Good time to invest in Vietnam now, says Dragon Capital


This photo from October 2021 shows motorcyclists waiting at a Covid-19 border checkpoint between Ho Chi Minh City and Long An province, Ho Chi Minh City, Vietnam. The country’s benchmark VN index has fallen about 14% year-to-date to Monday’s close.

Maïka Elan | Bloomberg | Getty Images

Vietnam’s stock index has fallen more than 10% this year, and a portfolio manager said it was “a good time to consider investing in Vietnam”.

As of Monday’s close, the VN index fell nearly 14% for the year – a sharp reversal after two years of dramatic gains for the benchmark in the earlier phase of the pandemic.

Those losses, however, are broadly in line with those of its global peers as investors largely reposition for safety amid rising interest rates and fears of a possible global recession.

Dragon Capital, a Vietnam-focused investment firm with $7 billion in assets under management, says valuations in the country are now cheap and forecast earnings per share growth of more than 20% in 2022.

Vietnam’s banking and retail sectors look attractive, the company’s portfolio manager Thao Ngo said Monday.

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Banking stocks have great growth potential in the mass market segment as more than half of Vietnam’s population is currently “underserved” in the banking sector, while retail stocks are expected to see a strong recovery in earnings thanks to post-pandemic pent-up demand, she explained.

“Our investment strategy is to provide long-term growth to investors,” Ngo said on CNBC’s “Squawk Box Asia.”

“We focused on the three key themes[s] at the moment: first, there is urbanization, the formation of the middle class and also the strong domestic consumption.”

Bullish on Vietnam

The portfolio manager explained several reasons why Vietnam stocks are a good bet.

The Southeast Asian economy has been among the fastest growing economies in GDP in recent years, and Dragon Capital sees this momentum continuing. In 2020, Vietnam’s economy even surpassed China and did not experience a single quarter of economic contraction despite the global pandemic.

Political stability and macroeconomic policy, along with factors such as the rapid growth of Vietnam’s middle class, create a “solid platform” for the country to experience GDP growth of 6% to 7%, Ngo said. .

“This year the government is also targeting a 7% GDP increase and in the first quarter we have already reached 5%,” she added. “We are on the right track to achieve this.”

While inflation is a big concern globally in countries like the United States and the United Kingdom, Vietnam appears to have it “under control” for now, Ngo said.

Vietnam’s consumer price index rose 2.6% in the first four months of the year, and Dragon Capital sees the full year figure to be around 4% to 5%.

“We believe that our government will make great efforts to maintain … a stable CPI,” she said.


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