Vietnam : Monthly Investor Report

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

Monthly Investor Report

A report detailing the activities of the Company for the month of December 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

Initial estimates suggest that the economy grew by 5.98% in FY2014, having seen GDP growth of 6.96% YoY in 4Q2014.  While domestic demand remains patchy, the economy does seem to be responding to the government's recent stimulation measures, low inflation, and robust export-oriented FDI activity.  Total FDI inflow pledges exceeded US$20bn in 2014, US$3bn ahead of target, with actual disbursements of over US$12bn - up 7.4% YoY.  The manufacturing sector was the main FDI inflow targets, accounting for 72% of the total. South Korea is leading the charge (Samsung in particular), accounting for over 36% of total inflows. The other 'heavy hitters' were Hong Kong, Singapore and Japan.

Inflation was a benign 1.84% for the full year 2014; the lowest rate since 2006.  A series of petrol price reductions were a key driver, as global oil prices fell during the latter half of the year. A number of petrol importers are thought to have made substantial inventory losses in the second half of 2014, having been wrong-footed by the severity of the decline in crude oil prices.  This may explain why the central bank allowed commercial banks to extend their foreign currency lending to petrol importers (and exporters) into 2015. 

Overall, Vietnam is entering 2015 in much better economic health than when it entered 2014, although a full recovery in the country's growth momentum has yet to be secured.  Looking immediately ahead, issues in the political realm will come more to the fore in 2015, as the leadership prepares for the next Party Congress, provisionally scheduled for the first quarter of 2016.  Before then, there will be intense jockeying for senior positions that are expected to become available, as a substantial proportion of the existing leadership hit retirement age and are expected to step down.

VNH Insights

VietNam Holding's NAV per share ended the year at US$ 2.059, 18.1% higher than at year-end 2013. The USD adjusted VNAS ended the year with an increase of 7.9%, higher still than the USD adjusted VNI which was up by 6.6% for the full year. This was the second year in a row during which VNH has outperformed its lead index by over 100%.

Over the last five years to year-end 2014, VNH's NAV per share increased   cumulatively by 51.7% from US$ 1.357, while both the USD adjusted VNAS and VNI declined by 6.8% and 5.7%, respectively, over the same period.

Vietnam's equities market was principally dragged down in the final month of 2014 by concerns as to the ramifications of 'Circular 36', issued by the State Bank of Vietnam in late November. The circular is intended to decrease the market leverage through a reduction in margin lending.  In addition, margin loans must be short term and banks with NPLs of 3% or more are no longer allowed to conduct margin lending. The circular becomes effective on 1 February.

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