Monthly Investor Report

RNS Number : 8543J

VietNam Holding Limited

17 June 2014

 



VietNam Holding Limited (the "Company")

Investor Report

A report detailing the activities of the Company for the month of May 2014 has been issued by VietNam Holding Asset Management Limited, the investment manager of the Company. Electronic copies of the report have been made available to shareholders on the Company's website at http://www.vietnamholding.com/latest-publications.aspx and a summary of the report is included below.

Investor Report Summary

Vietnam News

The biggest news emanating from Vietnam in May was the latest spat with China over competing territorial claims in the South China Sea (or 'East Sea', as it is known in Vietnam).  This time it was provoked by China sending a large oil rig into waters just 120 miles off the Vietnamese central coast, close to the Paracel Islands.  Since then, naval boats from both China and Vietnam have been busily sparring in that area of water, and at least one Vietnamese fishing boat was sunk after being allegedly rammed by a Chinese naval vessel.

But what was most striking was the widespread reaction in Vietnam itself to the oil rig provocation.  Demonstrations immediately occurred in a number of cities, and in some locations, mutated into mobs attacking and looting factories owned by ethnic Chinese, Hong Kong and Taiwanese investors in particular.  The violence prompted a significant number of the Chinese community in Vietnam to temporarily evacuate the country, with China chartering ships and aircraft to help get their nationals out.  Firms including Foxconn were forced to halt operations for several days.

The long-term damage done to Vietnam's reputation as a conducive environment for foreign direct investment is not yet clear. As the government and foreign investor community alike start to recover from the rioting, and businesses return to normality.

The government has also signalled that compensation to affected firms will be forthcoming.  In the meantime, Hanoi has signalled that it will submit a request to the international courts for a ruling on the disputed waters.  Both Moody's and S&P have issued statements confirming that they do not plan to revise Vietnam's ratings as a consequence of recent events.

Away from the demonstrations, the Vietnamese economy continued to show signs of improving health; the HSBC purchasing manager's index of 52.5 in May marked the 9th consecutive month with a PMI above 50. Both demand and output continued to increase, while Inflation was just 0.2% MoM in May, taking the YTD figure to a benign 1.08% and YoY figure to 4.72%.  The good rice harvest in the Mekong delta has helped keep staple food prices down.

VNH Insights

Despite the South China / East Sea tensions with China, the equity markets held relatively firm in May. Foreign institutional investors saw this as a buying opportunity in the latter half of May, having invested an additional USD 99m during the month.  As a result, the VNI ended May at 562.02, down merely 10 points compared with the end of April, but still well off its lowest point in mid-May at 513.  Indeed, the VNI remains up by 11.4% YTD, while the VN30 index of big cap stocks ended May at 618, up 9.96% YTD. So far this year, foreign investors have been net buyers of US$213m in Vietnamese stocks. 

Included in the tables on page 1 are our updated portfolio and segment valuations, compared to the Vietnam AllShare Index (VNAS) which was launched on January 27 of this year.

The VNAS covers the Ho Chi Minh City Stock Exchange (HoSE) universe. The two sub-indices for the VN30 and for small and mid caps allow us to provide a finer segmentation of our portfolio and to compare our valuations to realistic market figures.       

The following differences between the VNI and the VNAS motivated our switch for the valuation comparisons:

1. The VNI covers the entire HoSE market capitalization of US$46.8bn while the VNAS is a free-float index, with a market cap of US$12.6bn;

2. VNAS excludes a total of presently 64 companies which are suspended from trading for various reasons;

3. The VNAS includes only companies with a minimum free float of 5% of issued shares. This excludes GAS, which makes up 19.79% of the VNI;

4. The VNAS excludes companies if liquidity is <0.05%, however if the stock was included in the index during last term it is excluded if its liquidity is <0.04% (of average daily market cap over previous 6 months);

5. The VNAS caps any company at 10% of the total index, even though Vinamilk, for example, would account for 34.75% of the VNAS.

The VNI's 11.4% YTD performance compares to the VNAS' back-tested 8.8% as per end of May.

VietNam Holding Asset Management Limited
Gyentsen Zatul	Telephone: [phone]
- Investor Relations
Oriel Securities Limited (Nominated Adviser and Broker)
Stewart Wallace / Neil Winward	Telephone: [phone]

 

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