banks facilitated rapid credit growth but were hindered by a lagging deposit base and were instead supported by soft loans from international development institutions. Hamkor ended August trading at a P/E of 2.48x, a price to book value of 0.70x, and hosts a dividend yield of 4.06%

Another company we like is the Uzbek Commodity Exchange (TSE: URTS), which again reported fantastic numbers. URTS is the blue-chip we remain most excited about. The government has used URTS as a platform to facilitate tendering of materials, enhancing transparency in procurement to eliminate corruption. The company is an asset-light tech company which recently introduced derivatives trading and is moving into electricity and energy trading, two areas which should be key growth drivers for the company in the future, as URTS is yet another company highly leveraged to Uzbekistan's fast-growing economy. Further, URTS is easily understood by investors and being headquartered in Tashkent, is typically the first public company a foreign investor will meet with and likely seek to own shares in as well. URTS had another strong quarter of performance in the second quarter, with trailing twelve months earnings growth of 24% and equity growth of 65%. When looking at how far the company has come over the last five years, from second quarter 2020, TTM earnings per share have grown 328% and book value has grown 311%. URTS ended August trading at a P/E of 5.04x, a price to book value of 3.71%, and hosts a dividend yield of 8.88%.

At the end of August 2025, the fund was invested in 23 names and held 11.9% in cash. The portfolio was allocated to Uzbekistan (88.0%) and Kyrgyzstan (0.1%). The sectors with the largest allocation of assets were financials (50.1%) and materials (19.1%). The fund's estimated weighted harmonic average trailing 12 months P/E ratio (only companies with profit) was 3.58x, the estimated weighted harmonic average P/B ratio was 0.62x, and the estimated weighted average portfolio dividend yield was 3.11%.

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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