Monthly Investor Report

RNS Number : 1112H

VietNam Holding Limited

14 May 2014

 



VietNam Holding Limited (the "Company")

Investor Report

A report detailing the activities of the Company for the month of April 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

Vietnam's Purchasing Manager's Index (PMI) came in at 53.1, compared with 51.3 in March.  The trade figures for April were also pleasing, with exports of US$12.2bn (up 23% YoY) and imports of US$12.6bn.  The resulting US$400m trade deficit for the month reduced the first four months' trade balance surplus to US$600m.  US$30.4bn of the YTD exports came from the foreign invested sector, and US$7.7bn were derived from exports of mobile phones and parts alone.  Also the traditional export items of garments, footwear and seafood produced significantly increased exports so far this year.

The VND ended April broadly unchanged to the greenback.  Perhaps one of the few pluses to be derived from McDonald's belated arrival in Vietnam is that now the country can be included in The Economist's 'Big Mac Index'. The Big Macs currently retailing in Vietnam for the equivalent of US$2.84 (VND60,000) compared with US$4.62 in the US suggests that the VND is substantially undervalued.

The government's foreign exchange reserves have reached US$35bn in April.  That is the highest figure in recent memory, and will be due inpart to the US$11bn in inward remittances that Vietnam received last year.

Vietnam Airlines announced that it expects to get approval in June for its IPO, which will likely proceed in September if all goes well, with Citibank and Morgan Stanley advising the airline.  Apple announced that Vietnam is the fastest growing market for its products, with sales tripling in the previous six months.

VNH Insights

After a strong Q1 rally, Vietnam's VN-Index corrected by 2.5% in April 2014, bringing Year-to-date performance of the index to 14.5%.

The correction in April was triggered by

a) the partially-televised trial of former ACB Bank Vice-Chairman and founder who was arrested in August 2012 for conducting illegal business, extortion, asset appropriation, tax evasion and intentional breach of state regulations causing large losses to ACB Bank;

b) reminders by the SSC to the domestic brokerage firms about Margin Loan regulations, which resulted in some brokers tightening on margin lending practices;

c) rumors that the Foreign Ownership Limit (FOL) draft proposal is not likely to be approved anytime soon, because of the time required by Ministry of Investment and Planning (MPI) to develop a Take Over Code to deal with threats of take-over bids of Vietnam listed companies by foreign competitors.

As a result, some blue chips subject to Margin Lending and some illiquid stocks  suffered a sharp price decline in April due to retail domestic investor selling, as average daily trading value dropped by 38% in last week of April versus the average trading value in Q1 2014. Meanwhile, foreign investors remained calm and continued to be net buyers for VND 1,750 billion in April (after they net sold VND 2,100 billion in March 2014).

As of the writing of this report, Vietnam stock markets suffered several further setbacks, having caused the VN-Index to decline sharply by 10.9% since the end of April. Domestic investors were worried about news regarding confrontations between Vietnamese coast guard boats and Chinese boats that accompany a giant oil-drilling rig, which China is attempting to anchor near the disputed Paracel Islands off Vietnam's coast in the South China Sea (in Vietnam called the "East Sea").  We remain confident that after initially strong rhetoric and propaganda, both Vietnam and China will peacefully negotiate an acceptable solution regarding the disputed islands.

Foreign investor sentiments support our view so far, as they continued to use these market corrections as a buying opportunity to increase their Vietnam equity exposure.

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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