VietNam Holding Limited (VNH) has announced a monthly investor report and manager update for April. As of April 30, the company was up 4.4% YTD, a slight drag on the Vietnam All Shares Index which was up 5.2%. Shares were down 0.4% over the past month. In addition to its recent performance, management added the following commentary:
Manager Commentary – Moving ahead in an uncertain world
“April ended on a flat note overall for Vietnam. Although the country ran a trade surplus of US$ 6.4bn for the first four months of 2023 (4M-2023), global macroeconomic uncertainty meant its key manufacturing sector, particularly garments and electronics makers, were unable to maintain their usual high growth with some forced to cut some jobs due to dampening demand from abroad. The impact of the global slowdown is very broad-based with the biggest impacts seen in textiles, footwear, smartphones, wooden furniture, fishery products, as well as in iron and steel.
“On the positive front, the Vietnam Dong has become more stable, and FX reserves robust. Foreign direct investment (FDI) and public investment also continued to push ahead. For example, public investment for the 4M-2023 is estimated at US$5.6 bn – an increase of 18% year-on-year (YoY). Additionally, inflation risk is more under control compared to many other markets, and unlike the rest of the world, Vietnam’s central bank, the State Bank of Vietnam (SBV), has been cutting its interest rates.
“Another plus is that international tourism bounced back strongly in April, with Chinese arrivals making a significant rebound, up +62% month on month (MoM), after authorities in China lifted Covid-19 restrictions for group tours from the 15th of March. Retail sales remained upbeat, largely due to the tourism comeback and two recent public holidays in Vietnam. Nevertheless, we expect a downward trend of retail sales in coming months due to the many lingering global macro and geopolitical risks afflicting all countries.
“Recent policy developments in Vietnam still provided positive forecasts, for example, with the government’s VAT and interest rate reductions, further stimulus packages as well as its ongoing efforts to resolve real estate corruption finally bearing fruit. FX risk is much lower compared to last quarter and a weaker US dollar has allowed modest easing from the SBV. This not only helps restore confidence in the country’s real estate and corporate bond markets, but also reduces market risks for its banks.
“As expected, volatility in Vietnam’s equities market persisted into April, pricing in both good and bad news. Despite headwinds in the short-term, both externally and internally, the Fund, with a decline of 0.4% NAV for the month, continued to accumulate shares during the month, as companies accounted for their disappointing earnings growth for Q1 2023. Though domestic sentiment was still somewhat subdued, we also saw signs of foreign investors allocating more to Vietnam and this has been apparent by more flows into Vietnam ETFs and other investment products.
“Ongoing disruption is why conviction and selection criteria continue to be as important as ever, not least as policy changes around the world influence so much of how business leaders and their stakeholders up and down the value chains make decisions.
“In April, we welcomed more transparent regulations signed by Deputy Prime Minister Tran Luu Quang on the procedures, issuance, and management of Asia-Pacific Economic Cooperation (APEC) business travel cards, which are inevitably key to future business propositions in Vietnam. Seven APEC economies, namely the United States, China, Japan, South Korea, China and Hong Kong SAR, Malaysia, and Singapore, are among the top 10 largest export markets and major investors in Vietnam, so the benefits of encouraging international businesspeople to visit the country more easily will only attract further investment.”
VNH : VietNam Holding Limited update for April