Last checked at 
14 Nov 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 October 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 - Turning the tides
With all the extraordinary events and multiple crises this year, the messages coming out of the United Nations Climate Change Conference, COP 27, in Egypt couldn't be more stark, not least when it comes to building sustainable futures for developing markets, such as Vietnam.
From the start, discussions in Sharm El-Sheikh moved well beyond the pledges made by government and business leaders around the world at last year's COP in Glasgow - when Vietnam's Prime Minister Pham Minh Chinh announced the country's commitment to phase out coal power generation by the 2040s and achieve net-zero carbon emissions by 2050 - to how these goals can be achieved given the accelerating global risks of today. From disastrous droughts and extreme floods to the war in Ukraine and cost of living crisis, there is immense pressure on public policy makers worldwide to set out clearer plans on how they will facilitate this critical transition to net zero. The game changer will be how governments, investors and business leaders come to together to turn ambitions into action.
For Vietnam, the transition presents explicit risks but also enormous opportunities. While the country's economy continues to grow at high levels - back on its 30-year trend of 6.5% to 7% GDP growth, as many others in the West contract - it faces both physical threats from the potential damage caused by flooding as well as transitional risks given a high proportion of its GDP comes from high-carbon sectors and its capital stock from fossil fuel-based power. On the positive, Vietnam's policy goals are in line with many of its ASEAN peers not only through its National Strategy on Climate Change, but also critically via multiple agencies within the Vietnamese government that have outlined what a recent McKinsey report described as 'concrete' CO2 reduction policies. These include the Ministry of Industry and Trade's Power Development Plan 8 (PDP8), which aims to switch 75% of generation capacity to renewables by 2045. The prime minister continues to encourage electric vehicles (EV), EV charging infrastructure and electric public transit, and so far public stakeholders have taken action accordingly.
Opportunities exist across sectors for public and private partnerships, e.g., funding the energy transition would represent a US$ 1.5bn revenue opportunity for Vietnamese banks that issue transition finance products. The challenges lie in how to allocate the necessary funds and keep pace with the rapidly rising risks. In this respect, we also recognise our stewardship role and having been a signatory to the United Nations Principles for Responsible Investing for over 12 years will continue excelling our task of 'Doing More, Measuring More and Reporting More'. Our portfolio's carbon footprint is 60% lower than the VNAS index and that shows how our active management style in sector allocation and selection of well-managed, companies matters more than ever in these times of increased uncertainty.
October proved just how fierce and fast-moving the global stock markets' reactions to all these risks have become, and Vietnamese equities were no exception. Despite its manufacturing sector expanding and retail sales recovering further, the country's stock market fell sharply due to irrational selling as interest rates and FX risks heightened, with Real Estate and Financials being particularly hard-hit.
The Fund outperformed the VNAS but its NAV was down -12.8% for the month, with most positions falling because of the worsening market sentiment. MWG lost 22.5% despite fundamentals remaining on the right track. The Fund, which has kept a high level of cash throughout the downturn, had also selectively increased its positions given the attractive valuations for the long-term. Most listed companies in Vietnam reported Q3 earnings growth, which was very much in line with our expectations, but the banking sector was especially attractive with an earnings growth average greater than 30%. This is on top of a stable NIM and conservative reserves for bad debts. If there is one thing to come out of Cop 27, it is that agile planning and decision making - as was demonstrated by the Vietnamese government and indeed its citizens throughout the pandemic - is going to be the key ingredient to success. This goes for businesses, households, governments and investment managers alike.
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