From Morningstar: 2024-05-01 02:17:00

Ngo Thanh Thao, Co-Portfolio Manager of Vietnam Enterprise Investment Trust, explains the 0.9% underperformance in 2023 due to a tough year for global economy, Fed rates, and weakening domestic demand. Thao believes the retail sector, especially Mobile World, will rebound in 2024, driven by low interest rates and government economic growth plans.

Thao backs Mobile World due to electronic and grocery business recovery, expecting profit to jump and stabilize in 2024 and 2025, with a recent $1.5 billion grocery business valuation pre-IPO. Thao anticipates strong growth in Mobile World and value unlocked for shareholders.

Banking dominates the trust at 38.72%, reflecting belief in economic recovery benefits. Thao highlights VPBank as a top holding due to expected improved credit growth, net interest margin, asset quality, and impressive forecasted earnings and return on equity. Thao predicts a potential re-rate for bank valuation in 2024.

Vietnam benefits from US-China trade tensions, attracting strong FDI and shifting supply chains to Vietnam as part of the ‘China Plus One’ strategy. Vietnam progresses from low to high-tech manufacturing, aided by investments from major companies. Vietnam positioned to play key role in global value chains alongside regional countries.

Agriculture, contributing 11-12% to GDP, faces climate change challenges like drought, rising sea levels, and extreme weather impacting productivity. Government implements policies to mitigate climate change effects, showing progress in rice productivity increase in key deltas. Climate change remains a concern for agricultural sustainability.

Real estate, the second largest sector in the trust at 19.71%, remains crucial to Vietnam’s economy despite recent slowdowns. Vinhomes, a key holding, provides exposure to the sector, offering growth potential despite recent challenges like the debt crisis. Thao sees real estate as a significant sector in the Vietnam economy.



Read more at Morningstar: Vietnam’s Opportunities and Challenges | Morningstar