Vietnam Enterprise Investments (LSE:VEIL) Ltd outperformed its benchmark index last month, with the Vietnam Index having shown little reaction to events in Ukraine.
As of 28 February, VEIL's net asset value (NAV) was up 1.0% to US$12.35 per share from the end of January in dollar terms, compared to a 0.1% rise for the Vietnam Index, which advanced after the lunar new year holiday before losing some ground amid global market turmoil before recovering quickly around record highs.
With the £1.5bn investment trust’s share price having dipped 0.3% in the month, its discount to NAV at month-end was 19.5% from 18.5% four weeks earlier.
VEIL bought back just over 1mln shares during the month, to be held in treasury, with 0.8% of shares outstanding having been repurchased since the start of the year.
Dien Huu Vu, portfolio manager of VEIL, noted that, unlike many markets globally, the Vietnam Index has been robust since Russia’s invasion of Ukraine, while consumer price inflation has also been minimal, at 1.4%.
“From an economic perspective, whilst initial assessment from the investment manager suggests that the conflict has not had a material direct impact on Vietnam's economy, we believe there will be knock-on effects with markets globally having been affected and ongoing inflationary pressure.”
Money flows on the stock market were supportive, the manager said, with new retail investor account openings reaching their third-highest monthly number ever, at 211k, bringing new openings for the first two months of 2022 to 401k, more than all of 2020.
Foreign net selling stabilised to US$16.4m following around US$130m of outflows in both January and December, with average daily turnover decreased by 16% on local exchanges, but for the first two months of the year, average daily turnover up 60% year-on-year.
On inflation, the manager lifted inflation forecasts for 2022 from 3.5% to 4.2% to reflect higher oil prices.
“While oil itself is just 3.6% of the CPI basket, increased fuel costs could quickly spill over into other components of the basket, and non-fuel commodity prices are also vulnerable," Dien Huu Vu said.
“Meanwhile, the Investment Manager has reduced its trade-surplus projection from US$13bn to US$10bn to make room for higher import prices (led by oil), and perhaps a decline in export volumes created by both demand and supply-chain factors. Currency risk seems limited given external account surpluses, rising US dollar reserves, low foreign debt and ongoing FDI disbursement.”
By the end of the month, nearly 77% of the country’s 97mln population had received at least two Covid vaccines and roughly 40% also having a booster economy.
Vietnam also increased exports 15.5% year-on-year to US$23.4bn, while imports jumped 21.9% to US$25.4bn, with the US$2bn deficit in the month attributed to manufacturers increasing purchasing activity at the fastest pace in ten months in order to secure materials for production, according to IHS Markit's PMI survey.
In other news, Samsung committed US$920m to expand its smartphone factory.