VietNam Holding Limited (LON:VNH) saw its net asset value (NAV) rise by 4% in September helped by increased exposure to the country’s banking sector, the fund’s manager Dynam Capital said.
In its monthly update, Dynam noted that the benchmark VNAS Index performed well in September, rising 4.4% for the month, driven mainly by banks, food & beverage (F&B) and industrial goods.
Most of the listed banks achieved above market-expectation earnings for the third quarter, Dynam said, and F&B companies (VNM, SAB) are also likely to release surprise earnings growth 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," Dynam added.
In the longer-term, less than 40% of Vietnam’s population today has a bank account, it noted.
Dynam said the fund has proposed a tender to purchase 15% of its shares at a 2% discount to NAV and also adjustments to its fee structure, including removal of the incentive fee and modifications to the management fee.