Vinacapital Vietnam Oppo... Share Discussion Threads

[mancman1] 19/4/2024 11:32

VNH incidentally trades at around NAV levels, VOF trades at a 20% discount, not that dissimilar to pretty well every private equity investment trust that I am aware of. RCP, which has around 40% private equity, trades near a 30% discount.

[mancman1] 19/4/2024 11:26

I have been looking back at the five year VOF chart and comparing it with the Vietnam Index and VNH.

All three registered big falls in Sept/Oct 2022 when I assume news of the fraud first appeared. VOF and the Index have recovered since then, although both are still well off their pre Sept 2022 peaks. VOF has I think been more stable than the index. VNH on the other hand has surged way past its previous levels. I am fairly relaxed about VOF as an investment, but it represents only 1.4% of my portfolio. I would be a bit more nervous of VNH I think.

[amt] 19/4/2024 10:11

Vof holding up well considering a 7% fall in the main index this week

[amt] 19/4/2024 10:08

I have looked through all the posts and news in general in Autumn of 2022 and there was no mention of the reasons behind the issues with this bank. Some mention of liquidity issues but not of much significance. The market fall of more like low 20% was matched by other World markets at that time so Vietnam didn't stand out particularly. What struck me was the general muted recovery since then when other markets were booming and everything seemed to be great for Vietnam. Maybe the few in the know were selling while the majority like me were unaware that the biggest fraud in history which needed a collosal bailout was happening in secracy. I suspect these issues that have now come to the fore so many more will be reconsidering their position. You might be right that longterm this will be good but I fear sentiment is against the market at the moment. If people here believe this story has been in the public domain for the last couple of years I am staggered and can't understand why they didn't mention it.

[shaker45] 19/4/2024 09:20

This fraud and bail out has been in the public domain long enough to be priced in. Corruption is endemic in this part of the world and shouldn't impact Vietnam's investment status. Remember Lehman, Madoff? Not only vietnam

[aleman] 19/4/2024 09:13

If you look at the market reaction now compared to the market reaction at the end of 2022, it suggests that most people in the markets were already aware of the problem and the reaction is just because the size of the bailout has been a bit bigger than expected. It does not seem to be doing that much damage since there is currently a huge foreign direct investmnet boom going on with all sorts of deals ongoing and new ones being signed off, as posted in previous links. I'm pretty sure due diligence for these deals will have included investigations into the repercussions from this very high profile fraud trial.

[amt] 19/4/2024 08:44

Well 24 billion of cash has gone from the central bank into the SCB bank. Whether they will get it all back is another matter. Wishful thinking that it won't cost the Government a penny I think. They might recover a large proprtion but the damage to Vietnam as a stable country to do business is unquantifiable but surely significant.
24b is equal to about 240b in UK terms so its collosal. Most of the fraud took place between 2018 and 2022 when anti corruption measures were already being taken.

[aleman] 19/4/2024 08:07

I'm not aware it has cost the govenment a penny. The government stepped in with GUARANTEES to try stop the bank run. The central bank provided emergency liquidity to cover withdrawals. As nobody has lost any money from SCB collapsing yet an the situation has reportedly stabilised, I'm not aware any of the government's guarantees have had to be drawn upon. The sale of fraudulent loans' collateral assets on the order of the court should return much of the money to the bank to repay much or all of the emergency central bank funding in due course.

That's my understanding unless anybody wants to enlighten me with anything else or different.

[amt] 18/4/2024 20:59

I do read the reports from the investment trust managers but they are always going to be positive about things. Its unimaginable that they would speculate about a possible financial crisis. They don't want a stampede out of their shares.
Let's suppose there us a 30% chance of a crisis, they are not going to talk about., they will go with the 70% chance there isn't.

[amt] 18/4/2024 20:53

As regards my comment about the Vietnam stock market performing poorly, well VOF is about the same price as 3 years ago and down a bit from 2 years ago.

[amt] 18/4/2024 20:50

Well the stats might state that Kenmitch about corruption being worse in India. However don't forget India is a democracy and so corruption is measurable. Vietnam is highly secretive so we don't really know what's going on. The article I posted earlier wrote that the corruption has got worse in Vietnam since the crackdown started. I doubt it but it's evident there is a lot going on that we never hear about. It's only since this massive fraud has been exposed that we are seeing articles about just how bad the situation is. This massive fraud, possibly the biggest fraud in History and the biggest ever in SE Asia has cost the Government enormous amounts of cash to stave off a banking crisis. All might turn out OK but as we have seen with previous finacial crises confidence can drain away quickly.

[kenmitch] 18/4/2024 20:16

amt

You admit that some of your investment decisions have been poor. Is it worth researching more? e.g it’s easy to check whether India is more corrupt than Vietnam? And is it better to base our Investment decisions on known facts, and in Countries like Vietnam by reading the updates from the Vietnam Investment Trusts, instead of on our own possibly inaccurate opinions? That should help in reducing our wrong investment decisions.

[kenmitch] 18/4/2024 20:00

Everything Aleman has posted here about corruption in Vietnam is accurate.

Here’s the full corruption list of every country in the World.



There are 103 Countries that are MORE corrupt than Vietnam, including India (it hasn’t stopped their stock market from doing well and being highly rated) whereas Vietnam market PE is cheap. India PE ratio is 25 compared with Vietnam 14. India’s PE ratio is even higher than US 23, and UK 12.

Note that Countries like Ukraine, Brazil, Thailand, Turkey and Indonesia are more corrupt than Vietnam.

And people are missing one of Aleman’s key points; Vietnam is being ruthless now in tackling corruption.It might help improve the corruption figure fast if death sentences are the risk if caught!

And another key point being misunderstood is that the banking corruption episode was in 2022. That’s why the Vietnam stock market fell 30% in Autumn 2022.And what a good top up opportunity that was!

The idea posted here that Vietnam market has done badly for 2 years is a bit odd too. I used the Autumn 2022 as a chance to top up Vietnam Holdings and Vietnam Opportunities. VNH is up from 230p then to 370p. Is that really lousy performance?

Very recent Vietnam market is poor, reflecting recent events and those falls might not be over yet. But as soon as the falls show signs of reversing is far more likely to be a buy opportunity than a chance to escape.

Finally don’t forget that at present Vietnam is classed as a “frontier” market but quite soon could be promoted to full Emerging Markets status. That could well bring in a lot more big investors and lead to further excellent gains for all 3 Vietnam Trusts. And so much so perhaps that the current discounts could well go to premiums. I strongly suggest that posters here read the excellent monthly updates and also the Results statements from the 3 Vietnam Trusts.

I’ve held both VOF and VNH for multiple years, except for selling temporarily in the covid market crash and both have been excellent performers, albeit with VNH way outperforming VOF.

[amt] 18/4/2024 18:33

Good luck but I haven't got the stomach for such a risk at the moment. Some of my recent investment decisions have been poor so possible I am misreading the situation

I kept a small investment so still have an interest

Not sure how bad or widespread corruption is India but at least reporting is not controlled by the state so we get a clearer picture there.

[aleman] 18/4/2024 18:24

It's a risk with foreign investing. Does one just not bother? I got caught with a small loss in the backwash from the Hiranandanis property scams in India about 15 years ago. Scams and frauds are like plane crashes. The safest time is just after a big one.

[amt] 18/4/2024 18:14

Aleman yes it will be a good thing in the longrun but according to the articles I am reading it's causing paralysis of the public sector where no one wants to work and difficulties in running businesses. When corruption has just become a way of life then it requires a big change in business culture. Are there more cases to come, who knows. It teaches me there is no transparency and so it makes me wonder how reliable the reports from companies are etc etc.
I have been very naive in my beliefs about Vietnam

[aleman] 18/4/2024 17:24

I'll bet there's much less fraud now so that Vietnam is a much better place to invest. Who'd defraud a finance or property company there now after the severe sentences handed out?

[amt] 18/4/2024 17:11

Yes Vietnam sounds like a fantastic place to invest and that's what I thought until I read about this massive fraud which has only just come to our attention. Plus some observers stating that corruption is on a massive scale in Vietnam and rooting it out is going to cause a lot of pain.
This probably explains why the stock market performance has been disappointing in the last couple of years despite all the indicators looking great for a boom. I will sit on the sidelines and see how things play out.

[31337 c0d3r] 18/4/2024 16:52

Aleman, with respect the post you have linked only mentions bank customers withdrawing deposits. It doesn't bring investor's attention to massive fraud.

[spangle93] 18/4/2024 15:30

Also, ref hpcg's post 2029, there are a couple of slides on Vietnam moving from Frontier to Emerging, and the effects

[spangle93] 18/4/2024 15:29

VOF addresses SCB in relation to the fund at 40:40 in yesterday's presentation



Worth watching the whole thing if you have 50 mins.

[aleman] 18/4/2024 14:47

It was 8 months before even I bought in. I presumed others knew. It was mentioned on this thread at the time (link below) and there were items about the court case in numerous secondary links in economic news I've been linking to in recent posts. I did not mention it because I thought it was old news. I'm shocked at the market reaction actually. I don't see what is new apart from the released bail-out numbers which might have been larger than some expected - but there could be implications I do not understand, possibly.

It's only getting publicity now the (highly reported, very high profile) fraud case has completed, with sentencing which includes selling the collateral assets - including significant properties around HCMC. Obviously the bail-out is ongoing but selling the collateral returns fraudulently lent money to SCB and reduces or completes the bail-out. I see it as the beginning of the end and another step forward so have been surprised by the reaction. It's said to be mostly foreign selling so I'm still thinking it might just be a blip. It does not even stand out on the share price chart.

[amt] 18/4/2024 14:42

Exactly no-one or the IT Directors have mentioned this before. So maybe some people knew about it but under a Dictatorship kept quiet.