(Alliance News) - VietNam Holding Ltd on Wednesday reported a sharp drop in net assets during its most recently ended financial year, underperforming the stock exchange in Vietnam.
At June 30, the investment company's NAV per share stood at USD2.719 compared to USD3.061 at the same point a year earlier, an 11% decline.
VietNam Holding's total net assets dropped 31% over the twelve month period to USD139.4 million from USD202.0 million. During the period, the company bought back and cancelled 9.7 million shares, explaining the discrepancy.
The company's benchmarks the VN70 Index and Vietnam All Share Index gained 2.3% and lost 5.6% in the year to June 30, both significantly outperforming VietNam Holding's NAV decline.
"The performance of the fund for the year was in two distinct parts. From July 1 until December 31, the NAV per share fell by 11%; from January 1 until June 30 the NAV per share fell by only 0.2%," said the company's investment manager, Dynam Capital.
The investment manager continued: "We have rebalanced the portfolio during the year and added a number of new positions. During the year there were some exits where certain realized returns on investments were adversely impacted by the low levels of liquidity available during the realisation process."
The company's portfolio now holds a "relatively concentrated" 22 companies, with a bias towards midcap domestic consumers and companies focused on urbanisation.
"These themes are actually linked, as industrialization and urbanisation support further robust growth in GDP and domestic consumption," Dynam explained.
Looking ahead, Dynam added: "In last year's annual report, we talked about the prospects for a stronger US dollar and the possibility of a lengthy trade war between the US and China. As anticipated, Vietnam has benefited from the trade war so far, with record levels of foreign direct investment, increased market share of exports to the US, and net inflows of foreign funds to its domestic capital markets.
"Although the outlook for the global economy remains mixed, the growth in the domestic Vietnam economy supports the fund's investment themes, and the portfolio has been rebalanced to benefit from this in the medium term."
Dynam noted, however, that many "top" Vietnam stocks are at their foreign ownership limits - meaning foreign investors, including VietNam Holding, would now need to pay a premium to invest in the stock. At the end of June, about 30% of VietNam Holding's portfolio was at the limit.
Shares in VietNam Holding were untraded in London on Wednesday but last closed at 190.00 pence each.
By Paul McGowan; paulmcgowan@alliancenews.com
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