Monthly Investor Report

VietNam Holding Limited

17 August 2023

 

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

Monthly Investor Report

A report detailing the activities of the Company for the month of July 2023 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 - The heat is on 

Vietnam's stock market made an impressive comeback in July, with the VN Index reaching its highest level in more than eight months and surpassing major stock markets in the world, such as the US, Korea, India, and China. The momentum stems from a much-improved domestic macroeconomic environment that has been spurred by fiscal and monetary policies, including the State Bank of Vietnam's monetary easing since the beginning of 2023. This included a fourth consecutive round of interest rate cuts in July, which, amidst a stable FX rate, saw month-on-month (MoM) exports increase for the first time this year and a record trade surplus reach US$15bn.

Vietnam's commitment to sustainable economic development has also helped foreign direct investment (FDI) expand to an all-time high with US$12bn dispersed in the first seven months of 2023 (7M2023). 70% of this was in the manufacturing sector, which despite still contracting, is back on an upward trend, up 4.2% MoM and 3.6% year-on-year (YoY). To put that into greater context, the Manufacturing Purchasing Manager Index (PMI) was 48.7 in July, the highest level in five months, and we expect the recent rise in production and exports to continue in 2H2023, for example, with Samsung's new series of mobile phones scheduled to be released in August.

Additionally, Vietnam's tourism industry has continued to rebound. International tourist arrivals in the country rocketed to 6.6m for 7M 2023 YoY, growing to nearly 70% of pre-Covid levels, with tourism-related sales increasing by 53.6% YoY. Vietnam's new e-visa extension from 30 to 90 days is projected to enhance the country's resurgent tourist sector in 2H2023. The recent 2% VAT drop and increase in the statutory base rate for officials' and public employees' wages, both of which went into effect in July, should also support purchasing power.

As July was the hottest month on record, the rising average world temperature is only adding on more pressure to the already tense global economy, for example, through reduced labour productivity, damaged crops, higher mortality rates, and massive trade disruption. Nonetheless, Vietnam's efforts in driving its strategies and relevant policies have demonstrated the country's fervent willingness to address climate change issues on its own, including its recently approved National Energy Master Plan.

Public investment will continue to be a key driver of growth in Vietnam's economy in all these areas, with public disbursements increasing 18% YoY to US$5.7bn in July, according to the Ministry of Finance. Although the fiscal year target of US$28bn remains unmet, we expect the government to increase public investment expenditures through the end of the year to keep all its economic development plans on track and to mitigate the negative impact of slowing global demand for exports and production. We expect industrial real-estate stocks, such as IDICO (+6%) to benefit from accelerated infrastructure development and FDI.

Because of the growing optimism among both domestic and foreign investors in Vietnam, market liquidity increased dramatically - by 30% from Q1 - to US$1bn at the end of July. The market is still trading at more attractive levels than its Asian counterparts. The increase in stock market activity helped boost the Fund's position in SSI Securities, a broker, by +14.3%. The Fund's overall +8.4% gain in July was also helped by its overweight positions in FPT (+15.2%) and Gemadept (+12.5%). We underperformed the VNAS index in July, which was up 9.6%, in part on excitement in stocks related to Vincom, whose founder's stake in VinFast was being readied for its debut on Wall Street (via a SPAC on 15th August, temporarily reaching a market value of $85 billion - almost twice that of General Motors or Ford).

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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