Vietnam Enterprise Investments Ltd (LSE:VEIL) chairman Stanley Chou said Vietnam's first half economic growth of 5.6% despite two new waves of Coronavirus (COVID-19) shows its resilience and provides a platform for future expansion.
Underpinned by the rejuvenation of the Vietnamese economy since the successful containment of the initial COVID-19 outbreak in early 2020, the local stock market was among the top performing indices in the world in the first half of 2021 and hit an all-time high in June, with record daily traded volumes during the month.
In the first half of 2021, the VEIL investment trust posted a net asset value (NAV) gain of 42% to 11.79p per share, outperforming its benchmark by over 13% or 19% on a three-year rolling basis.
The trust owns total assets of US$2.5bn, including US$16.5mln cash. A pre-tax profit of US$753mln was reported.
Chou said the investment trust’s outperformance was led by its overweight positions in the three key sectors – banking, real estate and steel – which are widely seen as the main beneficiaries of the country’s new era of lower interest rates and infrastructure spending.
Investment manager Dragon Capital said the strong performance of the trust can also be attributed to the portfolio restructuring carried out last year 2020, with a repositioning to tap into sectors that are expected to benefit from the post-COVID-19 economy.
With Vietnam currently going through a fourth wave of COVID-19, Dragon acknowledged that, as for many other economies, there is some uncertainty around the second half of 2021 and beyond.
With the government having secured a supply of 120mln vaccine doses, with around 40-50% of the population expected to have been offered a vaccine by the end of the year, up to 70% in the first half of 2022, forecasts for GDP have been revised down from 6.0% previously to 5.0%.
“Macroeconomic indicators may undergo some downward adjustment to reflect this wave, though VEIL remains confident in the resilience of the domestic economy," Dragon said in the outlook statement.
“Whilst VEIL continues to monitor both the containment efforts as well as the roll out in the Government's vaccination programme, VEIL believes that, if and when, this wave is brought under control, the central themes to the macro picture should be largely unchanged. In this regard, VEIL's portfolio is still well positioned to benefit from the re-reopening of the economy.
“The current conditions are undoubtedly challenging for businesses, but VEIL believes the Vietnamese economy will bring opportunities for those who can trade through, with the potential to flourish after the pandemic is brought under control.
“VEIL's investment management team remains very active in continuing the search for the next market leader and long-term winner within the current market as well as upcoming opportunities from the IPO market.”