VietNam Holding Ltd (LON:VNH) noted that Vietnam was the best performing stock market in the world in May, and the investment company outperformed the national benchmark.
The investment trust was London's top-performing investment trust by NAV and the second highest rising trust by share price increase.
Dynam Capital, the investment manager of the trust, issued a monthly report that noted FPT, the trust's largest holding, has seen its stock price rally 60% this year alone.
FPT is a leader in Vietnam's thriving IT sector, championing software and outsourcing services to Fortune 500 companies.
Its recent success reflects the digital transformation happening in Vietnam, Dynam said, with internet penetration in the country reaching 69% in 2020 and 70.3% in 2021, amongst the highest in Asia.
“For FPT, fast internet means customers can stream content over their rapidly growing Pay TV business …[and] contribute greatly to economic growth.
“Considering Vietnam's software engineers on average cost one third of the level of those in India and China, the opportunity for a Vietnamese company, such as FPT, to be internationally competitive is also immense. FPT already serves many Japanese and US companies, which are trying to move their activities to the cloud and upgrade their technologies to adapt to new customer usage patterns.”
Vietnam's digitalization story filters into other sectors, the manager said, with banks also a key driver of performance in May as many of them continue the shift to connect with a younger group of consumers.
Banks in the fund’s portfolio have seen their stock prices increase thanks in part to strategic decision making by their senior management, Dynam added.
“Other drivers in the digitalisation momentum currently taking place in Vietnam include education and government regulations… The government is also pushing hard for digital technologies as a way to scale Vietnam's development as a modernising industrial nation and is planning to promote e-payment and e-government.
“Soft infrastructure is as important as hard infrastructure, and both can have a multiplier effect on economic growth, in our view.
“Digitalisation is helping Vietnam stay on course to reach its 30-year track record of 6.5% growth.”
Over its financial year so far, Dynam said the trust is up around 90% and the portfolio EPS is forecast to growth more than 40% for 2021 at less than 11x price-earnings.