Jul 15, 2020 – Investor Letter

Dear valued Investors,

Both the Global and Vietnam stock markets had witnessed a speedy recovery in the last 3 months, after having experienced a tremendous downfall of -31.1% within the first 3 months of 2020. As of 30th June 2020, VN Index was down by just -14.1% compared to the beginning of the year.

At this moment, not a lot of information is available to be able to judge the possibility of the worldwide economic recovery. However, the slow bouncing back of China after the pandemic visualizes a much tougher-than-expected path to recovery that the global economy might have to face going forward.

To counter a serious decline in the economy and skyrocketed unemployment, various nations are implementing supporting policies at an enormous scale that has yet to happen before. Consequently, in our view, the copious cash injections, cheap prices, and the participation of the new investor generation will play a key role in maintaining the market’s stability, not the fundamental factors like revenues and profits. Therefore, choosing the right companies and the right prices to invest in at this moment is very important, but also challenging.

First and foremost, after the Covid pandemic, the economic sectors will be in very different positions, as some will enjoy rapid development, while the unfortunate ones will face bankruptcy and even cease to exist. As a result, investors should have a crystal-clear vision of how the future will look like for each sector in the overall economy.

Secondly, it is very challenging to witness the value of assets be manipulated by the 0% interest rate policy of the Central Banks around the world, and further elevated by the excitement of the fresh faces in the market. This will create a mental challenge for those with value-investing strategy, as their portfolio will be out-performed by the market.

On the other hand, this should be a great time for a mid-vision of 2-3 years and a long vision of 5-7 years, as Vietnam is dealing with the Covid pandemic with flying colors and has proven to be a potential destination for the FDI capital streams looking to lower their dependence with China. To our awareness, big corporations like Apple is seriously considering the relocation of some parts of their production lines to Vietnam. This news further strengthens our faith in the growth of Vietnam’s economy within the near future, especially the rise in income of the middle-class. We are paying lots of attention and interests in those companies whose targeted customers are those in the fast-growing middle class and are seeking opportunities to restructure our portfolio to reflect that vision.

The companies in our Portfolio have shown respectable recovery in terms of business operations in the 2nd Quarter. Although profits have yet to bounce back, we strongly believe that these firms possess strong foundations for a great breakthrough within the next 1-2 years. With that said, we have great expectations for an exceptional growth of our Portfolio in the year 2021-2022. We sincerely hope that our Investors can maintain their patience to witness fruitful returns within the next 1-2 years.

With best regards,
Pham Anh Vu