Dear Investors and Friends,
The broad upward trajectory of the equities market continued in January, on the back of 2020 GDP growth of 1.6%. We have noticed increasing activities across the larger “Blue-Chip” companies in recent weeks as the trend of new buyer interest continues to grow. Nonetheless, equity prices still remain very attractive and during the month the fund was active in deploying capital into several names, acquiring multiple blocks of shares. The January 2021 fund NAV increased to an estimated USD 1,372.2 (+2.3%), according to internal estimates.
AFC Uzbekistan Fund valuations as of 31st January 2021:
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Estimated weighted harmonic average trailing P/E (only companies with profit):
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4.28x |
| Estimated weighted harmonic average P/B: |
1.00x |
| Estimated weighted portfolio dividend yield: |
9.29% |
COVID-19 is a “bygone event”
As has been stated in many previous updates, from July 2020 onwards, the Uzbek economy has been operating largely as it was before the pandemic. While there remain modest restrictions, such as the requirement to wear a face mask in public, the rules are very, very, loosely enforced, making Uzbekistan one of the few countries in the world where people seem to neither discuss nor fear COVID-19 anymore, making life on the ground pleasant and ironically very free when compared to many Western countries.
With fears of COVID-19 now a thing of the past, the Government of Uzbekistan announced on 31st December 2020 the USD 1 bln anti-crisis fund, which was established in March 2020 to counteract the adverse effects of COVID-19, would be liquidated in 2021. A further return to normalcy came on 26th January 2021 when the government proclaimed that all public catering establishments and entertainment venues were permitted to return to business as usual (this includes nightclubs, concert venues, etc.). Meanwhile, since Christmas time there have been outdoor concerts with hundreds of people gathering, specifically in front of the Navoi Opera Theatre in the centre of Tashkent. All such events make life in the country very bearable and dare I say, “pre-2020 normal”?
As there are no inhibiting restrictions in either the economy or everyday life, small businesses appear to be thriving. On my way to a meeting in late January in Tashkent, I walked past a Soviet-era apartment block where the ground floor apartments had been converted into commercial storefronts (this is very typical in Post-Soviet countries). Within a week of my last passing this apartment block, I noticed a new advertising agency had opened, Jinxiu (the storefront in orange below), which is sandwiched between a local pizza chain, Chopar, and an independent bakery. New businesses continue to open up across Tashkent, and the country for that matter, and the construction sector remains a hive of activity as well. Just across the street from the new advertising agency is an office building which has been under construction for several years (works appeared to have been stopped for a prolonged period before recommencing several months ago) and is now seeing its façade being put in place as it advances towards completion. The building is located in a superb spot, just off a main road, but residing on a nonetheless very busy artery in Tashkent’s city centre — prime real estate.
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