“Quality without results is pointless. Results without quality is boring.”

– Johan Cruijff - Dutch professional football player and manager.

Uzbekistan National Investment Fund (UzNIF) Landmark IPO in London and Tashkent

May 2026 was an historically important month for Uzbekistan’s capital markets, which saw the IPO listing of the Uzbekistan National Investment Fund (UzNIF) simultaneously on the London Stock Exchange and Tashkent Stock Exchange. The UzNIF investment vehicle, which gives investors exposure to thirteen large and profitable state-owned companies, witnessed a huge interest given the strong economic and reform momentum in Uzbekistan. With 1Q26 GDP growth of 8.7%, it was not surprising that the London tranche of the IPO was 4x oversubscribed. You can read more on UzNIF and its impact on Uzbekistan’s economy and capital markets in the AFC Uzbekistan Fund Manager Comment below.

UzNIF London IPO and the Opening Bell

AFC Uzbekistan Tour 2026

AFC is hosting its 5^th AFC Uzbekistan Tour from Sunday 20^th September to Monday 21^st September 2026, bringing existing and prospective investors to experience the reality of Uzbekistan on the ground. This will be a 1½-day tour starting with a half-day tour of Tashkent on Sunday, followed by a day of meetings with the fund’s portfolio companies on Monday, and concluding with dinner. If you are interested in joining, please write to 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.

AFC Quarterly Webinar Held on 12^th May 2026

We held another informative quarterly webinar on 12^th May 2026 and as usual, existing and prospective investors were very engaged in the discussion with insightful questions. If you missed this quarterly webinar, you can always get up to speed by viewing the webinar recording and slides using the links below. You can also access our past webinars on our YouTube channel.

June 2026 Subscription Cut-Off Date

The next cut-off date for subscriptions for our funds will be 24^th June 2026. 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 May 2026.

AFC in the Press

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 Uzbekistan Fund - Manager Comment

The AFC Uzbekistan Fund Class F shares returned +5.2% in May 2026 with a NAV of USD 2,058.94, bringing the year-to-date return to +36.2%. The return since inception (29^th March 2019) now stands at +105.9%, representing an annualised return of +10.6% p.a.

May was another month of positive performance for the AFC Uzbekistan Fund. The Uzbekistan National Investment Fund (UzNIF) held its IPO on Monday 18^th May 2026 in both Tashkent and London, raising USD 604 million, while Tashkent trading saw a peak intraday turnover gain of over 44%. Moreover, the broadening-out we have discussed in recent months has also accelerated, with materials and financial services companies experiencing strong performance during the month.

UzNIF & the Broadening-Out

On 18^th May 2026, the Uzbekistan National Investment Fund (UzNIF) launched its IPO, with Franklin Templeton ringing the opening bell at the London Stock Exchange. USD 604 million, or roughly 31% of the company, was sold in the IPO. It was the second-largest European IPO in 2026, the largest in London, and the largest closed-ended fund IPO in London since 2021. On the first day of trading in Tashkent, volume was approximately USD 330,000, and by the end of the week, over 4% of the float had traded. The deal was 4x oversubscribed, which led investors subscribing for shares in London to get a max allocation of 25%, with many getting none. For those who invested through Tashkent, the allocation was roughly 55%.

UzNIF London IPO and the Opening Bell

The Tashkent tranche ended up being USD 18 million which, while not large, is still the largest public equity issue in the country’s history. However, it also means that with local investors profiting early from this IPO, up 18% by the end of the month, when not factoring in the additional 5% subscription discount for individual investors, their appetite for future IPOs will likely lead to significantly greater domestic demand. Equities on the Tashkent Stock Exchange are therefore finally starting to be viewed as a mechanism for wealth generation, something we’ve harped on about for years. This also means future dual listings are likely to see more demand on the Uzbek tranche of shares as more locals invest, as well as more foreigners who can get a better allocation domestically. Naturally, seeing this early on, the AFC Uzbekistan Fund subscribed locally, and we are pleased with the performance so far.

With retail investor participation being key to the success of the Tashkent Stock Exchange, we will discuss some history. In 2023, when we met the Tashkent Stock Exchange on one of our investment tours, we were told that there were approximately 50,000 brokerage accounts in the country, with roughly 15,000 (to be kind) showing some type of annual activity, effectively nothing, which explains the illiquid market. Well, with the UzNIF IPO, things are changing fast. Just one digital brokerage platform saw 4,800 local investors subscribing for shares with an average subscription equivalent to USD 425. This is indeed peanuts, but it shows just how low a base Uzbekistan’s capital markets are starting from and why we believe the AFC Uzbekistan Fund’s performance to date is just the tip of the iceberg once we start getting momentum in the capital markets development. This is a country of 38 million Uzbeks with less than 50,000 active brokerage accounts. What happens in a few years when we hit 500,000 accounts, and how will this impact equity valuations? We remain optimistic that this is where we are heading.

AFC Uzbekistan Tour 2026

AFC is hosting its 5^th AFC Uzbekistan Tour from Sunday 20th September to Monday 21st September 2026, bringing existing and prospective investors to experience the reality of Uzbekistan from the ground. This will be a 1.5-day tour starting with a half-day tour of Tashkent on Sunday, followed by a day of meetings with the fund’s portfolio companies on Monday, and concluding with dinner. If you are interested in joining, please write to 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 May 2026, the fund was invested in 24 names and held 10.1% in cash. The portfolio was allocated to Uzbekistan (89.81%) and Kyrgyzstan (0.04%). The sectors with the largest allocation of assets were financials (62.67%) and materials (15.60%). The fund's estimated weighted harmonic average trailing 12 months P/E ratio (only companies with profit) was 6.18x, the estimated weighted harmonic average P/B ratio was 0.93x, and the estimated weighted average portfolio dividend yield was 2.75%.

AFC Asia Frontier Fund - Manager Comment

The AFC Asia Frontier Fund (AAFF) USD A-shares returned +0.1% in May 2026 with a NAV of USD 2,382.61. The MSCI Frontier Markets Asia Net Total Return USD Index gained +0.3%, while the MSCI Frontier Markets Net Total Return USD Index gained +0.6%, and the MSCI World Net Total Return USD Index gained +4.6%. Year to date, the fund returned +4.1%, the same as the MSCI Frontier Markets Asia Net Total Return USD Index in the same period. The performance of the AFC Asia Frontier Fund USD A-shares since inception on 30^th March 2012 now stands at +138.3% while the MSCI Frontier Markets Asia Net Total Return USD Index increased +29.7% during the same period. The fund’s annualised performance over 5 years is +9.9% with a Sharpe ratio of 0.58 and a Sortino ratio of 0.76. The broad diversification of the fund’s portfolio has resulted in low risk with an annualised volatility of 10.6% and a correlation of the fund versus the MSCI World Net Total Return USD Index of 0.51, all based on monthly observations since inception.

With the pendulum swinging both ways with respect to the geopolitical situation in the Middle East, the fund’s universe was broadly in wait-and-watch mode during the month. The key positive contributors to performance were Pakistan, Uzbekistan, Mongolia, and Bangladesh. The negative contributors to performance were Kazakhstan, Sri Lanka, and Oman.

Despite Pakistan being a net oil importer especially from the Middle East, the KSE-100 Index has recovered its March 2026 losses when the conflict in the Middle East began on 28^th February 2026. After correcting by 11.5% in March, the index made a smart recovery in April and May and gained +9.4% and +6.8% respectively, which now takes the index to 3.3% higher compared to when the Middle East conflict began.

A key reason for this stock market rebound in Pakistan is due to its ongoing economic momentum backed by a continued focus on IMF (International Monetary Fund) led reforms, which is sustaining overall macroeconomic stability. Furthermore, the macroeconomic gains in Pakistan are backed by political stability as well.

A sign of investor confidence towards Pakistan was the recent successful placement of the country’s USD and CNY (Chinese Renminbi) bonds, which attracted significant investor interest, leading to an oversubscription for both the USD and CNY bond. The USD and CNY bonds were raised in April and May 2026 respectively, and after the Middle East conflict began, which reflects investor confidence towards Pakistan’s economic outlook.

Initial plans were to raise USD 500 mn via the USD bond, but because of high investor demand, the bond issue size was increased by 50% to USD 750 mn, while the CNY bond was 5x oversubscribed and raised CNY 8.8 bn. Furthermore, this was Pakistan’s first CNY bond, and it re-entered the international USD bond market after four years, which shows that investors are paying attention to Pakistan’s economic progress.

If Pakistan can translate its ongoing macroeconomic and geopolitical gains into a sustained period of stable economic growth, we expect the KSE-100 Index to make new all-time highs. Pakistan remains the fund’s largest country weight at 14.0%.

KSE-100 Index in Pakistan Now 3.3% Higher than when Middle East Conflict Began

Worker remittances in our fund universe also remain stable after the start of the Middle East conflict. Bangladesh, Pakistan, and Sri Lanka, which receive the majority of their worker remittances from the Middle East, have not seen any major disruption in remittance flows since the conflict began.

Historically, we have observed that in times of an uncertain economic environment, Bangladesh, Pakistan, and Sri Lanka tend to receive higher remittance inflows, and we experienced this trend during the pandemic and at the start of the Ukraine conflict.

Worker Remittances in South Asian Frontier Markets Stable Post Middle East Conflict (in USD mn)

Given that central banks globally would like to maintain overall macroeconomic stability due to the uncertainty of the time horizon of higher crude oil prices and its impact on inflation, central banks in Georgia, Pakistan, and Sri Lanka raised their benchmark interest rates over the past month.

The National Bank of Georgia increased its benchmark interest rate by 25 basis points, while the State Bank of Pakistan and the Central Bank of Sri Lanka each raised their interest rates by 100 basis points. We believe these are very good moves, especially in the case of Pakistan and Sri Lanka, where there is a deep commitment now by their central banks to maintain broader macroeconomic stability.

However, unlike many global central banks which are watching inflation and interest rates closely, the National Bank of Kazakhstan (NBK) appears to now be on an interest rate reduction cycle as it reduced its benchmark interest rate by 100 basis points on 5^th June to 17.0%. Given the Kazakh government's focus on fiscal reforms in terms of reducing fuel and power subsidies and introducing a Value Added Tax, inflation in Kazakhstan had inched up in the last eighteen months leading to benchmark interest rates increasing by 375 basis points between November 2024 – October 2025.

However, with the base effect kicking in and the Kazakh Tenge witnessing a significant appreciation this year because of higher crude oil prices, inflation is beginning to ease which has given room to the NBK to reduce interest rates. The higher crude oil price environment has also led the NBK to increase its forecast for 2026 GDP growth by 100 basis points to 4.5-5.5%. This upgrade to GDP growth ties into our positive overall view on Central Asian and neighbouring economies like Georgia, Kazakhstan, and Uzbekistan.

National Bank of Kazakhstan Has Begun an Interest Rate Easing Cycle as Inflation Cools

Co-Fund Managers Thomas Hugger and Ruchir Desai were on the ground in Sri Lanka to meet with portfolio companies, and we also had an excellent opportunity to meet with the Governor of the Central Bank of Sri Lanka, a few days after the 100-basis-point interest rate hike was announced.

After our meeting with the Governor and with the fund’s portfolio companies, we remain very positive on Sri Lanka’s overall economic direction, given both the government’s and the Central Bank’s commitment to sustain the economic gains made over the last few years, as well as their proactive focus on managing the impact on the country from the Middle East conflict.

In addition to this, on the ground in Sri Lanka we observed that domestic consumption remains strong with hotels and restaurants showing very healthy occupancy levels while having a very good mix of both local and foreign visitors. We would not be surprised if the Colombo All Share Index begins rallying again after there is some clarity in the Middle East, as the platform has been set in Sri Lanka for a sustained period of economic and earnings growth.

Thomas Hugger and Ruchir Desai with Mr. Nandalal Weerasinghe, Governor of the Central Bank of Sri Lanka

As discussed previously in our manager comments and quarterly webinars, Oman appears to be less impacted by the conflict in the Middle East and could also be emerging as a net beneficiary because of its neutral geopolitical position and geographic location outside the Strait of Hormuz. This geographical advantage is now evident in the GCC’s (Gulf Cooperation Council) oil production data up to April 2026.

Compared to its GCC peers, Oman’s oil production in April 2026 has remained flat compared to the end of February 2026, while its regional counterparts have seen large declines in oil production since the start of the conflict. Oman’s geographical advantage, which allows its oil production to face less geopolitical pressure, appears to put it in a relatively stronger macroeconomic position compared to the rest of the GCC, where the fallout of the conflict on energy production, tourism, and trade is expected to have a significant negative economic impact.

Oman Oil Production Less Impacted Because of Geographical Advantage 
(% Change in April 2026 v/s February 2026)

The best-performing indexes in the AAFF universe in May were Pakistan (+6.8%) and Bangladesh (+0.9%). The poorest-performing markets were Oman (−7.3%) and Iraq (−4.9%). The top-performing portfolio stocks this month were a leather producer in Mongolia (+49.7%), a lime & cement producer in Papua New Guinea (+26.7%), a Pakistani mobile phone assembler (+16.6%), a mobile phone operator in Asian frontier countries (+12.9%), and a Pakistani conglomerate (+11.1%).

In May, the fund increased existing positions in Mongolia.

At the end of May 2026, the portfolio was invested in 63 companies, 2 funds, and held 7.1% in cash. The two biggest stock positions were a bank in Uzbekistan (5.4%) and a cement producer in Pakistan (4.1%). The countries with the largest asset allocation were Pakistan (15.3%), Uzbekistan (13.0%), and Sri Lanka (11.6%). The sectors with the largest allocation of assets were financials (36.8%) and consumer goods (16.8%). The fund's estimated weighted harmonic average trailing 12 months P/E ratio (only companies with profit) was 7.06x, the estimated weighted harmonic average P/B ratio was 1.34x, and the estimated weighted average portfolio dividend yield was 4.30%. The fund’s portfolio carbon footprint is 0.18 tons per USD 1 mn invested.

AFC Vietnam Fund - Manager Comment

The AFC Vietnam Fund returned −0.5% in May with a NAV of USD 3,412.92, bringing the 2026 return to −3.9% and the return since inception to +241.3%. This month, the fund underperformed the benchmark, the Ho Chi Minh City VN Index, which gained 0.6% in USD terms. The fund’s annualised return since inception stands at +10.4% p.a. The broad diversification of the fund’s portfolio resulted in an annualised volatility of 14.75%, a Sharpe ratio of 0.57, and a low correlation of the fund versus the MSCI World Index USD of 0.49, all based on monthly observations since inception.

In May, the Vietnamese stock market reached a new record high of 1,933 points despite relatively low market liquidity. The rally was once again driven primarily by Vingroup-related stocks, including VIC, VHM, and VRE, while the broader market remained weak, with most stocks declining during the month and market breadth staying negative.

VN-Index in Local Currency from May 2025 to May 2026

Market Developments

Strong Fundamentals Behind Market Distortion

Recent months have seen rising investor concerns about potential oil shortages and the economic impact of heightened tensions in the Middle East. However, actual economic activity and domestic energy trends suggest that Vietnam has managed the situation far more effectively than many initially feared.

In April 2026, the Vietnamese government confirmed that domestic fuel supply had been secured through at least July 2026. Since then, Vietnam has continued importing crude oil and refined products from the Middle East despite ongoing geopolitical volatility, with several large shipments successfully passing through the Strait of Hormuz and arriving safely at Vietnamese ports. At the same time, geopolitical tensions have recently shown early signs of stabilisation, as negotiations and ceasefire discussions between the United States and Iran increasingly support expectations of gradual de-escalation.

Perhaps more importantly, domestic gasoline prices have remained relatively stable even as global crude oil prices were quite volatile. In our view, the combination of a stable energy supply, resilient domestic pricing, easing geopolitical concerns, and continued strong economic activity demonstrates Vietnam’s effective policy management and reinforces the economy's underlying strength despite heightened global uncertainty.

Crude Oil Price (USD/barrel)

Vietnamese Economy Maintains Strong Momentum with Bright Long-Term Outlook

Despite elevated energy prices and ongoing geopolitical uncertainty, Vietnam’s economy continued to demonstrate impressive resilience and broad-based growth during the first four months of 2026. Newly registered FDI rose 32% year-on-year to USD 18.2 bn, while realised FDI increased 9.8% to USD 7.4 bn, highlighting continued confidence from foreign investors.

At the same time, total exports surged 19.7% year-on-year to USD 168.5 bn, supported by strong global demand and Vietnam’s competitive manufacturing position. Domestic consumption also remained robust, with retail sales rising 11.1%, marking one of the strongest growth periods since the post-COVID reopening. Meanwhile, international tourism continued to recover strongly, with visitor arrivals reaching a record 8.8 mn, up 14.6% year-on-year. Together, these indicators reinforce Vietnam’s strong structural growth story and positive long-term economic outlook.

Strong Fundamental Growth (%, yoy)

The strength of Vietnam’s economy has remained broad-based across electronics, industrial manufacturing, seafood, logistics, and supporting industries, further reinforcing the country’s position as one of Asia’s most attractive manufacturing hubs outside China. At the same time, Vietnam is entering one of the largest infrastructure expansion cycles in its modern history, creating an additional long-term growth driver for the economy.

One notable example is Hanoi’s ambitious Red River Boulevard project, a large-scale urban redevelopment and infrastructure initiative with estimated investment capital of approximately USD 30 bn. Spanning more than 11,000 hectares along the Red River, the project includes major transportation infrastructure, metro connectivity, urban expansion, and riverside redevelopment. Beyond direct construction activity, the project is expected to improve logistics efficiency, labour productivity, tourism development, and land utilisation across the greater Hanoi metropolitan area.

The Red River Boulevard Megaproject

In our view, projects such as the Red River Boulevard highlight Vietnam’s transition from a low-cost manufacturing economy toward a more advanced, infrastructure-led, and productivity-driven growth model. These large-scale investments are expected to strengthen long-term competitiveness, improve urban efficiency, and support higher sustainable growth over the coming decade.

Importantly, Vietnam is pursuing this ambitious infrastructure expansion while maintaining relatively conservative public finances. Government debt remains low at around 37% of GDP, well below many emerging-market peers, while the country recorded a fiscal surplus of approximately USD 17.1 bn during the first four months of 2026 alone. This combination of strong growth and prudent fiscal management provides Vietnam with substantial flexibility to continue supporting economic development in the years ahead.

Vietnam Has a Low Debt-to-GDP Ratio (%)

At the same time, Vietnam is entering one of the largest infrastructure expansion cycles in its modern history. In addition to Hanoi’s USD 30 bn Red River Boulevard project, the country is simultaneously accelerating multiple strategic developments, including Long Thanh International Airport, the North–South Expressway network, metro systems in Hanoi and Ho Chi Minh City, deep-sea ports, and major energy infrastructure projects nationwide.

In our view, these multi-billion-dollar investments are not only supporting short-term economic activity but, more importantly, laying the foundation for a long-term productivity expansion cycle through improved logistics efficiency, urban connectivity, manufacturing capacity, and labour productivity. We believe this infrastructure wave will play a critical role in supporting Vietnam’s ambitious target of achieving approximately 10% annual GDP growth during 2026–2030, reinforcing what we view as one of the strongest and most sustainable long-term growth stories in emerging markets today.

Vietnam Stock Market Has Yet to Fully Reflect Earnings Growth

Although the VN-Index reached a record high in May, underlying market conditions remained much weaker than the headline performance suggested. Market breadth remained negative, with a large portion of listed companies trading at depressed valuations despite strong operating results.

Aggregate first-quarter earnings across HOSE-listed companies increased approximately 30% year-on-year, while AFC Vietnam Fund’s portfolio companies delivered even stronger earnings growth of around 40% during the same period. Despite these robust fundamentals, valuations across many high-quality businesses remain deeply discounted, largely due to narrow index concentration and historically weak market breadth.

In our view, the broader market has yet to fully price in the strong earnings recovery emerging across many Vietnamese companies, particularly export-oriented businesses benefiting from Vietnam’s accelerating export growth cycle.

Market Breadth – December 2025-May 2026

Portfolio Highlights

MPC – Minh Phu Seafood Corporation

MPC, currently the largest holding in the AFC Vietnam Fund, delivered exceptionally strong first-quarter results. Revenue increased approximately 100% year-on-year, while net profit surged more than 12-fold compared to the same period last year. The recovery has been supported by improving global shrimp demand, accelerating export orders, operational restructuring, and strengthening international market conditions.

These results reinforce our view that Vietnam’s export sector remains highly competitive globally despite ongoing external uncertainty. Yet, despite this strong earnings acceleration, MPC continues to trade at highly attractive valuation levels, with a trailing P/E of approximately 8.6x and an estimated 2026 forward P/E of approximately 6.1x. This valuation does not adequately reflect the company’s earnings growth potential and long-term industry positioning.

SHB – Saigon Hanoi Commercial Joint Stock Bank

Another clear example of the market failing to fully reflect underlying fundamentals is SHB, one of Vietnam’s largest private-sector banks. SHB reported approximately 8% profit growth in Q1 2026, alongside continued balance sheet expansion and improving operational performance.

Despite these positive fundamentals, the stock remains deeply undervalued, trading at approximately 0.9x P/B and 3.4x P/E, while offering a dividend yield of around 4%. The bank also maintains an ROE of approximately 20%, among the strongest within Vietnam’s banking sector. These valuation levels significantly underestimate SHB’s long-term earnings power, scale, and strategic positioning within Vietnam’s rapidly expanding private banking industry.

AFC Vietnam Fund: A Historic Valuation Disconnect

The current market environment reflects one of the widest disconnects in recent years between underlying corporate earnings growth and actual market pricing outside a narrow group of index-heavy stocks.

Today, strong corporate earnings growth, accelerating export recovery, and improving macroeconomic conditions stand in sharp contrast to weak market breadth, narrow index concentration, and deeply discounted valuations across many fundamentally strong businesses. In our view, this divergence may represent one of the most attractive long-term entry opportunities Vietnam has offered in recent years.

While this market distortion has negatively impacted the AFC Vietnam Fund’s short-term relative performance, we believe it also creates a compelling opportunity for fundamentally driven investors. Currently, the VN-Index trades at approximately 14x earnings, while AFC Vietnam Fund’s portfolio trades at only around 8.8x earnings despite delivering stronger earnings growth than the broader market.

In our view, the valuation gap between underlying business fundamentals and current market pricing has become unusually wide and is unlikely to remain sustainable over the long term.

At the end of May 2026, the fund’s largest positions were: Minh Phu Seafood Corp (9.5%) – a seafood company, Agriculture Bank Insurance (8.0%) – an insurance company, Lam Dong Minerals and Building Materials (7.7%) – a building material supplier, Phu Tai JSC (7.0%) – a home and office furnishings company, and Saigon - Hanoi Commercial Joint Stock Bank (4.4%) – a bank.

The portfolio was invested in 33 names and held 2.4% in cash. The sectors with the largest allocation of assets were financials (40.6%) and consumer (37.9%). The fund's estimated weighted harmonic average trailing 12 months P/E ratio (only companies with profit) was 8.83x, the estimated weighted harmonic average P/B ratio was 1.19x, and the estimated weighted average portfolio dividend yield was 4.13%. The fund’s portfolio carbon footprint is 1.86 tons per USD 1 mn invested.

AFC Iraq Fund - Manager Comment

The AFC Iraq Fund Class D shares returned −1.3% in May 2026 with a NAV of USD 2,591.61, outperforming its benchmark, the Rabee Securities RSISX USD Index (RSISUSD index), which lost 4.9% 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 8.0% for the year versus the index, which went up by 3.1%. Since inception, the fund has gained 159.2% while the RSISUSD index is up by 75.6%, an outperformance of 83.6%. The annualised return since inception of the fund stands at +9.1% p.a.

There is more to the index’s 4.9% decline than meets the eye due to the nature of the index’s market value-weighted calculation that incorporates stock dividends, but not cash dividends, that negatively affected the index’s monthly performance, much as it did the prior May. The culprits were two huge cash dividend announcements during the month of 12.1% and 8.7% by two of its ten components, the Bank of Baghdad (BBOB) and Asiacell Communications (TASC), respectively, with a 17.7% and 19.1% index weighting at the end of April. If these two cash dividends were incorporated in the index’s calculations, then it would have been down 1.1% for the month and not down 4.9%.

These, as discussed last month, come on the heels of two similarly oversized dividends. The first, in March, was Mansour Bank (BMNS)’s combination of a cash dividend amounting to a 4.7% dividend yield and a 31.5% share dividend, for an effective dividend yield of 19.5%. The second, in April, by the National Bank of Iraq (BNOI)’s combination of a cash dividend amounting to a 4.9% dividend yield and a 25.0% share dividend, for an effective dividend yield of 9.5%. These four dividends promise a repeat of last year’s humongous dividends by the top companies in the market, particularly Baghdad Soft Drinks (IBSD), which last year paid out a cash dividend equivalent to a 7.5% dividend yield.

The market’s month-on-month increase in trading volumes – as measured by the average daily traded value – built upon that of the prior three months, with increases of 26.5% in February, 22.1% in March, 27.2% in April, and 25.0% in May (trading volumes adjusted for block-trades). From a technical analysis perspective, the market’s action continues to be that of consolidating its three-year gains, and that a continued consolidation or a pull-back should be within its multi-month uptrend (chart below).

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

The icing on the cake continues to be the unusually mild weather this time of the year, which allowed for more pleasant walkabouts in Baghdad, the city that is full of life, as experienced on a night visit to “Al-Mutanabbi Street” – Baghdad’s intellectual, literary, and cultural heart. The street, named after the legendary Abbāsid-era poet Al-Mutanabbi (915-965 A.D.), is jam-packed with traditional booksellers displaying all kinds of books both in outdoor stalls and in bookstores – an embodiment of the old Arab saying, “Egyptians write, Lebanese publish, Iraqis read”. However, there is more to the street than meets the eye, as Al-Mutanabbi can be thought of as an intellectual, literary, and cultural complex composed of the street itself, the Baghdadi Cultural Centre, and the Al-Qishla compound in Al-Sarai Street.

The visit took place at almost the same time of the year as the one reported on exactly four years ago in “Sandstorms, and a stroll down Al-Mutanabbi Street”, yet since then, the complex has undergone significant renovations, stemming from the cumulative positive effects of the relative stability that the country enjoyed over the last few years. The latest renovation “Iqraa Downtown”, part of the ongoing Baghdad Downtown initiative, was completed in February with the transformation of a historic building in Al-Sarai Street into a vibrant cultural and commercial complex. The complex, in both name, and features, fits in with the street’s character – the word “Iqraa” in Arabic means read, and the complex incorporates bookshops, a public library, and a gallery, among many other attractions such as shops, cafés, and restaurants, as well as a tiny five-star boutique hotel. The Baghdad Downtown initiative’s renovations over the past few years deserve a fuller telling in a future piece, until then the photos below offer a glimpse of the complex on a night walkabout.

A Night Walkabout in Al-Mutanabbi Complex

A Night Walkabout in Al-Mutanabbi Complex

In conclusion, while being fully cognizant of the geopolitical risks, we remain convinced that the high quality of the fund’s holdings, and their future earnings growth, will drive the fund’s performance irrespective of any volatility that the next few days and weeks might bring. The same holds for the two key dynamics, discussed here often – the cumulative positive effects of the relative stability and structural banking developments – that are in the early stages of their transformation of the economy, a process that would unfold over the next few years. However, considerable risks remain, in that the current pause in the U.S.-Israel war on Iran, in the form of “no war-no peace”, would end reigniting a conflict that could escalate considerably beyond the control of participants, direct and indirect, and become an all-out war engulfing the region, filled with all the nightmare scenarios that are popping up in the media, by experts and “experts”.

At the end of May 2026, the AFC Iraq Fund was invested in 8 names and had a cash level of 9.5%. 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 (88.7%), Norway (1.7%), and the U.K. (0.1%). The sectors with the largest allocation of assets were financials (60.3%) and communications (19.1%). The fund's estimated weighted harmonic average trailing 12 months P/E ratio (only companies with profit) was 7.49x, the estimated weighted harmonic average P/B ratio was 2.11x, and the estimated weighted average portfolio dividend yield was 7.12%. The fund’s portfolio carbon footprint is 0.07 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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