Credit - Bloomberg
The global equity selloff has helped make Vietnam a lot more attractive to at least one London-based fund manager.
Monday 26, November 2018
(Bloomberg)--Ashmore Group Plc has doubled its exposure to Vietnamese stocks since the end of the first quarter, according to fund manager Andrew Brudenell. The group, which managed $76.4 billion as of end-September, now sees the country’s banking sector and some consumer stocks as notably cheaper.
“We remained very lightly exposed to Vietnam through most of the last 12 months, up until maybe the last few months that we’ve seen the market derate,” Brudenell said in a phone interview. “We are now more positive than we were last year but more within specific sectors,” added the manager, who said at the end of last year that valuations in the southeast Asian nation were “too high.”
The VN Index has fallen 23 per cent from its 9 April record high, battered by concern over the trade war between the US and China. The MSCI Asia Pacific Index has declined 13 per cent over that same period, while the S&P 500 Index has gained more than one per cent. Vietnam’s benchmark gauge is trading at 13.5 times 12-month expected earnings, down from over 20 in April.
Vietnam’s real estate stocks still look “very expensive,” and their possible collapse poses a risk for the market, Brudenell said. Another reason for caution is possibly faster inflation, including that tied to movements in the dong against the Chinese yuan.
Still, Ashmore is “positive” on Vietnamese stocks overall. The country’s gross-domestic product growth is strong, the currency is not under too much stress and corporate earnings growth “should be pretty decent,” Brudenell said.