VietNam Holding Limited ("VNH" or the "Company")
Monthly Investor Report
A report detailing the activities of the Company for the month of October 2023 has been issued by Dynam Capital Limited, the investment manager of the Company. Electronic copies of the report have been made available to shareholders on the Company's website and a summary of the report is included below.
Manager Commentary: VNH wins 'Best Emerging Markets Single Country trust'
While Vietnam's stock market continued its correction in October, with a steep monthly decline, VNH kicked off November on a higher note by winning the 'Best Emerging Markets Single Country trust' gong at the Citywire Investment Trust Awards 2023: Best Performers & Best Board event in London. VNH beat a strong cohort of contenders - Ashoka India, Vietnam Enterprise and Fidelity China - with what Citywire described as 'impressive information ratios and investor returns' over a three year period.
Despite the VNAS Index falling 12.5%, wiping out most of the gains year-to-date, Vietnam is still trading at an attractive valuation versus its peers. Although sentiment in Vietnam's stock market was already shaky due to FX pressures and weaker-than-expected 3Q earnings from big conglomerates, intensifying global geopolitical tensions in the Middle East given the sudden outbreak of war in Gaza greatly aggravated it in October. Uncertainty around the implications of the conflict fuelled fear among domestic retail investors, which make up most of the market, leading to profit-taking and margin calls. We still see the recent correction as a constructive trend that could pave the way for gains in the final two months of 2023 and into the new year. To start, the VN-Index is expected to gradually recover as the end of the US Federal Reserve Bank's rate hike cycle becomes more evident and therefore helps ease FX risks. Additionally, the upcoming launch of the KRX trading system in December is a significant development for the infrastructure of the Vietnamese stock exchange, HOSE, making Vietnam's inclusion in the MSCI EM Indices yet another step closer. Any future upgrade by MSCI is expected to attract inflows of US$7-10bn into Vietnam's stock market and provide a basis for re-rating of listed companies. BIDV's chief economist stated in early November that such an upgrade will attract "larger, more stable, and more diverse" capital flows from foreign investors.
Indeed, Vietnam's economic recovery already looks promising, with further interest rate reductions, for example, supporting strong economic and trade growth. Vietnam hit a record-high US$24.6bn trade surplus in 10M2023, expanding from US$9.6bn in the same period of 2022. Trade accelerated in October with exports up +5.9% year-on-year (YoY) and imports +5.2% YoY. To put this progress into context further, exports grew 5.3% month-on-month (MoM) versus a -6.3% MoM decline in September as manufacturers play catch-up with an up-tick in orders. Furthermore, registered FDI in Vietnam soared by 49.9% YoY in October, thanks largely to big projects in solar panel and electrical equipment production. In the past two years since participating in the 26th United Nations Climate Change Conference of the Parties (COP26), Vietnam has been the leader in solar power development in the ASEAN region.
We also see potential for more digitalisation projects, including those enabled by artificial intelligence (AI). FPT, VNH's largest holding, announced several initiatives, including the acquisition of the US engineering services firm, Cardinal Peak, and a strategic partnership with Landing AI, a global AI platform set up by the founder of Coursera and Google Brain. These moves, as part of the company's global growth strategy, allows it to expand its tech capabilities as well as its customer base. FPT targets 30%+ YoY growth in signed revenue driven by rapid digital transformation, and also announced plans to sign a partnership with Microsoft to develop more generative AI use cases for customers, both at home and abroad. Moreover, its commitment to education in Vietnam is on track for opening 13 new high schools in tier-2 and tier-3 provinces across the country. Vietnam's education system is already heavily oriented towards Science, Technology, Education and Mathematics (STEM) with 40% of its college graduates having a STEM focus, which is four times the global average.
For more information please contact:
Dynam Capital Limited
Craig Martin Tel: +84 28 3827 7590
info@dynamcapital.com |www.dynamcapital.com
Cavendish Capital Markets Limited
Corporate Broker and Financial Advisor Tel: +44 20 7220 0500
William Marle
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