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Good time to invest in Vietnam now, says Dragon Capital


The photo is from October 2021 and shows motorcyclists awaiting their turn at the Covid-19 border crossing between Ho Chi Minh City (Vietnam) and Long An province. This was taken in Ho Chi Minh City. At Monday’s close, VN’s benchmark index had dropped around 14% over the past year.

Maika Elan | Bloomberg | Getty Images

Vietnam’s stock index fell more than 10% last year. A portfolio manager stated that it is now a great time to think about investing in Vietnam.

As of Monday’s close, the VN index has fallen close to 14% for the year — a sharp reversal following two years of blockbuster gains for the benchmark index in the earlier phase of the pandemic.

These losses however are mostly in line its global peers, as investors generally reposition to safety against the backdrop of rising interest rate and fears about a global recession.

Dragon Capital, an investment firm that focuses on Vietnam, has $7 billion under management. It claims the valuations of Vietnam are cheap and forecasts earnings per share growth more than 20% for 2022.

Thao Ngo was the portfolio manager of the firm’s Monday report that Vietnam’s retail, banking, and financial sectors were attractive.

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She explained that banking stocks offer a huge potential growth opportunity in the mass market segment because more than half Vietnam’s population are currently “underserved” by banks. Retail stocks, however, will see strong earnings recovery from pent-up demand following the pandemic.

Ngo stated that “our investment strategy is designed to deliver long-term economic growth for investors” on CNBC’s SquawkBox Asia.

“We’ve been focusing on three main themes[s]At the moment: The first is urbanization, the formation of middle classes and strong domestic consumption.

Bullish on Vietnam

Portfolio manager explained multiple reasons Vietnam stocks make a great investment.

Dragon Capital believes that the Southeast Asian economies will continue to grow in GDP. For 2020, there will be a significant increase in GDP growth. Vietnamese economy topped even ChinaDespite the worldwide pandemic, there was not a quarter of an economic contraction.

Ngo stated that Vietnam has a strong platform for GDP growth, thanks to macro policies and political stability.

She said, “This year the government will also aim to increase the GDP by 7%. In the first quarter, we achieved 5%,” We are on the right track to reach that goal.

Inflation is an issue worldwide in many countries, including the United States. the U.S. And UKNgo indicated that Vietnam has it under control for the time being.

The Vietnam consumer price index rose 2.6% during the first four months, while Dragon Capital expects that the total year figure will be around 4%-5%.

She said, “We believe our government will make strong efforts to keep… CPI stable.”