16^th November 2021

Vietnam Enterprise Investments Limited

("VEIL" or the "Company")

Monthly Update

+6.5% NAV Return for October and 47.1% in 10M2021

Vietnam Enterprise Investments Limited ("VEIL") is a closed-end investment fund investing primarily in listed equity in Vietnam and a FTSE 250 constituent. The Company's NAV performance for October 2021 is set out in this notice.

Company Performance

·    As of 31 October 2021, VEIL's NAV increased by 6.5% over the previous month (compared with 7.7% for its reference index, the Vietnam Index) in US$ terms

·    YTD the Company's NAV has increased 47.1%, compared with the Vietnam Index which has increased 34.1%

·    All of VEIL's top ten holdings rose although six of the ten underperformed the Index, mainly due to a relative underperformance in the banking sector

Economic Overview

·      The Vietnamese economy showed signs of recovery in October as lockdowns eased, although leading indicators were still mixed. The Investment Manager expects normalisation will still take some time.

·      The appreciating Vietnam Dong indicates underlying strength in the economy.

·      FDI ("Foreign Direct Investment") continues to come into the country, with US$1.87bn disbursed in October, US$15.2bn YTD (according to the General Statistics Office of Vietnam), the Manager's full-year target of US$19bn looks quite realistic, comparable with US$20bn last year.

·      Inward remittances look set to increase over last year's US$17bn.

·      COVID is still problematic in a few places, but data indicates vaccinations are rapidly containing the spread.

·      A meaningful fiscal package is being discussed by the Government to help stimulate the economy further.

Dien Huu Vu, the Portfolio Manager of VEIL commented:

"October started and finished strongly off the back of the reopening up of the economy and news of a potential economic stimulus package, respectively. The market closed the month on record-highs in the Vietnam Index, which had daily liquidity of $1.2bn across its three exchanges, also boosted by solid Q3 earnings growth and remains one of the best performing markets in Asia. VEIL is heavily weighted in banks and we believe valuation and share price performance in the sector will likely diverge further in the near future as 3Q and 4Q results separate the better banks from the weaker.

Looking ahead to 2022, we believe stock selection within the banking sector will become more critical when assessing value/growth metrics, accelerating credit expansion and provisions being unwound. This presupposes that our forecast of a broad-based macro recovery pans out, helped by the expected fiscal stimulus to help Vietnam's economy return to its high growth rate, which we believe will be positive for equities."

October Commentary

Vietnam's stock market continued rising as the lockdown in key cities such as Ho Chi Minh City were eased in October.  VEIL's NAV gained 6.5% for the month, trailing the Vietnam Index, by 1.2%. Whilst all of VEIL's top ten holdings rose, relative performance varied, with six of the top ten holdings underperforming the Vietnam Index.  The biggest contributors to VEIL's relative performance were Hoa Phat Group ("HPG") and Vinhomes ("VHM"), whilst the banking sector was generally relatively weak during October.

Sentiment in HPG improved as its 3Q21 earnings results pleasantly surprised the market.  For the quarter, HPG posted earnings of US$455m, up 174% over the last year, despite very difficult market conditions during the lockdown period.  The company started 4Q21 on a strong note as the reopening of the economy boosted demand for steel.  HPG also reported its second highest ever monthly sales volume of 968,000 tonnes in October.  Robust demand has also enabled the company to gradually increase its selling prices for key products, such as construction steel, by around 3% in October, suggesting a potentially strong end to FY2021.

Similarly, Vinhomes' Q3 earnings results also provided a major boost to sentiment in its share price as the biggest residential developer in Vietnam booked a profit of US$495m, up 89% over the year.  The strong earnings were driven by bulk sales of its key projects such as Ocean Park and Grand Park, which were more than enough to offset the otherwise weak handover and pre-sales due to the lockdown.

The banking sector has been a weak spot for the market in general since the start of the fourth wave of the COVID-19 pandemic, primarily due to concerns about the possible creation of non-performing loans (NPLs).  Whilst an uptick in NPLs is inevitable, the degree of their increase as well as the impact on asset quality and earnings will vary from bank to bank. 

VEIL Top 10 Holdings

For further information, please contact:

Vietnam Enterprise Investments Limited

Rachel Hill

Phone: +44 122 561 8150

Mobile: +44 797 121 4852

[email protected]         

Jefferies International Limited

Stuart Klein                                                                                                                        

Phone: +44 207 029 8703

[email protected] 

Buchanan

Charles Ryland / Henry Wilson / George Beale

Phone: +44 20 7466 5111

[email protected] 

LEI: 213800SYT3T4AGEVW864