Vietnam’s Biggest Fund Manager Sees Value in Mid-Cap Stocks
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Vietnam’s biggest fund manager says a growing divergence between the valuations of larger-cap stocks and mid- and small-cap stocks has made the latter group more attractive.
Vu Huu Dien, the Ho Chi Minh City-based deputy chief investment officer at Dragon Capital, said inflows from passive money have poured into large-cap stocks, driving up their valuations. The VN30 index, which tracks large caps, rose 6.8% in the third quarter and currently trades at 11.5 times forward earnings. The mid-cap VN70 index gained 2% and has a 7.9-time multiple, according to data compiled by Bloomberg.
“There is real value to be found in the mid- to small-cap selections in the VN Index, many of which carry amazing growth stories,” he said. “This is where we are excited about investing in Vietnam.” He didn’t name companies or sectors.
The benchmark VN Index rose 4.9% in the third quarter, making it Southeast Asia’s top performer as the country continues to be a beneficiary of supply chains shifting away from China amid its trade war with the U.S. The gauge is up about 12% this year.
Over the weekend, the government reported economic growth in the third quarter rose 7.31% from a year earlier, up from a revised 6.73% in the second quarter. Fitch Solutions on Tuesday revised its GDP forecast to 6.9% from 6.5% for 2019, citing support from growth in the construction and service sectors.
With all the key economic indicators remaining positive, “we are hopeful of a similarly encouraging trend in the last three months of this year,” Dien said.
Foreign investors have bought a net $361 million of Vietnamese shares this year through the end of September, data compiled by Bloomberg show.
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