Monthly Investor Report
A report detailing the activities of the Company for the month of September 2026 has been issued by Dynam Capital Limited, the investment manager of the Company. Electronic copies of the report have been made available to shareholders on the Company's website and a summary of the report is included below.
Manager Commentary: The Price of Progress
Vietnam's extraordinary economic growth came with a rather uncomfortable reminder for investors in September. GDP expanded by a whopping 9.95% Year-on-Year (YoY) in the third quarter, one of the strongest growth rates among the world's sizeable economies and well ahead of its Southeast Asian peers. Meanwhile, the stock market headed in the opposite direction. The Vietnam All Share Index fell 3.9% during September, as even Vietnam's long-awaited FTSE Russell Secondary Emerging Market upgrade failed to sustain an initial rally amid concerns about liquidity, funding costs and global uncertainty. VNH fared somewhat better, with the Fund's NAV declining 2.6%. The underlying economic data made the market's reaction all the more telling.
Exports surged 39.1% YoY in September, taking growth to 24.5% for the first nine months, with computers and electronics continuing to lead. Imports grew even faster over the nine-month period, rising 36.7%, largely driven by machinery, electronics and production inputs. September delivered the country's first monthly trade surplus of the year, at US$1.27bn, although the cumulative deficit remained US$19.42bn. As we noted in previous reports, what Vietnam imports matters, particularly when those purchases help build future manufacturing and export capacity. Domestic consumption also maintained momentum, with retail sales up 14.1% in September and 13.4% over the first nine months. Public investment disbursement reached US$21.8bn, its highest level in five years at this stage of the year, as the government pressed ahead with its ambitious infrastructure programme to unlock double-digit GDP growth.
All this investment needs financing, and the cost of doing so is becoming an increasingly important consideration. Credit growth continues to outpace deposit mobilisation, intensifying competition for funding across the banking system. Banks are seeking to attract the deposits needed to finance expanding loan books and major investment projects, including those involving Vietnam's national champions. Relatively attractive deposit rates also offer domestic savers an alternative to equities, particularly when markets are volatile.
We are becoming increasingly selective about the kind of growth we want to own, favouring businesses that generate their own capital, have access to structurally cheaper funding or can earn exceptional returns on the capital they invest. Several of our largest holdings illustrate how these advantages can take different forms.
Mobile World Group (MWG), our largest holding, is benefiting from three sources of operating leverage: stronger sales at existing stores, recovering margins and economies of scale. Its consumer electronics operations have performed particularly well, with Dien May Xanh reporting 29% revenue growth over the first nine months. MWG trades at around 10 times 2026 earnings, with EPS growth of around 18% pa expected. The banking sector presents a more complex investment case. With funding becoming more expensive, the ability to attract and retain deposits at competitive rates is increasingly valuable. MB Bank (MBB), our second-largest holding, benefits from established payroll relationships, digital banking capabilities and a relatively low-cost current-account deposit base. Its strong return on equity is complemented by the ability to fund further growth at a competitive cost, even as other banks face increasing pressure to attract deposits. Maintaining capital discipline and asset quality will be equally important as credit expands. PetroVietnam Technical Services (PVS) illustrates another aspect of our investment approach, with its mechanical and construction business benefiting from a substantial pipeline of energy infrastructure projects. Its estimated US$7bn order backlog for 2026 to 2030 includes projects such as Block B and offshore wind and overseas contracts. PVS trades at approximately 8 times forecast 2026 earnings. With the portfolio trading at around 10 times forecast 2026 earnings, we believe considerable value remains to be recognised in the companies we hold. Vietnam's FTSE upgrade remains an important milestone in the development of its capital markets, particularly as the country seeks to broaden its sources of investment capital. September's subsequent sell-off nevertheless showed that the upgrade alone cannot immediately overcome tighter liquidity or higher funding costs. Foreign investors remained net sellers during the month, and attention is now turning towards third-quarter company results. Vietnam's ambitions remain extraordinary, and the opportunities for long-term investors are considerable.
September reminded investors that economic growth and stock market returns do not always move together.
For more information please contact:
Dynam Capital Limited
Craig Martin Tel: +84 28 3827 7590
info@dynamcapital.com |www.dynamcapital.com
Cavendish Capital Markets Limited
Corporate Broker and Financial Advisor Tel: +44 20 7220 0500