Foreign fund posts a loss in March, increases cash holdings

For Lumen Vietnam Fund, in a context of rising interest rates since late 2025, the fund restructured its portfolio to favor more defensive sectors such as energy and consumer staples, while increasing cash holdings to a prudent level. LVF reported March performance of -6.52% in USD, bringing year-to-date performance to +4.97% in USD, as the Vietnam All Shares Index (VNAS) fell 10.21% in the month and was down 7.83% year-to-date, in USD. The fund notes a significant shift during March, recovering from a steep early-month decline to finish with a negative 6.52% in USD. Market dynamics reflected this trend, with initial selling pressure pushing daily trading value to a peak of $1.414 billion, before cooling to around $710 million by month-end. This change indicates the stock market is transitioning from a strong distribution phase to a more cautious period, as investors begin bottom-fishing and gradually absorb external shocks and shifts in domestic liquidity. On that basis, price movements have facilitated a clearer assessment of drivers and sector-rotation trends throughout the month. Double pressures from the Iran-related tensions—especially concerns about energy supply disruption through the Hormuz Strait—together with interbank rates spiking to 10.4% annually during the month were key factors driving price volatility. This rise in funding costs cooled the real estate group, with VIC and VHM under notable selling pressure. Meanwhile, energy and utilities sectors initially showed resilience on supply concerns but quickly followed the overall market trend. Foreign investors remained net sellers, with net withdrawals of about $592 million. Selling pressure concentrated on large-cap stocks such as VIC and FPT. Domestic investors continued to be a market pillar, accounting for nearly 87% of total trading value. However, the fund views the March adjustment as a necessary consolidation phase for balanced growth and risk control in the market. Long-term prospects remain positive, supported by GDP growth targets and the implementation of transformative infrastructure projects, including several metro lines in Ho Chi Minh City. The PMI rose to 54.3, signaling solid economic health and a positive outlook. With growth anchored on pillars like public investment and industrial momentum, the market is well-positioned to translate short-term volatility into a foundation for longer-term structural growth. The fund believes the current market uncertainty offers attractive deployment opportunities as Vietnam’s growth story remains positive. Vietnam’s stock market standing is expected to move to the FTSE Emerging Markets category in 2026, alongside the formation of an international financial center in Vietnam, potentially attracting greater participation from global investors. At the same time, the rebound in initial public offerings (IPOs) is expected to broaden the investable universe and create more diverse opportunities across sectors, rather than being concentrated in financial stocks as before. For Lumen Vietnam Fund, in a rising-rate environment since late 2025, the fund restructured its portfolio toward defensive sectors such as energy and consumer staples, and increased cash exposure to a prudent level. This positioning has helped mitigate some of the negative impact from market volatility in March. With the current cash position, the fund will continue to gradually deploy into sectors and companies that have recorded meaningful valuation discounts in a higher interest-rate environment, while still showing resilience to near-term challenges.