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Craig Martin of Vietnam Holding discusses the fund's outperformance in 2021 and is bullish for 2022

10:12, 14th January 2022

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Craig Martin, Chairman of Dynam Capital, Investment Manager of Vietnam Holding #VNH FOLLOW discusses the fund's outperformance in 2021, where its NAV increased by 65% and is confident there’s more to come in 2022.

Navigating a new year        

In Vietnam, 2021 will be remembered for the harsh effects of Covid-19 variants, but in many ways the country is ringing in 2022 on new and more confident grounds. The country continued to make progress on its vaccination rollout during the month of December, with at the least 70% of the population now fully jabbed. Although the road to recovery in H2 2021 remained segmented, renewed growth in several areas of the economy strengthened as the year wound down. Its stock market has been one of the best performing in the world, up more than 30 percent YoY by the end of December, despite a constantly challenging economic backdrop thanks to Delta and its end-of-year mix with the highly contagious Omicron. By the start of 2022, retail sales had bounced back, export growth hit at an all-time high and global corporations continued to shift production from China to Vietnam. In addition, on January 1st 2022, the government lifted international flight bans and resumed travel to and from Cambodia, Singapore, Taiwan, Japan and the US to those who are fully vaccinated.

The Fund, which was up +63.9% for 2021 versus the benchmark VNAS index's rise of +53.0%, also ended the calendar year on record notes. For one, it maintained a strong peer outperformance of +14% during H2 2021 when there was growing market divergence. The performance of portfolio companies diverted during Q3 and Q4 of 2021 as Delta caused major disruptions, mid and small-cap companies performed better, domestic retail investors became increasingly more dominant and the capital outflow in large-cap stocks rose. We tactically reduced some large caps - mainly in banking stocks and steel-maker Hoa Phat Group - to allocate into selective smaller-cap names particularly in the more thriving brokerage and real estate sectors. We anticipate the wider property market in Vietnam to continue to perform well in 2022 as government-supported investment in infrastructure is accelerated. We also added to our positions in leading brokerages, which we feel are rightly positioned for opportunities that should crop up as the country's capital markets gradually ripen and expand.

In terms of our broader economic outlook, we expect another divergent year in Vietnam's stock market with one of the most important themes being on how companies address changing stakeholders' needs. As a responsible investor, good corporate governance has always been at the heart of our investment process, and our research continues to focus on how changes in consumerism, urbanisation and industrialisation shape Vietnam's future. Our keen interest in how the behaviour of Vietnam's large millennial population influences business decisions and corporate culture is a prime example. In fact, we have been largely engaged with how investee company retailers are preparing for Tet and the year-ahead and omni-channel retailer Mobile World, one of the top three performers in our portfolio, has been applauded for its recent campaign highlighting the value of family in today's pandemic-stricken world.

Furthermore, as the Regional Comprehensive Economic Partnership agreement became in effect as of the start of 2022, Vietnam's government and business leaders will become even more exposed to the global corporate stage with trading partners, suppliers, and customers from abroad watching how they deal with the pandemic and rapid transformations. Vietnam could benefit greatly from this historic free trade agreement as many of the latest 2022 forecasts of 6.5 percent GDP growth attest.

There's no doubt that the high growth that Vietnam experienced prior to Covid-19 has been stymied by the ongoing pandemic, and it is inevitable that supply chain and other structural risks will remain an integral part of the script in 2022, but the velocity of change, in terms of policy and rising environmental and social urgencies, is the reality that countries and companies all over the world face, large and small. When Vietnam eventually moves up from a frontier to an emerging market status, there could be a sea change in corporate and social responsibility not seen in its growth story ever before.

Vietnam Holding Ltd

Vietnam Holding (VNH) invests in high-growth companies in Vietnam, focusing on domestic consumption, industrialisation and urbanisation. Launched in 2006, VNH is a closed-end fund listed on the London Stock Exchange.


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