£ just took a small dive versus Dong. Only -0.8% but done in seconds. About -0.6% on the day. The Dong looks a reasonable investment over the years from a Sterling point of view. It traditionally has higher interest rates but has not depreciated so you'd have made more in Dong deposits.
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 Foreign selling has picked up a bit in recent days and bond yields are up about 0.2% in the last month, probably influenced by western bond market problems. Rising bond yields should be expected with the continuing strong econonomic forecasts, even if inflation shows little signs of being a problem. There is even still chatter that there could be another rate cut in 2025. Surely the market has to rerate if strong growth keeps coming through? Market forecasts I've read have suggested the best perfoming areas will be banking, property and construction, largely because of low (and falling?) rates and government intitiatives to boost these sectors. VOF is overweight in this area. Also, a new stock exchange trading system is expected to go live this year, which could enhance liquidity and see some Hanoi (midcap) and unlisted stocks move up to the main VNI. Again, this is likely to be a relative benefit to VOF. But when do all these positives start shining through? The market P/E ratio is low, but continuing to drift a little lower if anything. What is the catalyst for an expected rerating to start?
Experts from Vietcombank Securities (VCBS) project that under the baseline scenario, the VN-Index could reach 1,555 points in 2025. In a more optimistic scenario, it may hit 1,663 points. Global monetary easing trends and domestic fiscal easing capacity are expected to provide favorable conditions for growth.
Meanwhile, analysts at MB Securities (MBS) point out that stable macroeconomic fundamental, ongoing institutional reforms, and favorable monetary policies will be positive for corporate earnings. Market profits are forecast to grow by 18% in 2025 and 19% in 2026, with significant contributions from the banking, construction materials, residential real estate, retail, and industrial property sectors.
Lower interest rates, reduced input costs, and moderate wage increases are expected to significantly improve gross profit margins across various industries. Furthermore, Vietnam is moving closer to being included in the group of emerging stock markets.
However, MBS experts also caution about potential risks, such as exchange rate pressures amid a weaker VND and a slower-than-expected recovery in the residential real estate market, which could weigh on banks' collateral assets. Balancing these opportunities and challenges, MBS forecasts the VN-Index to range between 1,400 and 1,420 points in 2025. |
and the market is falling despite all the good news. Why? |
Discount has jumped to 25.0% and could be now over that after £ fell again v Dong. |
Let's see. Vietnamese shares closed up and Dong rose over 1% v £ so VOF shares fall 3%. Yes, that makes loads of sense .... |
Vietnam’s GDP expanded by 7.55% year-on-year in Q4 2024, accelerating from a revised 7.43% growth in Q3 while marking the steepest rise since Q3 2022, according to flash data. The latest figure represented the 13th consecutive quarter of yearly increase, bringing the full-year figure to 7.09%, higher than the National Assembly’s target of 6 to 6.5% and the 2023 level of 5.05%. In Q4, final consumption, which accounts for about 60% of overall growth, rose solidly by 7.54%, with fixed investment increasing firmly by 7.98%. On the trade front, exports jumped by 11.35%, underscoring robust overseas demand toward the end of the year. By sector, services activity quickened (8.21% vs 7.51% in Q3), as did agricultural output (2.99% vs 2.58%). Meanwhile, industrial output (8.35% vs 8.98%) and construction (8.35% vs 9.11%) experienced slower growth. Vietnam has set an official 2025 GDP growth target of 6.5% to 7.0%, with Hanoi preparing for an annual growth rate beyond 10% in 2026-2030. source: General Statistics Office of Vietnam |
NAV 616p. Discount still 22% at 481p. Still outperforming the other two:
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VOF NAV has been rising in the last few weeks with the main index going sideways. Midcaps are mostly sideways as well. However, the unlisted market is edging up a bit. Foreigners seem to have stopped selling in the last couple of months but foreign buying has not been significant as yet. I doubt foreigners would buy much of the unlisted stuff, from which VOF seem to be benefitting a little. The good run should make the next newsletter a bit more interesting. |
The 26% discount last month was very tempting. I topped up as this one has to catch up with the performance of the other Vietnam funds at some point. I just came back from South East Asia and it's looking very interesting in terms of modernisation. Of course, we can never know how much of that is on shaky loans but things are happening. |
VOF outperforming VEIL and, especially, VNH in December as the discount shrinks - now 23.0% at 468p.
free stock charts from uk.advfn.com |
VNI closed down slightly today. It's looking like the final dividend will rise, then. I suspect they'll go cautiously. 7.5C maybe? |
I’ve held VOF and VNH for most of this century. VNH is up 27% this year, and 60% since the start of 2023. VOF has disappointed with a flat 2 years, but that’s partly because of the wide discount to NAV. If/when that discount narrows there could be the double plus of a rising share price being given an extra boost via that narrowing discount. So if only wanting to hold one Vietnam Trust, there’s a strong case for VOF now. |
Good article Andy. At last an article that helps to explain what's going on.
So perhaps things may turn next year, in the meantime anyone investing in the last couple of years has missed out on booming markets elsewhere. However that boom can't go on forever so maybe some rotation is likely which could see Vietnam as a relatively good opportunity now. |
https://tuoitrenews.vn/news/business/20241222/vietnam-stock-market-underperforms-in-nearly-2-decades/83496.html?fbclid=IwZXh0bgNhZW0CMTEAAR0ONwgdYjNRGtPeQX-3Fqvm2o1egH3qKskAJh6DxXMZiukc7qbJqnys0aY_aem_xgIHv8DfCFfgzcF_jvh1owHope lies ahead...maybe |
All the more reason for those in VNH to switch to VOF?
Emerging market status is expected sometime on 2025 but I'm seeing more and more articles suggesting that it will probably be in March. I've posted this one because it is an interesting article in its own right.
In Asia, Vietnam is forecast to grow by 6.1% in 2025, driven by its integration into global supply chains and strategic trade agreements. Renewed trade tariffs could pose both upside and downside risks to Vietnam as a manufacturing hub, but the expected FTSE upgrade of its USD 200 billion stock market to emerging market status, most likely in Q1 2025, should increase liquidity and investor interest. |
Hope I'm wrong but I don't think 2 weeks is a significant enough period. Also keeping in mind VNH keeps issuing more equity. |
Is it just noise or is VOF finally starting to outperfrom VNH and VEIL after about 13 months of significant underperformance against VNH and 4 months against VEIL.
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Trade continues to accelerate. 15% more trade YTD generates 14% more trade taxes for government. Strong growth projected.
For 2025, the National Assembly has set a state budget revenue target of VND411 trillion, based on projected GDP growth of 6.5–7% and crude oil prices of $75-80 per barrel. |
NAV has been doing well lately, despite Western market struggles and the Vietnam market going sideways this week. Good to see it back above £6 at 604p. Despite the shares lifting off recent lows, the discount remains a hefty 26.7% at 443p and the projected dividend yield 2.7%. |
Prime Minister targets 8% GDP growth for 2025 and 10% growth for 2026-2030.
November car sales +58%, taking YTD up to +17%. |
There was net foreign selling again last week as the market consolidated the previous week's rises. It does feel like the market would make new 30-month highs if foreigners would stop selling every time the VNI approached 1300. There looks to be a lot of pent up pressure if this level can be broken.
There was a securities fraud in the media last week that might have encouraged a bit of foreign selling. I have been aware of it for a while but had no idea it was so big. The fraudster ran 44 offices with 1900 employees. |
National car sales in Vietnam are about 300k per year so building a plant that might make 600k electric vehicles (300k from next summer) is a very big deal.
VNI closed modestly up again on Monday so the discount here is likely to be at another new multi-year high. |
Found elsewhere - yesterday's closing NAV is 594p so discount is 26.9% @ 439p. And VNI closed up 0.2% today.
Prospective dividend yield off these numbers is 2.7%. |
No NAV reported yet today? VEIL's NAV rose 2.7% and VNH's rose 2.4% on th eback of Thursday's VNI 2.2% rise. The midcap HNI index also rose 2.2% and appeared to break through resistance in a chart that I can't post but is vaguely similar to the VEIL one posted yesterday.
VNH now trades at a 2.9% PREMIUM to Friday's closing NAV. (420.0p v 408.1p) :-o |
New high for VNH, trading at par with NAV, and VEIL breaking out, on 20% discount to NAV. Meanwhile, VOF discount to NAV could now possibly be as high as 28%?
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