Frontier and emerging markets (Vietnam)

Dylan Waller

Nomadic Equity

Thematic (Sector/Industry)

With an inevitable increased FDI inflow approaching Vietnam, the securities industry is a necessary part of any portfolio that invests in Vietnam.  Shortly after Vietnam announced the removal of its foreign ownership limitation in some industries this September, Mark Mobius pledged to invest <a href="http://www.dealstreetasia.com/stories/franklin-templetons-mark-mobius-commits-3b-investment-in-vietnam-16668/" target="_blank">$3 billion in Vietnam</a>.  This is a quite a feat, as Vietnam's stock market is only a tenth the size of Thailand's stock market, and the largest closed end fund in Vietnam only has $743 million AUM.  Vietnam's…

With an inevitable increased FDI inflow approaching Vietnam, the securities industry is a necessary part of any portfolio that invests in Vietnam.  Shortly after Vietnam announced the removal of its foreign ownership limitation in some industries this September, Mark Mobius pledged to invest $3 billion in Vietnam.  This is a quite a feat, as Vietnam's stock market is only a tenth the size of Thailand's stock market, and the largest closed end fund in Vietnam only has $743 million AUM.  Vietnam's…

Vietnam's economy has a flurry of advantages to offer to investors, which perhaps makes it one of the most ideal locations for investment in Asia:<ul><li>Vietnam's stock market trades at a 30-40% discount to its peers in Asia.  Funds that utilize value investing have been very successful in Vietnam.</li><li>Annual GDP growth was most recently 7%, ahead of the 2015 economic plan, which planned for 6.2% YoY growth.  <a href="http://www.smartkarma.com/insights/vietnam-going-once-going-twice" target="_blank" data-smartkarma-citation="insights:146">Vietnam: going once, going twice...</a> </li><li>Retail sales growth has averaged at 21.8% between 2002 and 2015, and YoY retail sales growth in October was <a href="http://www.tradingeconomics.com/vietnam/retail-sales-yoy" target="_blank">13%</a>.</li><li>Inflation fell to 0% in <a href="http://www.tradingeconomics.com/vietnam/inflation-cpi" target="_blank">October of 2015</a>.</li><li>Growth in Vietnam is being catalyzed by its high export growth, and its relative advantage as a site for low cost manufacturing.  Due to Vietnam’s comparatively lower wages, exports in Vietnam have <a href="http://www.tradingeconomics.com/vietnam/exports" target="_blank">doubled in the past five years</a>.</li><li> Vietnam also took a very important step in September this year by removing the foreign ownership limitation in certain industries, a step that will promote a larger flow of FDI into the country as this new law is implemented by companies.  Foreigners have been willing to pay a premium of 20% to invest in companies like Vinamilk, that are fully held by foreign investors.</li><li> Franklin Templeton has recently announced its plan to invest $3 billion into Vietnam, a large accomplishment for a country’s stock market that is substantially smaller than its peers in Asia.</li><li> China’s devaluation of its currency in August created a flurry of currency devaluations throughout Asia, yet the Vietnamese dong has held its ground relatively well, with a<a href="http://www.bloomberg.com/quote/USDVND:CUR" target="_blank"> YTD depreciation of 5.14%.</a></li><li>Demographics are favorable, as over 50% of the population is under 30 years old.</li></ul>Locally managed investment funds offer stronger advantages for individual investors, as well as institutional investors utilizing a fund of fund approach.  Vietnam Holding Ltd. and VinaCapital Vietnam Opportunity Fund, both listed on the London Stock Exchange, are two funds for individual and institutional investors to strongly consider.

Vietnam's economy has a flurry of advantages to offer to investors, which perhaps makes it one of the most ideal locations for investment in Asia:Vietnam's stock market trades at a 30-40% discount to its peers in Asia.  Funds that utilize value investing have been very successful in Vietnam.Annual GDP growth was most recently 7%, ahead of the 2015 economic plan, which planned for 6.2% YoY growth.  Vietnam: going once, going twice... Retail sales growth has averaged at 21.8% between 2002 and 2015, and YoY retail sales growth in October was 13%.Inflation fell to 0% in October of 2015.Growth in Vietnam is being catalyzed by its high export growth, and its relative advantage as a site for low cost manufacturing.  Due to Vietnam’s comparatively lower wages, exports in Vietnam have doubled in the past five years. Vietnam also took a very important step in September this year by removing the foreign ownership limitation in certain industries, a step that will promote a larger flow of FDI into the country as this new law is implemented by companies.  Foreigners have been willing to pay a premium of 20% to invest in companies like Vinamilk, that are fully held by foreign investors. Franklin Templeton has recently announced its plan to invest $3 billion into Vietnam, a large accomplishment for a country’s stock market that is substantially smaller than its peers in Asia. China’s devaluation of its currency in August created a flurry of currency devaluations throughout Asia, yet the Vietnamese dong has held its ground relatively well, with a YTD depreciation of 5.14%.Demographics are favorable, as over 50% of the population is under 30 years old.Locally managed investment funds offer stronger advantages for individual investors, as well as institutional investors utilizing a fund of fund approach.  Vietnam Holding Ltd. and VinaCapital Vietnam Opportunity Fund, both listed on the London Stock Exchange, are two funds for individual and institutional investors to strongly consider.

Vietnam Fund of Fund Approach: VinaCapital Vietnam Opportunity Fund and Vietnam Holding Ltd.

Research and consultancy, Tabbush Report

Daniel Tabbush

Research and consultancy

Tabbush Report

We provide research and consultancy on Asian banks. Our focus is on what we call “Asian bank research, without the noise.” We are interested in the most critical swing-factors for banks, the NPL and credit cycle, and where we believe there is a gap between perception and reality. We often focus on the less studied components of bank financial statements.  Our research is highly thematic, sometimes examining unlisted banks and companies as a window on mainstream banks. 

Being independent allows us to look at smaller banks, often overlooked by others. Analysis of BIS bank guidelines in the context of Asia, is also a focal point, while we also analyze global banks operating in the region. We use what we believe is the most comprehensive, reliable financials database, SNL Financial. S&P Capital IQ augments our database, with corporate data and CEIC, with economics. 

Asian bank research, without the noise.

<ul><li>A likely Russian credit and currency crisis, the weakening Euro and ineptitude of BoJ &nbsp;combine to create a world of worry in markets and bank stocks in particular. The way this usually plays out is first with liquidity.&nbsp; </li><li>Banks pull credit lines from weaker banks (and weaker companies).&nbsp; </li><li>If a bank has a loan to deposit ratio (LDR) above 100%, it is often difficult to repay the redeemed credit line, as it means disposing of an asset, a loan – immediately. &nbsp; </li></ul>

A likely Russian credit and currency crisis, the weakening Euro and ineptitude of BoJ &nbsp;combine to create a world of worry in markets and bank stocks in particular. The way this usually plays out is first with liquidity.&nbsp; Banks pull credit lines from weaker banks (and weaker companies).&nbsp; If a bank has a loan to deposit ratio (LDR) above 100%, it is often difficult to repay the redeemed credit line, as it means disposing of an asset, a loan – immediately. &nbsp; 

Vietnam

Asia Commercial Bank attracts deposits and offers commercial banking services.

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Asia Commercial Bank/Vietnam (ACB VN)

Vietnam's Securities Industry

With an inevitable increased FDI inflow approaching Vietnam, the securities industry is a necessary part of any portfolio that invests in Vietnam....

Nomadic Equity

Vietnam Fund of Fund Approach: VinaCapital Vietnam Opportunity Fund and Vietnam Holding Ltd.

Vietnam's economy has a flurry of advantages to offer to investors, which perhaps makes it one of the most ideal locations for investment in...

Nomadic Equity

Be Wary of High LDR Banks at Present

A likely Russian credit and currency crisis, the weakening Euro and ineptitude of BoJ combine to create a world of worry in markets and bank...

Daniel Tabbush

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