Vietnam Enterprise Investments Ltd reports 1.7% monthly increase in

Vietnam Enterprise Investments Ltd (LSE:VEIL) reported a 1.7% increase in net asset value for last month as the south-east Asian country’s post-lockdown recovery continued and the stock market saw record highs.

The FTSE 250-listed investment trust saw seven of its top ten holdings rise, with the share price moves for six of the top ten were in a narrow band of 1% change either way for the month, though Saigon Securities Corporation was up 38.2% for the month.

Overall, the NAV performance compared to 2.5% for the reference index, the Vietnam Index, in US dollar terms, while VEIL’s NAV is up 49.6% so far in 2021, compared with 37.4% for the index.

Dien Huu Vu, portfolio manager of the trust, said: “The market saw an encouraging performance in November, with record-highs reached as vaccinations accelerated and a further economic recovery was evident.

“Daily liquidity across Vietnam’s three stock exchanges averaged US$1.8bn for the month and bullishness even continued into December despite a global decline in markets.

“Rumours of Omicron variant spreading to Vietnam did take the market lower, but the mood so far seems to be one of uncertainly rather than panic.”

In the real economy, data showed trade returned to a surplus and industrial production continued to improve, but the service sector still struggling and retail sales up 6.2% on the month but still down on last year.

The manager expects that in the coming months, as forced inventory accumulation drops out of the numbers, export growth is likely to accelerate while import growth falls.

Vietnam’s daily COVID-19 cases bottomed at around 3,000 in September, but with the country coming out of lockdown they are currently averaging 13,500 with a death rate currently at 0.8% versus 2.4% at the height.

Most cases are mild, stay-at-home ones, with the manager not seeing any evidence these are overwhelming hospital systems. 

Nearly 130mln vaccine doses have been administered; with 55% of adults fully vaccinated and 75% having received one dose.

“Other than the new Omicron variant, the main macro worry for investors appears to be the currency, although we currently believe the risk seems low,” Dien said.

“External-account surpluses are returning, currency reserves are around US $108bn, equivalent to nearly four months of imports.”

With the Vietnam dong having appreciated 0.4% so far this year, the manager expects central bank tapering is “unlikely to reverse this”, given the country’s low foreign debt, positive real rates and negligible foreign investment in bonds.

With inflation still around 2% year on year, low inflation is similar to the rest of the region and the manager adds: “With respect to Vietnam, we see numerous reasons for this: lack of fiscal and monetary excesses, falling food…