Vietnam : Monthly Investor Report

VietNam Holding Limited ("VNH" or the "Company")

Investor Report

A report detailing the activities of the Company for the month of July 2014 has been issued by VietNam Holding Asset Management Limited, the investment manager of the Company. Electronic copies of the report have been made available to shareholders on the Company's website athttp://www.vietnamholding.com/latest-publications.aspxand a summary of the report is included below.

Investor Report Summary

Vietnam News

In a bid to accelerate the divestment of non-core assets by large state-owned enterprises ("SOEs"), the government has issued regulations that will now permit SOEs to sell such assets at below book value, if so needed.  In addition, a government regulation now explicitly prohibits SOEs from investing in 'irrelevant' sectors, thereby locking in the drive to get SOEs to focus only on their core mandates and areas of competence.  Both moves are to be welcomed.

In addition, the government has issued regulations intended to streamline the share sale process for SOEs undergoing equitization.  Previously, strategic investors in SOEs could not acquire shares at a price less than the average successful bidding price of an IPO auction in that same SOE.  This effectively prohibited much-needed strategic investments being consummated until after the public share sale.  Now, however, strategic investments can proceed before or simultaneous with an IPO.  In the coming months, both Vinatex and Vietnam Airlines are expected to enact IPOs.

Microsoft announced in July that it is to relocate much of its recently-acquired Nokia mobile phone manufacturing activity in China to three other locations, including Vietnam.  In doing so, it will be joining the likes of Samsung and Intel that have made substantial investments in the country.  In addition to having built their biggest-ever chip plant in Vietnam, Intel announced that it is building its first central processing unit ("CPU") plant in Vietnam.  The company expects that by year-end, around 80% of its global production in CPUs will be manufactured in the country.

VNH Insights

The Vietnam All Share Index ("VNAS") rose by 3.1% in July, to end the month at 571.82.  Recent new listings, such as PetroVietnam Gas, have helped take the capitalization of HCM City's stock market to over US$52bn, despite only being 14 years old.  July saw the successful listing of Mobile World, a mobile phone retailer, with a share price that values the company at around US$240m.  It is estimated that Vietnam now has over 98m mobile phones in operation; more than one for every person in a country of 90m citizens.

The two overseas-listed Vietnam exchange traded funds ("ETFs") have woefully under-performed the indices. This lack of performance is no obstacle to plans to launch the country's first domestic ETF, which is due to list shortly and aims to track the VN30 benchmark index of large cap stocks.  As a local entity it will presumably not be subject to the 49% cap on foreign holdings in listed companies, and should therefore be better able to track the index than its overseas-listed peers.  This should allow the domestic ETF to perform substantially better than its foreign peers.                  

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