June 8, 2022: -Vietnam’s stock index has decreased by over 10% this year, and one portfolio manager says it is the right “good time to consider investing in Vietnam.”
On Monday, the V.N. index has to decrease close to 14% for the year, a sharp reversal following two years of blockbuster gains for the benchmark index in the before phase of the pandemic.
Those losses are mainly in line with its global peers as investors mostly reposition for safety against a backdrop of increasing interest rates and fears of a possible global recession.
Dragon Capital, a Vietnam-focused investment company with $7 billion in assets under management, says valuations in the country are currently cheap and have forecast earnings for each share growth of more than 20% in 2022.
On Monday, Vietnam’s banking and retail sectors are looking attractive, said Thao Ngo, portfolio manager at the firm.
Banking stocks have an enormous potential for evolution in the mass market segment as more than half of Vietnam’s population is currently “underserved” in banking. She explained that retail stocks are set to see a strong recovery in earnings from post-pandemic pent-up demand.
“We have been focused on the three key themesthemes: urbanization, middle-class formation, and strong domestic consumption.”
The portfolio manager drafted multiple reasons why Vietnam stocks are a good bet.
The Southeast Asian economy has been among the economies with the highest GDP increase in current years, and Dragon Capital sees that momentum is continuing. In 2020, the Vietnamese economy topped even China and did not see a single quarter of economic contraction despite the global pandemic.
Political stability and macro policy, along with the rapid growth of Vietnam’s middle class, create a “strong platform” for the country to see GDP growth of 6% to 7%, said Ngo.
“This year, the government targets the GDP will improve by 7%, and in the first quarter, we already achieved 5%,” she added. “We’re on track to achieve that.”
While inflation is a big concern globally in countries like the U.S. and U.K., Vietnam seems to have it “under control” for now, Ngo said.
Vietnam’s consumer price index increased 2.6% in the first four months, and Dragon Capital sees the full-year figure coming in around 4% to 5%.
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