(Alliance News) - VietNam Holding Ltd said Tuesday it expects domestic confidence in Vietnam to "rebound rapidly" following the coronavirus outbreak.
The investment fund dedicated to Vietnam equities said the country has been "successful" in containing the virus, as all 16 people initially having been reported as having the virus have now recovered.
"Vietnam took swift preventative steps to limit the spread of the virus, curtailing transport with those countries affected, putting people in quarantine and extending the school holidays. The authorities have also been active in informing the public on a daily basis about the virus, through social media and traditional media, and raising awareness of practical steps its citizens can take: such as washing hands and wearing masks if unwell," the fund said.
Globally, the virus has killed more than 3,100 people and infected over 90,000.
VietNam Holdings noted, however, there has been a sell-off in the equities markets since they re-opened after the Lunar New Year.
During February the MSCI EM index was down by 5.9%, and the Vietnam All Share index was down by 4.5%. The fund said its NAV has declined by about 3.5% in February.
In particular, VietNam Holdings said top-ten holding Saigon Cargo Services is most likely to suffer from the outbreak. International cargo accounts for about 90% of SCS revenue, and this could see declines of 20% to 30% during periods of transport disruptions, and dislocated supply chains.
"Although it is not clear how widespread the virus's impact will be for Vietnam, or how long disruptions will persist, when normality eventually returns, there is likely to be a rapid rebound in domestic confidence, which would likely be reflected favourably in the domestic equity markets," VietNam Holding said.
The fund added: "After SARS, in 2003, China and other economies in Asia experienced a 'V' shape recovery, and this might be the same if and when Covid-19 is eventually brought under control. Vietnam ended 2019 on a high-note, with record levels of foreign currency reserves, and this can help buffer some of the short-term impacts."
Shares in VietNam Holding closed down 0.7% in London on Tuesday at 154.00 pence each.
By Paul McGowan; paulmcgowan@alliancenews.com
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