Aerial View of Ho Chi Minh City, Vietnam ©Muk Photo via Canva.com
On October 17, 2023, Quynh Le Yen, the fund manager at Dragon Capital, provided positive updates on Vietnam's economic developments and what this means for the DC Vietnam Equity Fund. Here are the key points:
Vietnam's GDP improved in Q3 2023 and is expected to reach 5% by the end of 2023 and 6% in 2024.
The Vietnamese government continues to support the economy by investing in infrastructure, reducing VAT from 10% to 8%, and cutting interest rates.
U.S. President Joe Biden's visit is expected to open new opportunities for Vietnam.
The DC Vietnam Equity Fund USD has had a strong performance this year, closing the third quarter of 2023 with a return of +13.75%.
Vietnamese stocks are currently at a historically very attractive valuation, with company earnings increasing.
The FPT Corporation, a leading holding in the DC Vietnam Equity Fund, is exploring opportunities in the semiconductor industry.
Vietnam's Economy Shows Growth
Vietnam's economy grew in Q3 2023 and is expected to reach 5% by the end of 2023. This growth is attributed to the government's ongoing investment in infrastructure, including new expressways, airport projects, and energy initiatives. Additionally, the Vietnamese government has extended a 2% reduction in VAT until the end of 2023, reducing it from 10% to 8%. The State Bank of Vietnam has also continued to cut interest rates, which are now at 4.50%.
These developments indicate positive medium- to long-term prospects for Vietnam's macroeconomic environment. This, in turn, could lead to a continued recovery in both the stock market and the DC Vietnam Equity Fund.
Deepening Ties with the United States of America
In September 2023, U.S. President Joe Biden visited and cemented a new strategic partnership with Vietnam. Vietnam's Communist Party leadership officially elevated the country's relationship to the highest level, known as a "comprehensive strategic partnership," on par with its ties to Russia and China. This development sets the stage for increased economic cooperation between the two nations.
The U.S. secured significant deals in the semiconductor and minerals sectors, further enhancing the trade partnership between the two nations. Vietnamese Prime Minister Pham Minh Chinh urged Nvidia CEO Jensen Huang to set up a production base in Vietnam and utilize it as a central production hub in Southeast Asia. Huang responded favorably to this proposal.
Chinh also met with other prominent figures in the American tech sector, including Microsoft founder Bill Gates, senior executives from Meta, and Elon Musk's SpaceX.
According to Yuji Nitta of Nikkei Asia, Vietnam may be in a new foreign investment boom. Biden's visit may trigger a surge in American investment in Vietnam, as this diplomatic move may be interpreted as a green light to invest more in Vietnam. This has the potential to contribute to sustained long-term growth in Vietnam.
How does the DC Vietnam Equity Fund take advantage of these positive developments?
The DC Vietnam Equity Fund USD had a strong performance this year, closing the third quarter of 2023 with a return of +13.75%, outperforming its benchmark's return of +9.69%. The fund is in a favorable position to capitalize on the growing U.S.-Vietnam partnership. Its stock portfolio comprises top Vietnamese companies with attractive valuations expected to increase their earnings in the years to come.
For example, the fund's largest holding, FPT Corporation, Vietnam's largest technology company, is eyeing expansion in AI (Artificial Intelligence), semiconductors, and technical training. During Biden's visit, it announced a strategic partnership with the American startup Landing AI. It is also involved in talks with U.S. giant Nvidia to use AI for cloud storage, healthcare, and other applications. Currently, it has secured orders for approximately 70 million chips through 2025.
This company holds significant potential for future growth, so it continues to be the top holding in the DC Vietnam Equity Fund and a major contributor to the fund's exceptional performance this year.
At Astra, we still hold the view that Vietnam's long-term investment narrative remains the same and is predicted to be the 'next China' in terms of economic growth in the next 10-20 years.
Overall, we are highly satisfied with the DC Vietnam Equity Fund's performance and the state of Vietnam's economy. Thanks to the positive developments discussed earlier, our clients who have invested in this fund have experienced recovery and growth this year. You can also access this fund and other investment opportunities by getting in touch with Astra.
With Vietnam's economy on the rise and a deepening partnership with the United States, now is the perfect time to explore investment opportunities in the DC Vietnam Equity Fund. Don't miss out on the potential for growth and earnings recovery. Contact Astra to start your journey toward a brighter financial future!