Fact sheets August
The Spectacular Rise of VinFast and Positive Economic Developments in Vietnam
VinFast, a Vietnamese electric vehicle manufacturer, has taken Wall Street by storm with its impressive stock market debut. Since its launch earlier this month through a SPAC IPO, VinFast's stock has surged an astonishing 830%, bringing the company's valuation to nearly 200 billion US dollars.
At its peak, VinFast briefly held the title of the third most valuable car manufacturer in the world, surpassing industry giants like Ford and General Motors combined. However, the stock's rise isn't driven by the number of cars being sold or even by glowing reviews. Instead, it's rooted in the unique dynamics of supply and demand.
VinFast's founder, Pham Nhat Vuong, maintains a tight grip on the company, owning a whopping 99% of its shares. Only 1% of VinFast's shares are available to the public, equating to just 7.2 million tradable shares. This scarcity of available shares has created an imbalance between demand and supply, which has fueled the remarkable rally.
Stocks with only a limited number available for trading, like VinFast, are highly susceptible to volatility, leading to dramatic price swings. A minor shift in buying or selling pressure can skyrocket or plummet the stock. Recently, VinFast experienced a 26% drop, and this volatility might persist as more shares hit the market due to lock-up agreements and possible share issuances by the company itself.
TCM Vietnam does not invest in this start-up as the stock doesn't meet various stringent selection criteria we set, such as valuation and dividends. Over the past month, the fund (+1.25%) outperformed the index tracker (+0.66%) once again. This brings the total return since the beginning of the year to +24.59% compared to 17.61% for the FTSE Vietnam tracker. The fund benefited in August from the rally in FTP, its largest position with a 6.2% weight. The IT company reported strong H123 figures, with revenue growing 21.9% year-on-year and profits rising by 20.6% year-on-year. An even stronger growth is expected in the second half of the year, especially as demand for FPT services increases from Japan.
We're optimistic about Vietnam's economy, noting improvements in exports, a steady inflow of foreign direct investments (FDI), and manageable inflation. Moreover, the economy is benefiting from investments in infrastructure. An example is the construction of metro lines in Ho Chi Minh City. On August 29th, the first line was tested. The line spans 19.7 km from Ben Thanh Station in District 1 to Suoi Tien Depot in Thu Duc City. It has 14 stations, eleven elevated and three underground. Elevated sections can reach maximum speeds of 110 km/h, while underground sections can reach 80 km/h. This is the first of eight planned metro lines for the southern city, with the total investment amounting to 1.82 billion US dollars.
More news about Vietnam, Africa and the Global Frontier fund can be found in the latest fact sheets of the equity funds:
TCM Global Frontier High Dividend Equity
TCM Vietnam High Dividend Equity
TCM Africa High Dividend Equity