It is currently such a challenging period for global economy, particularly Vietnam because of international financial crisis. However, the Vietnam Investment Summit 2011 scheduled for 19-21 October 2011 will be opportunities for investors to understand Vietnam’s macro-economic environment and find out where foreign investors see the greatest growth potential for 2012 and the coming years. On this occasion, Vietnam Business Forum interviewed Mr Vu Quang Thinh, CEO of Vietnam Holding Asset Management. Yen Huyen reports.
Could you please evaluate your business and investment strategies for the first 9 months of 2011 under the implications of monetary policy and inflation in Vietnam?
Mr Thinh joined Vietnam Holding Asset Management as Chief Executive Officer of its Vietnam Representative Offices after more than 20 years in senior level positions in investment management and financial consulting with both major international organizations and private companies. Most recently, he served as CEO of SGI Capital, an investment management firm as part of the Saigon Invest Group. Previously he was managing partner of MCG Management Consulting, which he founded and led through numerous high-level assignments for both global and local companies. Prior to founding MCG, he was head of the management consulting practice of KPMG in Vietnam where he did extensive restructuring work with several State Owned Enterprises. Mr. Thinh holds an MBA from Washington State University and a BS degree in Mathematical Economics from the Hanoi National Economic University.
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Vietnam Holding is a value investor, which has among others resulted in a portfolio of companies have a low debt leverage. Thus, our asset allocation focus resulted in investments in companies which are mostly in businesses which are not affected by restricted availability of bank loans or by inflation. That is also why as of October 4 our net asset value (i.e. the NAV) has decreased by only 13.4 percent sine January 1 of this year, whereas the benchmark VNI has declined by 17.4 percent during that period. Since Vietnam Holding's assets are denominated in USD, our NAV reflects the decrease of the value of all our assets measured in USD. This means that in addition to the decline of the value of our investments, our NAV also had to absorb the Dong devaluation in February of 8.5 percent. Therefore, when measured in Dong our portfolio has outperformed the VNI by over 20 percent during the first 9 months of this year.
What must be resolved to encourage further participation of investors?
On a global scale, the Vietnam’s economy continues to be one of the top performers for the past 20 years, and also over the last four years. In addition, Vietnamese companies have achieved very high earnings growths over the past years. Therefore, the basics would have been in place for a good stock market performance. In your first question, you alluded to the main issue which explains why the stock market performance is not matching the economic performance: monetary policy and inflation. The concern of the domestic investor is the same as the foreign investors. The monetary policy actions of the State Bank since the beginning of this year have been very encouraging, as has been the appointment of the new SBV Governor. This had the result that the domestic investors gained renewed market confidence. As a result, since the beginning of August the VNI has performed substantially better than the MSCI Emerging Markets; the difference is over 25 percent. This return of domestic investor confidence is what will persuade foreign investors to start looking at the Vietnam equity market again.
What are your views on how to increase transparency in the investment process?
Vietnam Holding has strongly promoted good corporate governance since our beginning in 2006. We are convinced that the transparency which is the consequence of good corporate governance helps the companies to be better understood by the investors. It will allow the investors to identify which companies are good investments. That is why VNH has organized, mostly in conjunction with the SCIC, seven Vietnam Holding Forums. Most of these Forum events were on corporate governance themes. During these last 5 years, Vietnamese companies have come a long way. The best example is one of our largest portfolio investment company, Hau Giang Pharma. The company's annual report fully deserves the recognition as the best in Vietnam, because its transparency is exemplary not only for other Vietnamese companies, but also for many larger and better known international firms!
What can be done to encourage investors into sustainable projects?
Sustainability is a core belief of Vietnam Holding. Since over two years ago VNH adheres to the high standards of the UNPRI, the United Nation's Principles for Responsible Investment. These principles were established only in 2006 and today are being adhered to by over 900 global investors with total assets under management of US$30 trillion – that is one thousand times the total value of all listed Vietnamese shares! The list of the UNPRI signatories continues to grow very rapidly. That means that a rapidly increasing number of global investors will only buy equities of companies which are sustainable. This should be an encouragement for companies to become more sustainable. As you know, sustainability means not only good corporate governance, but also strong corporate social responsibility and a high level of environmental consciousness. Domestic investors are increasingly aware that the environmental practice of Vietnam's industry is very important. That is also why our future Vietnam Holding Forums will in future focus mostly on environmental issues. We hope that this will help to develop the awareness of the importance of the corporate environmental practices both at the level of the top management of listed companies as well as by the investors.
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