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 March 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 VNAS fell 4.8% in March to just under 547.46 in a poor month for Vietnamese equities. This compares with much smaller declines of 1-2% for MSCI indices covering frontier markets, emerging markets, and the world.

The larger of the two Vietnam ETFs, the Van Eck (some USD 472m of AUM) had around USD 57m of redemptions in the last 10 days of March, which erased most of the market's YTD foreign inflow and increased bear pressure.

However, as we discuss below, most economic news in the month was predominantly positive - there was good news on GDP growth (1Q above expectations at 6.0% YoY), FDI disbursals remain strong with 1Q up 7% YoY at USD 3bn, and interest rates are still heading lower.

It now seems clear that lower oil prices are a net positive for the Vietnamese economy, so if they continue to remain low, this is helpful to growth.

VNH Insights

Both recent data and anecdotal observation point to the strongest economic environment in Vietnam for several years, with domestic consumption growth at its strongest since at least 2010 (see our latest post on this on our new blog: blog.vietnamholding.com). The property sector appears to be on a healthy, non-euphoric recovery track. Also the recovery in the banking sector's credit creation is encouraging, with March YoY credit growth estimated at 17%. Interest rates trend steadily lower, resulting in an average lending rate of 10.1%, 1.4% lower YoY at the quarter-end. Finally, the government's reforms are heading in the right direction, as evidenced by the following examples: (a) the substantive progress on the bank governance rules; (b) the continuation of the privatization program, though less extensive than ideal in terms of percentage stakes on offer; and (c) the new laws on investment, enterprises, and foreigner property ownership.

Our fundamental assessment of market outlook for 2015 continues to be a positive one. Even though the overall emerging and frontier market scene remains challenging, Vietnam still stands out within this asset class for its strong fundamentals combined with low market valuation.

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