Vietnam is a growth hotspot and could reward brave investors, says JEFF PRESTRIDGE

Although the state visit by Japanese Emperor Naruhito and his wife, Empress Masako, virtually paralysed central London on Tuesday, it had no impact on the annual general meeting of investment company Vietnam Enterprise Investments.

As crowds gathered outside Claridge’s in Mayfair to catch a glimpse of the Emperor and Empress before they were welcomed by King Charles and Queen Camilla at Horse Guards Parade, more than 100 shareholders gathered at the Stationers’ Hall in the shadow of St Paul’s Cathedral to learn more about their investments.

They were not disappointed as lead portfolio manager Tuan Le and Dominic Scriven (founder of Dragon Capital, the investment house that runs the trust) made the case for investing in Vietnam. For those who stayed for lunch, myself included, a refreshing Vietnamese beer was served (I resisted the temptation) and a delicious array of Vietnamese food.

The choice of location – home to The Stationers’ Company, the City of London Livery company for the communications and content industry – was rather apt.

This is because the foundation has set itself the goal of communicating its investment story to a wider audience. That is why the first annual general meeting of shareholders (AGM) since the foundation went public on the British stock exchange eight years ago is taking place in London.

In theory, the £1.2bn trust should have a strong appeal to investors. Vietnam is currently one of the world’s few engines of economic growth. It is benefiting from huge domestic investment as major international companies move their manufacturing bases south from China and into northern Vietnam.

Without the government having to make a major investment, it is also investing heavily in the country’s infrastructure. At the same time, increasing urbanization is creating a growing middle class with money to spend.

The population (100 million) is also young, with an average age of 33, so there is no millstone around the neck like the NHS. Put all this in one pot and you have an economic climate that is ideal for businesses to thrive and make money for shareholders.

Moreover, interest in the stock market, especially from foreign investors, will increase as the country moves towards emerging market status (it is classified as a frontiers trust).

But Vietnam Enterprise Investments isn’t entirely successful. The fund’s efforts to grow and make money for investors are being hampered by the fact that its shares are somewhat in the doldrums. They are trading at a significant discount (20 percent) to the value of the fund’s underlying assets.

This undervaluation is not the result of anything the trust has done wrong, although 2022 has been a difficult year. Shares in rival trust VinaCapital are also trading at a discount of more than 20 percent.

It is more a reflection of the general malaise in the UK stock market, which has led to a large number of listed companies (not just investment trusts) trading at bargain prices, making them attractive to predators such as private equity.

Perhaps this low market price will disappear as the UK economy picks up.

Maybe, maybe not. We just don’t know.

Scriven, who has lived in Vietnam since the 1990s, is determined to see Dragon Capital’s flagship investment fund take flight again, though the board will ask shareholders next year whether they want it to continue. Scriven, who speaks fluent Vietnamese, is nothing if not resourceful.

So the board just cut the fund’s annual management fee from about 1.75 percent to 1.5 percent, a move that benefits shareholders.

Further reductions should be made as the fund’s assets grow. Dragon is also setting up an office in London to promote the fund. Scriven believes Vietnam’s bamboo diplomacy (flexible but strong roots) makes it a friend of China, India, Russia and the US. This, he adds, benefits the country economically and boosts imports and exports.

In short, Vietnam Enterprise Investments is a super investment fund that gives investors access to one of the world’s economic growth areas.

Despite the share price discount, the company has generated a shareholder return of 8.3 percent over the past year and 44.1 percent over the past five years.

Yes, it should only be a peripheral investment in a private investor’s portfolio, but it is a trust with an exciting mandate. For many reasons (some moral), I would choose it (or its rival, VinaCapital) over a Chinese trust every time.

Six banks in one shopping street? That will never work…

Thank you for your comments on whether or not to close bank branches on our high streets, given that Lloyds announced a further 60 closures two days ago.

Alan Hartley, a 78-year-old retired NHS finance director, called to say he had just had a wonderful time on a steam train journey along the Settle-Carlisle railway. As he wandered through Carlisle city centre, he was surprised to see branches of six banks and building societies within 500 metres of each other on the city’s English Street: Barclays, HSBC, NatWest, Newcastle, Santander and Virgin Money. There’s also a post office.

Trust in Steam: Ribblehead Viaduct on the Settle-Carlisle Railway Line

“It’s a change to see a high street so well supported by banks,” says Alan, who lives in Ewloe, just outside Chester. “I hope it stays like this for a long time.” Absolutely.

In contrast, retired accountant Karen Robinson, 68, bemoans the lack of banks in her home town of Immingham in Lincolnshire. To make matters worse, she says, the town no longer has a post office due to a collapsed ceiling. A pop-up replacement opened in the town hall but was withdrawn last month. Karen is with Lloyds, the last bank to pull out of the town in 2022. She has to travel to Grimsby – a 40-minute return journey – if she wants to do any banking.

‘It’s so frustrating,’ says Karen. ‘Immingham is a vibrant town with a busy port, two oil refineries and lots of new housing. It deserves a bank.’ She would like to see a banking hub – a shared banking branch – and has contacted ATM network operator Link. The prospects for success are slim. Link assessed the town after Lloyds pulled out and felt it wasn’t big enough to support a hub. More importantly, the Post Office needs to re-establish a presence in the town.

Finally, it is disappointing to hear that Lloyds is continuing to withdraw staff from its branches who help customers with queries that cannot be dealt with by cashiers. They will now be working from home. Peter Wall, a retired solicitor from Birmingham, says it is happening at his Lloyds branch in Harborne. ‘It is another blow to older customers,’ he says. Exactly.