Ngo Thanh Thao, deputy portfolio manager of Vietnam Enterprise Investments Limited at Dragon Capital, discusses with WealthBriefing the outlook for the Vietnamese economy and investment opportunities in the region. 

The Vietnamese economy rebounded by 8 per cent in 2022 – the fastest in a decade – to reach $409 billion, with expectations that it will grow by a further 6 to 6.5 per cent this year, Ngo Thanh Thao, deputy portfolio manager of VEIL at Dragon Capital, said last week.

Talking exclusively to WealthBriefingAsia, Ngo Thanh Thao said: “Tourism and public investment have the potential to be among Vietnam's strongest growth drivers in 2023.” 

Chinese arrivals accounted for 32 per cent of the 18.5 million overseas tourists in 2019, and the country's reopening is expected to provide a boost for the sector, which saw just 3.7 million visitors in 2022.

Furthermore, the government's budget for public investment is nearly $30 billion and will go towards key infrastructure projects including airports and motorways, she continued. These factors, combined with increased manufacturing from newly-relocated FDI companies, should help contribute to Vietnam achieving its 2023 GDP growth target of 6 to 6.5 per cent.

Vietnam's macro environment was also steady in 2022, with inflation under control averaging 3.2 per cent for the year, she said. “The country also did not suffer from the energy crisis, like the Western world,” she added. 

VEIL
Dragon Capital, an asset manager with $5 billion of assets under management focused on Vietnam and other Southeast Asian emerging markets, has funds targeting both institutional and retail investors. Ngo Thanh Thao is the deputy portfolio manager of Vietnam Enterprise Investments Limited, a closed-end fund investing primarily in listed equity in Vietnam, and a FTSE 250 constituent.  

Although VEIL's NAV decreased by 10.7 per cent in the fourth quarter of 2022 over the previous quarter against a fall of 9.8 per cent for its reference index, the Vietnam Index, Ngo Thanh Thao stated that they are long-term investors. VEIL's NAV per share performance in US dollar terms is +16.1 per cent over three years and +11.2 per cent over five years. Over the same time periods, the performance of the Vietnam Index was +7.6 per cent and +7.0 per cent, respectively.

The firm believes that the worst is behind them and that a repeat of the events that plagued market sentiment in 2022 is unlikely.

Dragon Capital believes that Vietnamese stocks offer significant growth potential. With valuations being reset to 10-year lows at the end of 2022, the firm believes that now is an ideal opportunity to accumulate high-quality stocks for the medium-to-long term as the market moves from Beta to Alpha. Local political events that caused the market to decouple from major global indices have been addressed, and new government initiatives are currently helping to reverse both cause and effect of these homegrown themes, and at a serious pace.

VEIL’s stocks focus on the banking and real estate sectors, Ngo Thanh Thao said. The top 10 holdings include Vietnam Prosperity Bank, Asia Commercial Bank, Vietcombank as well as Mobile World Group, the Amazon of Vietnam, and Phu Nhuan Jewelry. They also include Becamex IDC and Vinhomes, in the real estate sector.