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 January 2015 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

The Vietnam market is coming to terms with new constraints on margin lending and a more nuanced to positive view of lower oil prices. As Vietnam is an oil and gas producer, government revenues get hit somewhat, but the trade balance should not be much affected.  The stimulatory effect of lower prices should be a major positive across the private sector, giving a tailwind to the accelerating economy.

The new government directive ("Circular 36", effective from February) presents short term challenges to the banking and brokerage sectors. It represents some of the regulatory tough love that the financial sector needs for longer term health: prudent restraints on margin lending, a ban on bank lending to insider principals, and a partial dismantling of the spaghetti-like cross-shareholding regime that has long permeated the bloated (in terms of number of players) Vietnamese banking sector.    

VNH Insights

VietNam Holding's NAV per share ended January at US$ 2.047, down 0.6% for the month versus a 2.0% rise for the US$-adjusted Vietnam All Share Index (VNAS). For the last five years, the fund is up 47.7% versus the US$-adjusted VNAS which is down 0.3%.

VNH has consistently reviewed its peer performance since the time when we were 80% invested for the first time. We will in future show the same peers over a rolling 5 year period. As the fund management universe is notorious for picking the comparison periods which suits them best, we are here also reviewing our peer performance over the last six year periods.

Although the fund is not immune from the short term reactions relating to the Circular 36 described above, our very low weighting in bank shares remains appropriate in this environment. On the overweight side, we continue to maintain a strong exposure to consumer-related stocks (40% of the portfolio) and to mid-cap names (55% of the portfolio), which continue to offer an overall valuation discount to large caps.

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