VietNam Holding Limited ("VNH" or the "Company")
Monthly Investor Report
A report detailing the activities of the Company for the month of December 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.
Shiny Happy People
As we step into 2021, it is hard to believe how the world has changed since this time last year. No one could have imagined the velocity and vastness of the pandemic, or the spectrum of varied economic stories and sentiment not only across the globe but also the region. Vietnam ended 2020 on relatively high notes, in this respect, with its manufacturing PMI rebounding to 51.7 in December and a record trade surplus reaching close to $20bn.
Vietnam is poised to be one of the few economies in the world to register positive growth for 2020 having achieved a YoY growth of +2.9%. Asia's recovery appears to be faster than after the global financial crisis of 2008-2009, and Vietnam stands out given the relatively quick resumption of domestic activity.
Domestic confidence is especially robust compared with other countries. In an end of year survey conducted by Indochina Research between October 31st and November 12th, 98% of Vietnamese people compliment the government's handling of the pandemic, 63% of them feel happy with their lives, 89% feel healthy, and 67% are optimistic about 2021. Such optimism has been reflected in the increased activity of retail investors in Vietnam's equity markets: daily liquidity (and the margin lending that accompanies it) has reached record levels. Although this has been putting some strain on the stock exchange infrastructure, a system upgrade expected this year will benefit all investors.
December proved to be another strong month for the Fund, with NAV up +8.2%, taking the gains over the last six months to +38 percent. 23 out of 25 stocks in the VNH portfolio performed positively in December, led by VP Bank (+21.5%), Gemadept (+17.4%) and Hoa Phat Group (+16.9%). Laggards included Vinh Hoan (-6.2%), which is a leading exporter of aquaculture products but faces a rising risk of higher tariffs in the US market due to the USTR's investigation into alleged currency manipulation by Vietnam. Viettel Post was also down 1.1%, despite increasing 32% during the year. Its delivery services have been on the right track all year, particularly given the booming e-commerce sector, but fears of increasing competition from foreign players took the shine off the stock during the month.
Retail sales recovered significantly by +9.4% YoY in December 2020 and the outlook for the manufacturing sector remains solid. This is not so surprising considering that FDI disbursement in 2020 was down by only 2% YoY, and we expect an even smoother flow of FDI into Vietnam this year. Public investment disbursement reached $20.2bn in 2020, a YoY increase of +34%.
Whilst consumer confidence has recovered significantly since May, it is still not where it was this time last year. Nevertheless, Parliament has been focusing on incentives to further spur local consumption, for example, given the impact that international travel restrictions have had on Vietnam's large tourism sector over the past year. Although restrictions on international air travel are expected to carry on for some time from countries where the new variant is present, as the Vietnamese continue their cautious stance on the risk of imported cases of Covid-19, domestic travel has been growing since May. Airports and restaurants in famous beach get-away spots, such as Phu Quoc, have been particularly busy and bustling of late, albeit with social distancing rules in place.
Vietnam remains a bright spot of optimism as clouds persist across many other countries. If it can isolate itself from further outbreaks of Covid-variants and work steadily to derive a vaccination plan for its c100m people, then 2021 could be the year in which Vietnam steps up and steps out into the sunshine. Whilst short-term risks remain, the strength of forecast corporate earnings growth supports the market optimism.
For more information please contact:
Dynam Capital Limited
Craig Martin Tel: +84 28 3827 7590
Corporate Broker and Financial Advisor Tel: +44 20 7220 0500
William Marle / Giles Rolls