Vietnam Holding NAV grows 4.4% in August as retail stocks stage a recovery
Dynam Capital, the investment manager of ( ), delivered in its August 2022 investor report with another upbeat assessment of Vietnam's economy and business environment against a backdrop of global macroeconomic uncertainty.
This year marked 77 years since Vietnam's independence and 36 years since the country liberalised its economy under the "Doi Moi" open-door policy. Since then, Vietnam has experienced macroeconomic growth that was sustained even through the Covid-19 pandemic, culminating in one of the most open economies in the world today.
Vietnam's economy remained resilient in August as inflationary risks, extreme weather, and supply disruptions stemming from the war in Ukraine continued to escalate global headwinds. The country finished the month with an increase in imports and exports, and an increase in announced manufacturing projects.
Likewise, Vietnam's equity market staged a strong recovery in August, recording earnings growth and higher valuation levels in Q2 2022. Vietnam Holding's NAV was up +4.4% in August with a notable recovery of retail stocks e.g. MWG, PNJ, and DGW.
In particular, Mobile World Investment (MWG), a company primarily active in computer and electronics retailing, recorded a significant 21% return in August. The efficient restructuring of its Bach Hoa Xanh (BHX) stores has been on track and the firm's management expects to reach EBITDA break-even by the end of 2022. A potential future IPO of BHX could trigger a rerating of the entire group, Vietnam Holding. Banking stocks, the biggest sector in the portfolio, also performed well, and expects growth to continue into 2023.
August saw foreign direct investment continue its steady progress in Vietnam. Apple, Foxconn, Samsung, and Lotte have all set up new projects in the country, proving its climbing status as a global trade and manufacturing hub. Apple continued to move production from China to Vietnam, and in August Foxconn leased 50.5 hectares of land in Bac Giang Province, with plans to build a US$300m factory employing 30,000 workers.
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Vietnam's rapid ascent as a major global trade and manufacturing hub continues. is now up 170% since the pandemic downturn in April 2020 and has remained largely flat this year, indicating resilience against the global downturn in equities, and optimism about the country's growing middle class.
Vietnam recorded a US$3.96b trade surplus in the first 8 months of 2022 and continues to gain more share in the global export market. The country is often seen as more attractive to foreign investors than its neighbours, helped by a successful vaccination rollout and favourable policy directions on environment and corporate governance.
Vietnam has also managed the inflation crisis better than other competing nations, helped by less average energy consumption, with a healthy mix of domestically sourced hydro, solar, wind and natural gas, supplying 50% of its needs. This has had the added benefit of attracting companies with ambitious net zero goals. Vietnam's priority in this respect has been on upgrading its infrastructure as it itself strives to achieve net zero by 2050.
Today's report from Vietnam Holding mirrors an equally positive H2 2021 report from March, which showed asset value per share rising 14.1% in USD and 31.7% in GBP. Vietnam's open economy approach has seen its trade reaching more than US$668b in 2021, representing more than 200% of GDP, levels seen by only a few countries globally.
Vietnam also continues to develop a strong middle class with increasing levels of consumption, as living standards, digitalisation, and domestic production advance. The country is to become the tenth largest global consumer market by 2030, larger than Germany. is focused on this transition as part of its investment approach and selection criteria.
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