Last checked at 
13 Oct 2022 07:01
VietNam Holding Limited ("VNH" or the "Company")
Monthly Investor Report
A report detailing the activities of the Company for the month of September 2022 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 - September's Slippery Slope
Most global equity investors are familiar with the September Effect, an anomaly widely considered as a 'change of season' downturn in the month of September. Of course, that is not always the case, but as 2022 carries on with yet more twists and turns, this year's September ended as one of the most down-falling months on record. As the market reacts, turbulence in the world's financial markets has been of a magnitude not seen for a generation. Global inflation is in double digits for the first time in 40 years and tectonic transformations regarding climate change and other intensifying crises continue to stir up volatility worldwide. Despite Vietnam's ongoing growth and economic resilience this year, its equity market suffered from this worsening global sentiment in September, and domestic concerns on some bad actors in the real-estate and corporate bond markets. As more than half of Vietnamese stocks are in banks and real estate, also inherently vulnerable to rising interest rates, it goes without saying that market selling hit both the broader market and VNH.
Telecommunications (FPT) and Retail (MWG, PNJ, DGW) holdings remained more robust as they were less impacted by the intertwining global macroeconomic risks arising from a strengthening US dollar, central bank tightening, ongoing implications from the war in Ukraine and other geopolitical disruptions around the world. Although Vietnamese banks likely face a less favourable business environment in 2023, those in the portfolio have healthy balance sheets and attractive valuations for the long-term. The real estate sector, which VNH remains underweighted in, was the worst performing sector in Vietnam's stock market in September due in part to increased scrutiny of bond issuances, credit quota from some banks, and pending reviews of real estate laws.
Vietnam's continued GDP growth against all these global headwinds cannot be overlooked - its Q3 GDP was high at 13.7%. This shows further strengthening domestically post-pandemic and underlines the fact that Vietnam's GDP has grown faster than that of any Asian country bar China, averaging 6.2% per year since 2000.
Through our engagement with our investee companies, we have seen how many Vietnamese businesses have navigated the trying times of Covid-19. We also see how this year's growth momentum is increasingly fuelled by the underlying efforts of Vietnamese business and government bodies to adopt internationally accepted best practices that help attract investment and drive sustainable performance. Indeed, as environmental, social and governance (ESG) considerations evolve with these shifting times and accelerated global megatrends, we also cannot underestimate the role of responsible investing in today's world. This is becoming especially evident in emerging and frontier markets, as last month's extreme weather disasters drew attention to the upcoming COP27, which takes place in Egypt.
Our stewardship commitments, not least where ESG matters are concerned, have always been a major pillar of our investment management style. This year one of our top-five holdings published their very first ESG report (for 2021) while another investee company made improvements in ESG reporting with more data, including that of trackable year-by-year progress. As Covid restrictions were lifted in 2022, we met with various other management teams to advise how they can improve their ESG practices and disclosures. One of the Fund's top-five holdings recently asked for our help in reviewing how they assess and communicate their sustainability achievements better to international investors. We also helped guide one top-ten holding on how to structure their ESG Board Committee.
VNH applauds alignment with the United Nation's 17 Sustainable Development Goals, and one area that continues to grab our attention is companies that provide active employee training programmes. These programmes benefit many stakeholders, not only staff but also their communities, and we have seen how they also have allowed a couple of the Fund's top-ten holdings to attract the talent they need to grow their business, sometimes beyond market expectations. In these volatile times, finding companies with sustainable business models matters even more.
For more information please contact:
Dynam Capital Limited
Craig Martin Tel: +84 28 3827 7590
info@dynamcapital.com |www.dynamcapital.com
www.vietnamholding.com
finnCap
Corporate Broker and Financial Advisor Tel: +44 20 7220 0500
William Marle