“Vietnam defeated the Chinese many years ago, they defeated the French and defeated the Americans,” says Craig Martin, chairman of Dynam Capital. “And it looks like it is round one to Vietnam against the coronavirus.”
With that quote, Martin is attempting to distil down the dogged determination and dynamism of this Southeast Asian nation of 100mln people that can’t be summed up in a spreadsheet or an analysts’ report. Cynics will point out Vietnam is a one-party command economy where the population has been willing to sacrifice civil liberties for safety in the teeth of the pandemic.
“Fundamentally we think that companies that pay back to society and have better governance will do well and get a better rating,” says Martin. “A number of investors are attracted to our ESG and are engaged on that. That focus on small- and mid-caps means the Dynam team overseeing VietNam Holding has uncovered pocket rockets that are growing at 20-30% a year.
Emerging markets exodus
The International Monetary Fund estimates US$90bn of investment has been pulled from these developing markets since the coronavirus outbreak. Last month, the net asset value of VietNam Holding fell by over a quarter, which tracked the decline of the local benchmark give or take the odd percentage point. “We could sell our number one stock, FPT, for probably a 30-40% premium to another foreign investor,” Martin says by way of example. VietNam Holding took some money off the table earlier in the year, more by chance than design, and is reinvesting in quality companies at lower prices.
Martin believes VietNam will be a two or three-year play as the NAV increases and the discount to that asset valuation unwinds. “We are patient investors,” says Martin.
Credit Photo: Casting the net: Under Dynam’s stewardship, VietNam Holding has built up investments in 20-30 local companies