Vietnam Enterprise Investments (LSE:VEIL) Limited said it outperformed the Vietnam Stock Index even though the country was in lockdown for most of the summer.
Restrictions started a week into July and ended the day after the quarter finished.
READ: Vietnam Enterprise Investments confident resilient economy provides potential to flourish
The Vietnam Index hit record highs earlier in the quarter before declining sharply and recovering in the following months.
“The Fund used this as an opportunity to acquire stakes in companies we believed to be oversold, including attractively priced block trades discounted to their market price. One of the reasons VEIL is able to execute such deals is due to its size - as the largest investment fund in Vietnam, the fund is sometimes the only buyer capable of taking entire blocks from larger investors,” said portfolio manager Dien Huu Vu.
“Due to the lockdown, the economic statistics for the quarter were at their lowest ever recorded. However, a mass inoculation programme was strategically rolled out across parts of the country where GDP is the highest in order to get the economy back on track for the fourth quarter, and with Hanoi, Ho Chi Minh City and neighbouring industrial hubs now fully open again, we are optimistic for the outlook going forward.”
Huu Vu said that the worst of the pandemic is now behind Vietnam, and the local economy should bounce back strongly from pent-up demand and a potential stimulus package from the government in the fourth quarter this year and into 2022-2023.
For the first nine months of 2021, VEIL's net asset value (NAV) was up 38.1% versus 24.5% for the VNI index. Against the backdrop of the fourth wave of COVID in Vietnam, VEIL dropped 2.8% in the third quarter, outperforming the VNI's loss of 3.3%.
The fund focuses on the banking, property and steel sectors, as it believes they are best positioned to be the main beneficiary of the trends currently driving Vietnam's development. Secondary sectors for the fund are retail, technology and more recently brokers.
During the third quarter, it repositioned some company holdings but kept the same weighting for its primary and secondary sectors. This reshuffling was executed with a US$205mln "buy" pipeline for property and brokerage firms that was set up at the end of the second quarter and financed by divesting stocks which had surpassed their immediate fundamentals and their relative upside potential was perceived to be greater elsewhere.