Vietnam Holding expects “another divergent year” in Vietnam’s stock market
(VNH has recorded a “strong” six month period to 31 December 2021 with net asset value per share rising 14.1% in US dollars and 31.7% in GBP pounds, respectively.
The Vietnam-focused fund said its NAV per share increased by almost 63.9% and the share price by 81.8% over the six month period. As a result, the Company was in the top three of all investment trusts listed in the UK in regard to performance for the full calendar year, it stated.
Total assets decreased to $156.22m at 31 December 2021 from $200.41m at 30 June 2021, while total comprehensive income was$17.23m down from $40.45m in the previous year.
In September 2021, the Fund completed a tender offer for 30% of its shares at a 2% discount to the prevailing NAV. It said this was completed with ‘little impact on the remaining portfolio, in recognition of the more liquid nature of the holdings and of the Vietnamese equity market.’
Hiroshi Funaki, Chairman of Vietnam Holding told investors that liquidity has also been “robust” in the trading of the Company’s shares on the London Stock Exchange with daily liquidity over the six-month period averaging a daily trading volume of c.72,000 shares.
The company said it has seen a number of new investors join the share register over the last six months with a mix of institutional, family office, wealth managers and individual investors.
Funaki stated that both Vietnam and the portfolio performances exceeded its expectations, particularly given the harsh circumstances brought about by the Delta variant of Covid-19.
He said Vietnam had suffered significantly at the start of the reporting period due to low vaccination levels, with the country imposing strict lockdowns across most of the country.
In comparison, by the end of the six month reporting period almost 90% of the population of Vietnam had been double vaccinated, and in some cities, 100% levels were even reported.
As a result, the success of the vaccination programme has given confidence to the authorities to further open the economy and remove some of the restrictions, Funaki noted to investors.
Despite this, the company said Vietnam demonstrated its resilience in terms of economic performance, particularly by strong export growth of 19% year-on-year as it took advantage of new trade deals. In December 2021, monthly exports and imports were even at all-time highs.
It said Vietnam has remained a very open economy with its trade reaching more than $668 bn in 2021, representing more than 200% of GDP, levels seen by only a few countries globally.
Overall, Vietnam’s stock market was one of the best performing in the world in 2021 with domestic indices hitting record levels. As a result, the Fund was up over 63.9% for calendar 2021, and 14.1% for the period under review outperforming the VNAS (+10.6%) and peers.
“During this period domestic investors acted confidently and positively, helping drive the Vietnam stock market to record levels. The portfolio constructed by the Investment Manager on behalf of the Company, and the nimble approach to stock selection and portfolio weighting helped the Company perform even better than the overall market and peers,” he commented.
He said the Board has kept a very close eye on the developments in Vietnam and elsewhere during the six month period and “continues to adopt sensible business continuity practices.”
As the Regional Comprehensive Economic Partnership agreement came into effect as of the start of 2022, “Vietnam’s government and business leaders will become even more exposed to the global corporate stage with trading partners, suppliers, and customers from abroad watching how they deal with the pandemic and rapid transformations,” the company noted.
As a result, the fund believes Vietnam could benefit greatly from this historic free trade agreement “as many of the latest 2022 forecasts of 6.5% GDP growth attest,” it stated.
By the start of 2022, retail sales had bounced back, export growth hit at an all-time high and global corporations continued to shift production from China to Vietnam. Looking ahead, the company told investors that trading levels are expected to grow even further in the country.
“In terms of our broader economic outlook, we expect another divergent year in Vietnam’s stock market with one of the most important themes being on how companies address changing stakeholders’ needs,” said Dynam Capital, a business which manages Vietnam.
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