Monthly Investor Report

RNS Number : 9545M

VietNam Holding Limited

17 January 2023

 

VietNam Holding Limited ("VNH" or the "Company")

Monthly Investor Report

A report detailing the activities of the Company for the month of December 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 - So long 2022 and hello Year of the Cat

December winded down the extraordinary highs and lows of one of the biggest rollercoaster years in a generation for equity investors around the globe. Putting that into context in Vietnam makes it a distinctive month to draw on, indeed with the pandemic seeming like a lifetime ago. As the world's poly-crisis environment and domestic nuances, including the government's corruption crackdown, rattled equities month-to-month all year, from a macro perspective it is worth noting that December saw an 8% GDP growth boom in Vietnam, a decade high. Most recent estimates from the Asian Development Bank expect this to cap out at 7.5% for 2022 as a whole.

FDI flows into Vietnam also ended the year on a record high - US$27bn for 2022 overall - with 224 new projects kicking off in December alone bringing the total for the year to 2,036, according to Vietnam's Ministry of Planning and Investment. Vietnam's manufacturing and processing sector maintained the lead in attracting the most FDI in December, further verifying the country's role as a key alternative to China. Korea, Singapore and Hong Kong topped FDI sources for the month of December, while China and the US remained Vietnam's top trading partners in terms of two-way turnover - US$175.6bn and US$123.9bn respectively for the year.

In fact, Vietnam's trade surplus for 2022 - US$11.2bn - was the second highest ever, and just when you thought that was huge enough for this curveball of a year there was also the massive announcement in early December of a US$15.5bn Just Energy Transition Partnership (JETP) deal between Vietnam and members of the G7, Denmark and Norway. It's the world's third JETP after South Africa's and Indonesia's, and emphasises the additional 15 trade agreements that Vietnam currently has in place and how they also have been helping to shape the country into the global manufacturing hub it is today. 

December was a story worth telling for equities too. Despite ongoing concerns about how the rising US dollar and fast-changing global economy might affect Vietnam going forward, the domestic stock market managed to recover as selling pressure waned and liquidity gradually increased. Full year net buying ended up making the US$1bn mark, a first since 2019. While we expect local indices to consolidate in this current environment of monetary tightening and wait-and-see sentiment, it is times like these when rare opportunities for the long-term arise, particularly given the attractive valuation levels of Vietnamese stocks and consensus view that corporate earnings growth is more than 10%. VNH was up +4.7 in December and outperformed VNAS for the calendar year with its NAV falling 30.1% versus the VNAS' decline of 39.8%. Strong double-digit growth in the retail sector in 2022 stood out, and we expect that to continue in the lead up to Tet.

Although inflation was a risk for all countries in 2022, it remained low compared to the rest of the world ending the year at 3.15%. This is widely expected to rise to somewhere between 4.5 and 5.0% in 2023, again considering the lingering implications of the global risk landscape. PMIs for December also implied a slowdown, with the current consensus growth target for Vietnam in 2023 standing at around 6.5%.

As China's zero-Covid policy helped pave the way for more foreign manufacturers moving into the country in 2022, we believe the overall impact of its recent U-turn re-opening is only likely to benefit Vietnam, indeed all of Southeast Asia, particularly when it comes to tourism, which has suffered since the start of the pandemic. With Chinese consumers' revenge-spending being amplified on a 1.2bn scale this could be just the boost this sector needs.

Rising infections in the China region might dampen their travel plans during the upcoming Lunar New Year, but Vietnam's Year of the Cat is considered a 'good' year associated with longevity and fortune and domestic travel is expected to be busy. The Cat is the fourth animal in the Vietnamese zodiac and the only one of the 12 signs that is different to the Chinese, which is instead the Rabbit. The Cat in Vietnamese culture is a symbol of tactful consideration and thinking ahead, which is why we see many across the country feeling hopeful during this festive time. 

For more information please contact:

Dynam Capital Limited  

Craig Martin  Tel: [phone]

[e-mail] | www.dynamcapital.com

www.vietnamholding.com

finnCap

Corporate Broker and Financial Advisor     Tel: [phone] 

William Marle

 

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