REG - VietNam Holding Ltd - Monthly Investor Report

VietNam HoldingAnnouncement

14/11/2022 07:16

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RNS Number : 2674G  VietNam Holding Limited  14 November 2022

VietNam Holding Limited ("VNH" or the "Company")

Monthly Investor Report

A report detailing the activities of the Company for the month of October 2022
has been issued by Dynam Capital Limited, the investment manager of the
Company. Electronic copies of the report have been made available to
shareholders on the Company's website
(https://www.vietnamholding.com/media/hgcolkdc/vnh-investor-report-october.pdf)
 and a summary of the report is included below.

Manager Commentary - Turning the tides

With all the extraordinary events and multiple crises this year, the messages
coming out of the United Nations Climate Change Conference, COP 27, in Egypt
couldn't be more stark, not least when it comes to building sustainable
futures for developing markets, such as Vietnam.

From the start, discussions in Sharm El-Sheikh moved well beyond the pledges
made by government and business leaders around the world at last year's COP in
Glasgow - when Vietnam's Prime Minister Pham Minh Chinh announced the
country's commitment to phase out coal power generation by the 2040s and
achieve net-zero carbon emissions by 2050 - to how these goals can be achieved
given the accelerating global risks of today. From disastrous droughts and
extreme floods to the war in Ukraine and cost of living crisis, there is
immense pressure on public policy makers worldwide to set out clearer plans on
how they will facilitate this critical transition to net zero. The game
changer will be how governments, investors and business leaders come to
together to turn ambitions into action.

For Vietnam, the transition presents explicit risks but also enormous
opportunities. While the country's economy continues to grow at high levels -
back on its 30-year trend of 6.5% to 7% GDP growth, as many others in the West
contract - it faces both physical threats from the potential damage caused by
flooding as well as transitional risks given a high proportion of its GDP
comes from high-carbon sectors and its capital stock from fossil fuel-based
power. On the positive, Vietnam's policy goals are in line with many of its
ASEAN peers not only through its National Strategy on Climate Change, but also
critically via multiple agencies within the Vietnamese government that have
outlined what a recent McKinsey report described as 'concrete' CO2 reduction
policies. These include the Ministry of Industry and Trade's Power Development
Plan 8 (PDP8), which aims to switch 75% of generation capacity to renewables
by 2045. The prime minister continues to encourage electric vehicles (EV), EV
charging infrastructure and electric public transit, and so far public
stakeholders have taken action accordingly.

Opportunities exist across sectors for public and private partnerships, e.g.,
funding the energy transition would represent a US$ 1.5bn revenue opportunity
for Vietnamese banks that issue transition finance products. The challenges
lie in how to allocate the necessary funds and keep pace with the rapidly
rising risks. In this respect, we also recognise our stewardship role and
having been a signatory to the United Nations Principles for Responsible
Investing for over 12 years will continue excelling our task of 'Doing More,
Measuring More and Reporting More'. Our portfolio's carbon footprint is 60%
lower than the VNAS index and that shows how our active management style in
sector allocation and selection of well-managed, companies matters more than
ever in these times of increased uncertainty.

October proved just how fierce and fast-moving the global stock markets'
reactions to all these risks have become, and Vietnamese equities were no
exception. Despite its manufacturing sector expanding and retail sales
recovering further, the country's stock market fell sharply due to irrational
selling as interest rates and FX risks heightened, with Real Estate and
Financials being particularly hard-hit.

The Fund outperformed the VNAS but its NAV was down -12.8% for the month, with
most positions falling because of the worsening market sentiment. MWG lost
22.5% despite fundamentals remaining on the right track. The Fund, which has
kept a high level of cash throughout the downturn, had also selectively
increased its positions given the attractive valuations for the long-term.
Most listed companies in Vietnam reported Q3 earnings growth, which was very
much in line with our expectations, but the banking sector was especially
attractive with an earnings growth average greater than 30%. This is on top of
a stable NIM and conservative reserves for bad debts. If there is one thing to
come out of Cop 27, it is that agile planning and decision making - as was
demonstrated by the Vietnamese government and indeed its citizens throughout
the pandemic - is going to be the key ingredient to success. This goes for
businesses, households, governments and investment managers alike.

 

For more information please contact:

Dynam Capital Limited

Craig
Martin
Tel: +84 28 3827 7590

 

info@dynamcapital.com (mailto:info@dynamcapital.com) |www.dynamcapital.com
(http://www.dynamcapital.com)

 

www.vietnamholding.com (http://www.vietnamholding.com/)

finnCap

Corporate Broker and Financial Advisor
                                 Tel: +44 20
7220 0500

William Marle

 

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