There has been a lot of good news from Vietnam lately. The growth of industrial production has accelerated and in the last three months, expansion of over 10% has been recorded every month – in July +11.2%. This year, Vietnam’s exports have increased by +15.7%. The pace has accelerated as the year progresses, and export growth was almost +20% in July. Between January and July, the trade balance accumulated a significant surplus of USD 14.1 billion. Government tax revenues have also grown rapidly, +14.6%, and public finance generated a surplus of USD 9.2 billion.
High inflation extension in the USA kept interest rate expectations high from the beginning of the year until the end of July, which led to a weakening of the Vietnamese dong by about 4%. There has been a clear shift in market views in August, and we believe that the Vietnamese dong will strengthen during the second half of the year.
The stock market trades at a modest P/E 12 level for 2024 forward earnings. The State Securities Commission of Vietnam has recently announced new regulations that allow pre-funding to be waived in stock trading. If the change is implemented, the index house FTSE could have the opportunity to move forward with its decision on Vietnam’s market status from the Frontier market to the Emerging market. This, together with the waiver of pre-funding for stock transactions, would make Vietnam a more attractive market for foreign investors.
PYN Elite’s NAV has gained +16.3% since the beginning of the year. Vietnam’s index has risen +13.8% at the same time. The index is now at 1,285 points. The index has been hovering between 1,200 and 1,300 points for some time. When the level of 1,300 points is breached, the already published Economic data supports the scenario that the index could end up notably higher towards the end of the year. Modest interest rates outlook and the strong earnings growth should lead the market to perform as the valuation is just P/E 10 with 2025 earning forecasts.
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The attached publication is marketing material and should not be regarded as a recommendation to subscribe or redeem units of the PYN Elite Fund. Before subscribing please familiarize yourself with the Key Information Document, the Prospectus and the Rules of the Fund. The material presented in this text is based on PYN Fund Management’s view of markets and investment opportunities. PYN Elite Fund (non-UCITS) invests its assets in a highly allocated manner in frontier markets and in a small number of companies. This investment approach involves a larger risk of volatility compared to ordinary broadly diversified equity investments. The value of an investment may decline substantially in unfavorable market conditions or due to an individual unsuccessful investment. It is entirely possible that the estimates of economic development or a company’s business performance presented in this presentation will not be realized as presented and they involve material uncertainties.