The covid-19 pandemic is having a devastating impact on the global economy and, while they have recovered from their lows, financial markets remain depressed. Emerging markets have been at the sharp end of these moves but Vietnam, which was quick and tenacious in its response to the outbreak of the virus, is a bright spot in these otherwise difficult times.
Dynam Capital, the manager of Vietnam Holding (VNH), says that the authorities’ response to the virus is allowing Vietnam to exit from lockdown earlier than most countries and that it is well positioned to respond should a second wave occur. Most Vietnamese factories were able to stay open. Cross-border trade with China, its largest supplier, is recovering and should continue to grow. With very supportive long-term structural growth drivers, cheap valuations and a wider than average discount to net asset value (NAV), now may be a good entry point for investors who can look through the volatility and are prepared to be patient.
VNH aims to provide investors with long-term capital appreciation by investing in a portfolio of high-growth companies in Vietnam. These should come at an attractive valuation and demonstrate strong environmental, social and corporate governance awareness. It achieves this by investing primarily in publicly-quoted Vietnamese equities, but it can also invest in unlisted companies and can hold the securities of foreign companies if a majority of their assets and/or operations are based in Vietnam.