LONDON (Alliance News) - VietNam Holding Ltd on Monday reported a decrease in its net asset value per share, underperforming its benchmark.
In the year ended June 30, VietNam's net assets increased 6.6%, underperforming its benchmark, the Vietnam All Share Index which gained 14.9% in the year.
The VN All Share Index Total Return was even higher in the period at 17.2%.
VietNam explained the "divergence" between the index's return and the fund's "modest" growth on the "widening" performance between large-cap stocks that drive the VN All Share Index and the mid-cap stocks in the company's portfolio.
The trailing price-to-earnings ratio of the VN30 Index expanded by 49%. The trailing price-to-earnings ratio of the VN70 Index "only" grew by 6.2%.
VietNam said this meant the VN30 Index was trading at a 45% premium to the VN 70 Index at the "peak" compared to just a 3.9% premium at the beginning of the period.
This growth in Vietnam's top index resulted from the "large" inflows into initial public offerings, new listings and state divestments.
All of which, lifted the value of stocks such as Vinamilk, Sabeco, Binh Son Refinery, PV Power, Genco 3, Techcombank, VPBank, Vinhomes, and Vincom Retail.
The investment fund believes it is "reasonable" to believe the valuation gap between the two indexes will revert to "more reasonable" levels in the future.
The company's net investment income decreased to USD17.0 million from USD34.8 million in the year.
Looking ahead, VietNam said its outlook for next year is "uncertain".
Higher interest rates in the US will provide additional strength to the US dollar but for much of the year the fund flows from emerging markets has been "negative".
The "continuing uncertainty" of trade tariffs and the "prospects of lengthy" trade war between the US and China could "further pressure" the Vietnam dong. And the company believes the country is "susceptible" to "further weakness" of the dong.
The fund, however, believes Vietnam could be an "unexpected winner" in the trade war, as its manufacturing sector has "developed and advanced".
VietNam is also required to offer a continuation vote at its annual general meeting this year, which will be held Ocotber 31.
At the AGM the company will propose to tender up to 15% of its issued share capital at a 2% discount of its NAV.
Additionally, VietNam will also vote offer a vote on its re-domiciliation to Guernsey from the Cayman Islands.
And, finally, the company is also seeking to list the company on London's Main Market, moving from its current listing on AIM.
Shares in VietNam Holding were up 0.4% Monday at USD2.64 each.
Vietnam Holdings (VNH)