Wednesday, August 17, 2016

Vietnam Opportunity Fund July Update

VOF site:

Vietnam’s stock market maintained its momentum in July, with the VN Index increasing 3.2% and bringing the year-to-date gain to 13.6%. The VN Index closed the month at 652, its highest level in eight years. For the month, our fund NAV increased 1.6% on a like-for-like basis, and the capital market component, which includes listed equities and OTC, increased 3.4%, slightly ahead of the VN Index.


Vietnam’s economy continued to hum along nicely in July, for the most part. The Index of Industrial Production rose by 7.2% y-o-y in July, with manufacturing – which accounts for 70% of industrial activity – increasing by 9.7%. The Nikkei Purchasing Managers’ Index stood at 51.9, a slight decrease from June’s 52.6 although still in expansion mode. Meanwhile, retail sales during the first seven months of the year grew 9.4% in nominal terms or 7.4% in real terms.

The country posted a USD100 million trade surplus in July, bringing the year-todate surplus to USD1.8 billion. Foreign direct investment continued unabated, with commitments surging 47% to USD12.8 billion and disbursements up 15% to USD8.6 billion.

Amazingly the fund still trades at a 23% discount to net asset value. Many investors are loathe to get out of their comfort zone and even look at foreign companies. However, if I have the choice between buying an overvalued stagnant market like the US or a growing market like Vietnam at an almost 25% discount, well the chocie is easy. I continue to like Vietnam and the VOF.

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