Last checked at 
14 Oct 2020 07:10
VietNam Holding Limited ("VNH" or the "Company")
Monthly Investor Report
A report detailing the activities of the Company for the month September 2020 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.
Banking on a sustainable recovery
Vietnam saw a strong boost in sentiment and economic activity in September with an improved PMI of 52.2 and a GDP growth of 2.6% for Q3. Although the full year expected growth of 2.5% is below its multi-decade average of 7%, its macro-economic picture looks uniquely positive despite the global pandemic. It is now likely that 2020 will end with a record level of foreign reserves in Vietnam, possibly over US$100bn. This is the culmination of a record trade surplus - US$17bn for the year to September - as well as a nine-month high in foreign direct investment as Vietnam continues to emerge strongly as an attractive location for manufacturing and natural diversification to China. The UK's Foreign Minister, Dominic Raab, recently visited Hanoi to discuss trade matters. As the current Chair of ASEAN, Vietnam is likely to support the UK's ambition to become part of the successor to the Trans-Pacific Partnership (even though the UK faces the Atlantic) and to replicate the EU's free trade agreement with Vietnam sealed earlier this year.
The VNAS Index performed well in September, rising 4.4% for the month, and driven mainly by banks, food & beverage (F&B) and industrial goods. Most of the listed banks achieved above market-expectation earnings for Q3, and F&B companies (VNM, SAB) are also likely to release surprise earnings growth for Q3 considering the notable domestic retail sales increases. The Fund's NAV rose by 4.0% led partly by our increased allocation to the banking sector: we have more than doubled our allocation this year to 20% (the index weighting is more than 25%). As listed banks tend to be large, a consequence of this higher allocation is that our median portfolio market capitalization has risen to cUS$833m. This has also resulted in a higher liquidity profile for the underlying portfolio.
In our view, the banking sector stands out in Vietnam unlike in many developed countries right now. Banks are regulated more than other industries and as a result must adopt best practice standards, which pushes them to maintain healthier balance sheets and operational resilience. Moreover, we believe 2021 could see strong returns from banks on the back of economic recovery, with GDP growth of 7-8% forecast. In the longer-term, as Vietnam's e-commerce market continues to grow and middle-income consumers continue to multiply, technological advancements will ultimately lead to greater financial inclusion and wider use of investment and credit products. The growth potential in Vietnam is huge since despite rapid growth over the past 20 years, less than 40% of the population today has a bank account. As the country further industrializes and urbanizes, there will be escalating demand for modern yet affordable housing, mortgage and savings products, and e-payments. The momentum was marked at the end of the month with Timo Plus, Vietnam's first digital bank, re-launching its services at the end of September, and the government's ongoing focus on policies to expand its online payments and fintech sector, namely by offering start-ups preferential loans from the Vietnam Development Bank.
The Fund has issued its 2020 annual report and announced the date for the AGM (30 October). The Fund has recently made two important announcements, firstly a proposed tender to purchase 15 per cent of its shares at a 2% discount to NAV, and secondly, adjustments to its fee structure, including a removal of the incentive fee and modifications to the management fee. Details are available on www.vietnamholding.com
Dynam is hosting a webinar on Friday 30th October at 10:00 AM (UK) and all are welcome to register to attend.
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
Nominated Adviser and Corporate Broker Tel: +44 20 7220 0500
William Marle / Giles Rolls