VinaCapital Vietnam Opportunity Fund Limited (VOF) Earnings Call Transcript & Summary

Good morning, and welcome to the VinaCapital Vietnam Opportunity Fund Interim Results Investor Presentation. [Operator Instructions] Before we begin, I would like to submit the following poll. And I would now like to hand you over to Tom Ha, Business Development Manager. Good morning.

Good afternoon from Ho Chi Minh City. Welcome to VinaCapital Vietnam Opportunity Fund webinar presenting the interim results for the 6-month period ending December 2025. My name is Tom Ha, Business Development Manager at VinaCapital. First, I'd like to thank Investor Meet Company platform for hosting today's presentation. Also, I'd like to thank you, the shareholders, for your long-term continued support. As a reminder, the fund is a $1 billion FTSE 50 company that invests in privately negotiated opportunities across the public and private companies in Vietnam. During the period under the review, there's been a lot of events that have happened that has impacted our performance, both on the relative and absolute terms. Also, within the fund itself, we've seen some changes. For example, at the Board level, Kathryn Matthews, who has been a member of the Board of Directors for over 7 years, was appointed to be the Chair of the Board of Directors. At the investment manager level, Khanh Vu, who has been one of the longest serving members on investment team was officially appointed the Lead Portfolio Manager of the strategy. And he's been busy repositioning the portfolio over the past 12 to 18 months to drive the alpha, and he will describe more his efforts in his presentation. Before we start, let me share quickly what's the agenda for today. First, Michael Kokalari, our Chief Economist, will provide a quick update on Vietnam's economy. Then Khanh Vu, along with Mike, will discuss the stock market performance, how it has impacted the fund performance as well as the portfolio repositioning efforts. Finally, at the end of the prepared remarks, I will return back to moderate the Q&A. So please submit your questions in the chat or Q&A function, and we'll try to answer all your questions. Now I hand it over to Mike and Khanh. Thank you.

Okay. So we'll have a few minutes on giving an overview of the Vietnam economy. And the first thing everyone is obviously very -- wants to know about is the impact of the U.S.-Iran war. The thing to focus on here is we are assuming that this war is going to be a relatively short but intense conflict. And that's based on -- it seems to be the global consensus. If you look at, for example, the Brent crude backwardation is at a record high. The VIX is below 30, et cetera, et cetera. So we're just following this -- what seems to be a global consensus. You may have seen there was this Goldman Sachs scenario that went around that they were also sort of expecting things to go more or less back to normal within a month. And in that scenario, first and foremost, we would see inflation in Vietnam get over -- pop over the 5% level in the months in March and April and then probably come back down to the 4-ish type level on average for the rest of the year. And also in this kind of short intense scenario, we would expect about 0.5 percentage point to get knocked off of Vietnam's GDP growth this year. Vietnam imports a modest amount of energy, about 1% to 2% of GDP, something like that. And the consumption is about 500,000 barrels a day to put that in context. So that's kind of similar to the Philippines, South Africa, these kind of countries. One thing I do want to point out, which you can see up on the screen now is that the Vietnam Dong currency did not really move that much during the war. That's actually significant because at the end of last year, there was some fairly big depreciation pressure on the Vietnam Dong. The government took some steps to support the Dong. And the point that we want to make with this slide here is you can see the behavior of the Dong was kind of just in the middle of the pack all the other countries. So fairly resilient.

I think Mike, for investors, that's important, right? You want to be investing in an environment where you don't see significant devaluations.

Yes.

And also in terms of the impact of this oil crisis or this conflict on inflation in Vietnam. I think the consensus is that it's not just Vietnam that will be impacted. It's quite a pervasive impact to others.

Yes, that's right. Yes. So that's about the currency. In terms of the economy, the first 2 months of statistics have come out now. And actually, the trajectory of the economy is starting in a little bit of a different direction than we had anticipated. Last year, 2025, what the story of Vietnam's economy was about was very strong exports to the U.S. So high-tech exports were up about 80%, 8-0 percent very strong Chinese tourist arrivals and consumption by local Vietnamese consumers was kind of modest, lukewarm, just steady, not weak, not strong, but just sort of bubbling along. What we were expecting for this year, for 2026 is a normalization of exports and tourism back to kind of more normal levels. and a normalization of domestic consumption up to kind of more normal levels. What we've seen so far in the 2 months of the year is rather than being a soft landing in exports, exports actually accelerated so that the growth of -- the strength in the Vietnam exports to the U.S. has actually gotten better. The tourism is having this kind of soft landing that we had anticipated, but retail sales has actually deteriorated a bit. Now I've got a chart here where you can see visually what was going on with manufacturing. And when we say manufacturing, manufacturing and exports are kind of intertwined, of course, it's basically almost the same thing. It may not be completely clear on this slide because we have some distortion from the Tet holiday, but that is kind of -- that's the way things unfolded in the first 2 months of the year. I have a few more details on this slide. You can see very strong exports of high-tech products to the U.S., also very strong imports to Vietnam. That's important because FDI companies dominate the imports. So we don't have -- we don't import like a lot of consumer products. So when you see very high imports, that's a strong leading indicator that, that export story is probably going to continue for the first part of this year. However, you can see on the right side of the slide here, the drop-off in retail sales that I mentioned. What we think is going on there is that there was a big reset in mortgage rates. Mortgage rates -- Vietnam mortgages are floating, and they typically have a 2-year reset period. So there's many mortgages that have recently reset from around a 10% level up to around 13% I mentioned a few minutes ago about the relative strength of the Dong despite all the war stuff. And part of what that was about is that the State Bank of Vietnam allowed interest rates to go up by a bit more than 1 percentage point of last year. So that's filtering through now to higher mortgage rates. We had -- we knew these resets were coming, of course. We anticipated that the sentiment of the consumers would be strong enough to kind of shake it off, especially since their incomes are growing at about a 6% or 7% pace. So the sentiment actually turns out to be a bit weaker than we had anticipated. So that's the main thing that's been putting pressure on the consumption this year. And of course, we've had the story of the consumers rebuilding their savings post COVID. That's still happening as well.

And Mike, just sort of to stay a little bit on this. As it relates to sentiment, right? I mean, obviously, the real estate sector last year was one of the stronger performers of the market. And that's soft landing, you could almost say also in the real estate sector, the first half of the year is sort of spilling into how people behave in terms of consumption patterns. That being said, I think you've started this year by saying the second half of the year where the government wants to have very ambitious growth goals to get to that level, you need to really push the pedal on things like the real estate sector to have an accommodative fiscal and monetary policy stance.

That is a perfect lead into my next slide. Thank you. Yes, we were really expecting, as we've talked a lot before, that the first half of this year, consumption would be kind of sideways. And then by the second half of the year, as people have rebuilt their savings post COVID, it would start to pick up. But we weren't really expecting this kind of fairly significant dropoff. I have something up on the screen here. We can see this phenomenon has also been picked up and discussed in the media that Tet spending was fairly weak. But to your point, they are going to need to do something because although you had these 2 things going in opposite direction, manufacturing got better, consumption got weaker in the first -- it's only 2 months, but that is what we saw in the first 2 months. The thing is manufacturing is about 1/4 of the economy, consumption is almost 2/3. So those 2 are not -- don't net each other out. And right now, we're -- just based on the first 2 months of the year, that's kind of on track for like 6.5% GDP growth for Q1. And that is, of course, before the war stuff as well. So to your point, given that they have this very high target, they will need to really stimulate. Now part of, I think what they'll do is they'll probably say, "Oh, well, the target is kind of invalid now." But even if they want to take that kind of an approach, it's still -- you can't have 6.5% is just too low. So they will need to step on the gas pedal. And then to the really good point you raised, the question is what would they do? They can't cut rates because of the inflation story and the d weird he mentioned. Last year, they really stimulated the infrastructure spending, and that's wonderful. That's good for the country. But we're almost like choking on infrastructure spending now. There's only so quickly the economy can absorb that. So that's not really a realistic option for them to kind of quickly stimulate the economy. The best thing that they have to do is to really take some measures to support consumers directly, support the real estate market directly. What you might see them -- we have question marks up on the slide here. This is just our guess of the type of things they might do. But what you might see them do, for example, is just directly support mortgages. That's never been done in Vietnam. They did do something comparable back in 2009 with working capital for companies, but they will need to do something -- what they have been doing is they've trimmed the VAT rate and they've trimmed the personal income tax. That's not enough to move the needle. So they will need to take more aggressive action. if they want to get that GDP growth.

Yes. And I think with regards to the consumer space, you've always talked, Mike, that consumption makes up about 2/3 of GDP. So if they do sort of pass these measures through the stimulus measures through, there is going to be quite a significant amplification.

It will hit the economy right away. It's really the only dial that they have that they can just get their goals quickly. The very last thing I want to say before we move on to other topics, given that we really are in this multipolar world is emerging, and we had that Mark Carney speech at Davos about middle countries and the war has kind of accelerated this whole theme. I do want to remind our investors that Vietnam is in a really good position for the whole multipolar things that are happening. Of course, at the moment, the geopolitical tensions are not good for markets and including Vietnam. But I want to remind that Vietnam is very friendly with the U.S. and the so-called friendshoring block of countries. Vietnam is very friendly with China and the BRICS block of countries. We're very friendly with the Middle East, with Russia. So we are well positioned for the way that the geopolitical chessboard is shaping out. I just want people to keep that in the back of their mind because there's so much happening in the world right now. So those are the main topics that I wanted to update our people on. And...

Yes. So thanks, Mike. Thank you very much for that. I mean, obviously, unpacking a lot there for 2025 and I think more importantly, 2026. The part of this call is to talk about our results for 31 December 2025. And I'll really just sort of briefly update investors because I think there will be lots of questions. I mean the fund for the 6-month period up until 31 December 2025 did actually reasonably well. The NAV is up about 13% over that period. And if you think about the Vietnam index, and it's no way a measure of our benchmark, we don't construct our portfolio around that. The Vietnam index did very well over that 6-month period, up almost 30%. But it masks some very strange anomalies, right? And we've been talking about this both in our interim reports, but also to our investors. In the U.S., Mike, we talked about the Magnificent 7 and how they've been so much concentrated and contributed to the market performance there. Vietnam, we've had this Magnificent 1 stock in the form of Vingroup. Vingroup is the largest company in terms of market cap. They're a conglomerate. They do many, many different businesses. Within that conglomerate, there are other listed companies. Vingroup, the parent company alone was up 255% over that 6-month period. We don't hold Vingroup in our portfolio. There are fundamental reasons why we don't hold in Group. And also, it's a large company with thin liquidity. There are other pockets of opportunity for us to invest in, including within that group, the real estate company. So for the last 5, 6 years, one of the core holdings in this portfolio has been Vinhomes. Vinhomes is a subsidiary, it's listed. It's the leading real estate company in Vietnam. And interestingly, as we saw last year, Mike, you talk a lot about these reform measures, removing the barriers of doing business, getting approvals of projects done. That has certainly helped sectors like real estate and specifically companies like Vinhomes. And for us, for the 6 months, they've been one of the biggest contributors to our performance. Now over the last 12 months and in fact, 18 months, there's been a lot of efforts in restructuring this portfolio. We've guided a lot by how you think about the economy. We've guided a lot about the reforms that are taking place. Some of the key themes that sort of shape our thinking. One is around the consumer space. Mike, even though we have perhaps a bit of a softer landing on the consumer space, there is a ramp-up towards the end of this year. We want to position our portfolio for that. We've talked a lot about the reforms that are taking place around the private sector. And for us, as investors, private sector opportunities are very important, and we can talk a little bit about those opportunities we've uncovered and invested in the portfolio. And the third thing is that growth now perhaps is being a lot more broader. It's been spread out a lot more broad across the economy. Perhaps in the past, that portfolio is constructed around this very concentrated mature, good compounding type of investments. But over the last year, we've been able to rotate into other opportunities that have really delivered alpha. Now over the last 12 months, you've seen that in terms of portfolio, about $750 million of activity, $450 million sold, $300 million investing into new opportunities, the balance of $150 million going into buybacks and dividends. This is our commitment to shareholders to return capital in a consistent way. That activity in the last 12 months has added about another $30 million -- if we didn't do anything, we would have potentially lost about 4% to performance. And if you stretch that, Mike beyond that, in the last 18 months, again, about almost $600 million trimmed, reinvested $400 million, the balance returned to investors, that alpha is about 7% in addition.

It's really good.

So for us, that flywheel effect of things that we've been doing to this portfolio over the last 12 months, 18 months is really coming to manifest itself, represent itself in the portfolio. And in fact, if you think about where we are up until the end of February before the crisis, we're up about 4% year-to-date for those 2 months. And more important is with this crisis, the index has been very volatile, down, but we're, in fact, actually performing well ahead of the index at the moment. So for us, it's been a year where there's been a lot of activity in the portfolio. And within those activities, the opportunities are targeted around what we talk about in the past, Mike, these opportunities that are perhaps not available to the public markets, these privately negotiated opportunities. In the last 4 months, we've got a couple of deals that sort of represent how we think about investments and opportunities in the country. These are what we call privately negotiated. These are companies that perhaps are public, but we're able to privately negotiate opportunities in there or we've been able to enter into some pre-IPO opportunities. Vietnam, we've seen a sort of a period where there had been no very little activity, if at all, in IPO. Last year, Techcom Securities IPOed the first IPO in 8 years in market. We participated in that. That position is up over 25%. Late last year, one of the leading conglomerates spun off and IPO-ed their infrastructure company. And again, Mike, perhaps later on, we can unpack some of this public spending story and infrastructure spending story. But we found this opportunity not available to most market participants. We're the only foreign investor of scale to invest. That company accelerated their IPO up into February this year, and they're up over 25% since we've invested. On the other side of this chart, these are public companies that we've been able to look at some privately negotiated opportunities. Importantly, we're able to do the diligence and access these companies at deep discounts to the prevailing market rate. If you mark those positions today, again, up over 20% on those positions. All these activities have been accretive to that performance. And I think as we think through the rest of this year and moving forward, that's going to be really important how we deliver performance to our investors. Mike, one of the things that you talk about are the sectors, right, and how you think and break down the economy. For us, we've also done that looked at how we structure and organize our team. So in the last few months, what we've been doing is that we've restructured the team into core industry groups. And it's important because if you look at our portfolio, about 1/4 of it is in financials, 1/4 in real estate, 1/4 in consumer and IT and the balance is in industrials. And within that, what we find is that there are certain sectors that lend themselves more towards public companies and public opportunities or privately negotiated opportunities there. And other sectors, for example, like consumers, there's still a lot of interesting opportunities in the private equity space. And so the team is spending time in those 4 sectors focusing on coverage, focusing on pipeline and deal generation, focusing on performance and returns. And I think as you look at the portfolio and how we discuss this portfolio and performance going forward, we'll frame it around these sectors and the opportunities there. So Mike, before we sort of move into the Q&A, and I think there will be plenty of questions from our audience. One of the important things that we want to stress to our investors is even though we're delivering -- the performance is improving, we are committing ourselves and remain committed to the return of capital through dividends and through buybacks. Of course, last year, we saw the discount widen. There are certain factors in the U.K. market. Mike, you and I have just come back from a roadshow in the U.K. in February. And certainly, that's been a topic of discussion. Some of the activities around industrial -- around investment trust in the U.K. have led to widening discounts and corporate activity. What we feel is the consistency of our return of capital through buybacks and dividends is a way to address that activism, but also a way to, over the long term, to address the discount. Today, we're actually seeing the discount narrower than it was at the end of last year. We're under 20% at the moment, about 19%. And again, we continue to commit to our investors through the form of buybacks. Last year, we spent about 12%, 11% of the portfolio in buybacks. This year, during periods of volatility, we've seen a significant amount of buyback activity. At the same time, though, it's important that the returns that we generate, we're able to invest into these new opportunities. So I'll stop there. Mike, thanks for having you on board. Obviously, we'll get back to investors over the period of the next weeks and months. Let's hope a lot of this volatility and uncertainty comes to pass, and we're able to invest into much more smoother markets.

Okay. Thanks, Mike. Thanks, Khanh, for the presentation. So we'll move now to the Q&A session. We'll try to spend about 15, 20 minutes on the questions. [Operator Instructions]. I see there are a few questions that came in. Maybe we'll start with Vingroup. Khanh, you've mentioned that the market has run a lot last year because of Vingroup. The question here is that, obviously, the way and how large Vingroup is positioned within the economy, Vin Group is positioned to benefit all these domestic reforms and also with the EM upgrade, right, the market should rally more. Is that a concern for you?

Look, so again, let's look at -- this is a conglomerate, right? So Vingroup is a conglomerate, and they do some really interesting things, health care, education, there's some really good core businesses. They also have other subsidiaries, real estate. So the #1 real estate developer in the country is Vinhomes. We invest into that. So our -- for 7 years, right? So our portfolio does have exposure to this conglomerate. I think that if you think about it's them as a constituent on -- when we move to the emerging markets, there is some more recent experience to show what could happen, right? The group itself was about 25% of index weight recently, single company, Vingroup itself was about 16% weight. And if you think about the rebalancing that happened in January this year, there are sort of parameters that ETFs and index have to keep. So for example, no more than 15% to a conglomerate, no more than 10% to a single company. So we saw a lot of activity in that early part of this year to rebalance and address that. Our view is that with -- and you've heard Mike talk about this in recent months, decree 68, right, where the government is essentially saying we want to promote the private sector. We want to create a level playing field for the private sector in Vietnam to shine through to be an important contributor to the economy. And that announcement created a very strong catalyst, very strong tailwinds for private companies. Vingroup is one of them. There are many others. And for us, our experience in this market is that we're beginning to see that private sector champion story be a lot more pervasive. And therefore, for us, there are many other opportunities now for us to look at and to invest in if we think through this conglomerate effect, the private sector effect that we're talking about.

This is a very good point about the active management component that we always talk about. If I understood the question correctly, you're kind of saying like foreign investors coming into the country and basically the risk of deploying through essentially index tracking type strategies, right? And then you would see a disproportionate amount of money going to Vincom. What I would say to that question is it's very understandable that foreign investors would have an indexation frame on their mind. As we know, in developed markets, especially the U.S., active is now less than 50%. So that's an understandable that, that question would come up. But actually, in EM, I think when people deploy money to EM, it's not quite a simple by the index type question. And even in Vietnam, there are a few different indices. And to speak very bluntly, I think this whole story about Vincom became such a big deal, and it was even in the international press and blah, blah, blah. So you could have an idea that maybe when foreigners want to deploy money in here, they would have that story in the back of their head and think, okay, maybe I should go for more active manager like us, for example. That would be my answer to that question.

I guess we can stick with the EM upgrade. There's another question that came in here asking about what is the impact of the upgrade. But maybe kind of Mike I sort of putting another topic here is what are the other catalysts you think investors should look at in the future besides EM upgrade?

Yes. Well, we'll get the -- sorry, the FTSE upgrade later this year. Not clear about the timing of the MSCI one. In terms of catalysts, well, I think everyone is really preoccupied with the -- all your normal investing playbook stuff, to be honest, I would kind of put to the side right now. And if there's going to be a catalyst, the war ends and then we get a big bounce, but we don't know when it's exactly going to end. The normal catalyst that I think we would -- I don't mean to skirt the question, but I think right now, with everything going on, it's probably not the time to think about your normal catalyst type playbook.

Well, I mean, to add to that as well, when you think about an index inclusion, right, it's generally 20, 30 companies, right? So if you think about our portfolio, and I think the question perhaps relates to our portfolio, we've invested in many companies that are very likely to be part of that index inclusion. The other dynamic that comes to play in our portfolio is that some of these companies are at foreign ownership limit. So part of the FTSE Russell Index upgrade, there is not a requirement. There is not a requirement to lift your foreign ownership. Under MSCI, that perhaps is one of the criteria. So for now, those companies that do get included in the FTSE Russell, perhaps investors are positioning themselves now to add. And this is really what we've been seeing in the last 2 weeks, barring the fact that we have a conflict in the Middle East, is that several companies now are hitting their foreign ownership limits because foreign investors are coming to Vietnam and buying up. Markets have corrected, greater buying opportunity. And if you look at our portfolio today, there are at least 3 names in there that are full. There is no more foreign limit. So if someone wanted to buy a stock in that company, if a foreigner wanted to buy a stock in that company today, they would have to pay a premium. So the dynamics that come into play when the EM upgrade happens is not sort of a point in time later in third quarter this year. It's a dynamic that's happening now. And what we say to investors is be invested, whether it be through our fund or direct because the opportunity still represents itself here in the market.

So I think the composite of our 2 comments is that the answer to the question is, yes, the FTSE upgrade is a catalyst right now or especially before the war type stuff. And what will be the next catalyst after that? At the moment, it's a little bit hard because there are so many other things going on.

What about the credit rating? I know you published something a few weeks ago.

Yes. I mean if we get the investment-grade credit rating, that's going to be a huge game changer for the country. At the moment, we're not kind of exactly focused on that because of all the war stuff. We did put out a report about that. That would probably be an even bigger catalyst for foreign money to come in than even the MSCI upgrade, if you look at what -- how it worked with past stock markets when they got that upgrade. We think it's possible for the government to get it relatively quickly because they meet all the quantitative criteria. The only thing that the ratings agencies are saying is they want some changes in the way that the government functions in terms of transparency and adopting more orthodox approach to managing monetary policy, for example. So that would be a big catalyst, you're right. But it's just not at the forefront of our minds right now with everything going on.

But on that point, you think about it, it's as basic as this. If you're an institutional investor or you're a very sophisticated investor, and you sort of ask yourself the question, Vietnam, heard about this market. sounds really interesting. Should we invest? Is it investment grade? Yes, it is. Excellent. You've passed the first hurdle. Is it an emerging market? Yes, it is. You pass another hurdle. These things that are being -- transforming this market make it a really important interesting opportunity. So again, come back to the same sort of be invested, be invested now.

Yes. Good point.

There's another question on the GDP growth of being 9% to 10%. Would that -- how would the government fund this growth? And could we see more equitization privatization in the years to come?

Yes. Actually, I used to get asked the question a lot, how will we know what signs would we look for that privatization is going to -- because in Vietnam, we haven't even privatized the telcos yet, as we talked about before. And the thing that I used to say, this is a number of years ago is when you see infrastructure spending ramping up like crazy, that's when you can know that some privatization is coming because there'll be a financial, I wouldn't say need because they have a lot of money, but it will be in their minds to raise money. So that's one way I would look at it. The other thing I would say is that our debt to GDP is very low in Vietnam. We have a lot of financial resources. We many, many years, the government issued government bonds, raised money, and they didn't actually spend the money because of various impediments to actually getting the infrastructure spending going. So there's ample financial capacity. The issue now is that, especially last year, they ramped up infrastructure spending so much that we're almost kind of choking on all these projects. You can only physically get things done so quickly. Last year, infrastructure spending was up more than 40% and actual construction was up like less than 10%. And that's just because of the time it takes to get the approvals, get buy the construction material, blah, blah, blah, all that kind of stuff. So -- but there's plenty of room to do a lot more infrastructure spending. That's sort of a 5- to 10-year type story, I think.

I mean if you look at the valuation of some market right now, right, it's becoming back to the average.

Right in the middle ...

So we could probably see if you could sound privation.

Okay. So very good point. The 2 indicators that you want to look at for privatization, number one, when they need the money; and number two, when the PE ratio is high. And if you want to go by that indicator, I would say we're not high enough yet. Normally, if you look the last time around, like in 2017, when you have the lots of stuff going on, you want to see the PE something like -- more than 1 SD over the long-term average.

Yes, one -- and I think when we started this business back in early 2000, right, 23 years ago, there was something like 15,000, 20,000 state-owned enterprises. Today, a handful only, let's call it 2,000. So the IPOs that the question asks around SOEs, they will be important. As to Mike's point, there are certain monopolies, certain oligopolies that dominate the market here that are slowdown companies and that will go to market. They're going to be really interesting. But on the flip side, what we've seen is this emergence of the private sector. And if you think about last year, we gave a presentation, Mike, you and I around the private sector reforms. And within that, there's sort of this hierarchy, this triangle of leading Vietnamese companies that are large today that will probably make their way globally, regionally and globally. Many of those we invested in. It's the next layer down that for us is really interesting. These are private companies. These are companies that are perhaps held -- listed but held mostly by local investors. And the interest there is for them to become leading players in their sectors and also then to attract foreign capital. And so what we spoke about earlier about EM upgrade, credit ratings, these will be ways to attract more capital into the market. And these are the companies that we think will benefit the most from that flow of capital.

So since you mentioned this about going globally, there's another interesting angle to this whole SOE story that we don't hear people talk about too much. But when you say like state-owned enterprise, SOE, you kind of bucket them all together. But what I've noticed in all the time that I've worked here and working as an analyst is that the SOEs that have more exposure to the global economy tend to be like better run, better companies, think about like Vietnam Bank. I mean, by now, the other SCBs have kind of caught up, but there was a long period of time there where VCV was basically the only good ...

In the mill ...

So that's another ...

And I think it's the embracing of governance, better governance, international standards...

Best practices.

And that's our role. As investors, we bring in those requirements to be institutionalized to have better standards to better governance. And that's part of that value creation that we try to introduce into businesses we invest in.

There's a question on data centers. So the question is, why has Vietnam underinvested in the power generation resulting in not enough attraction to put more data centers in Vietnam?

And the answer is because that's what they do. The whole -- I've been here almost 20 years now, and it's been constantly what's happened. This is kind of a good story and at the same time, it's a sweet and sour story because on the one hand, what I've noticed is they're constantly in the situation where they're sort of bumping up against the capacity. But actually, when they bump on the capacity, they come up with new capacity like pretty quickly. Sometimes they can get things done very quickly in this country. So we do get this question sometimes. And what I'll say is a blanket statement is it's not something that you need to be worried about. We do acknowledge that they're often kind of in and around the whole system capacity. On the topic of data centers, let me say this, that it's terrible what's happening right now in the Middle East and et cetera, et cetera. But specifically on this data center issue, this is going to benefit Vietnam like a lot. I mean this is going to be -- because we have plenty of opportunities for natural green energy and hydrocarbons here sitting offshore, et cetera, et cetera. So we do have the energy. We just need to develop it to turn it into electricity. And as a location, this kind of bamboo diplomacy country where -- well, people start to talk about the idea of connector countries, like countries that are sort of in between all the stuff going on with the great powers. This is an ideal place for countries to locate data centers. Of course, there's a big boom going on in the south of Malaysia. And you'll see something similar here, I think, as well.

Okay. There's a question on risks. So Khanh, maybe you can take this. So what are some of the risks that keep you at night?

The war.

Well, price of fuel.

Yes. I mean I think when you invest into Vietnam, you've got to start with the macro, right? And to understand...

Or any emerging markets.

Particularly here in Vietnam, if you start with the macro, then from there, you can then look at where the opportunities lie. And so for us, that's why having mine so privileged to have a Chief Economist in the team is that we have really in-depth discussions around things like policy, monetary policy, fiscal policy, currency. And then we look across to developed markets and see where that's heading. So right now, with what's happening in the Middle East, I think also what's going to happening in the U.S. around the stance around interest rates, it's going to have an impact here. So for us, as a team, we start with the macro risks. And then as we look to the next layer, what is also important is around the regulatory risk and the policy risk of operating in Vietnam. And for us, what we've seen in the last 12, 18 months has been a real concerted effort by the government to introduce reforms that promote private businesses, right, that promote investments. And one example, FDI continues to flow into Vietnam, regardless of what happens with tariffs, regardless of what's happened with global supply chains. Vietnam remains a very important place to attract investors. And they'll only do that because they're getting more and more comfortable with the regulatory environment. And the third risk is we think about is sort of the business cycle, where we are in that business cycle. You heard Mike talk earlier around this idea of a recovery in consumption. Perhaps that's been slightly delayed. Delayed perhaps because of uncertainties around tariffs last year, perhaps now with the -- what's happening in the Middle East. There might be a slight sentiment and perhaps a reaction towards that. And so for us to understand those business cycles and where we are in that business cycle is really important. So for us, that's how we sort of frame that risk question, start with the macro, look at the policy environment you're operating in, look at the business environment, and then we'll be comfortable to deploy our capital.

I will say something very honest about the job of an economist in the emerging markets. Actually, sometimes the macro is extremely important. But actually, most of the time, things are just kind of bumbling along. But those 25% of the time when you need an economist, you really need it. So it's like episodic. There's times when there's like a lot of stuff going on and the macro is everything and then things settle down. And this is just kind of how emerging markets work. The macro is a much bigger deal, but it's only a much bigger deal episodically, a few times during the year kind of thing.

Okay. I think we reached 20-minute mark on the Q&A. Maybe we can wrap up with Mike, why Vietnam? Khanh, why VOF?

Well, actually, of course, it's very too bad what's happening in the world and all the fragmentation that's happening. I think many people will have heard this Mark Carney speech where he's talking about the rise of middle power countries and geo multipolar fragmentation and this kind of stuff. Vietnam is one of the countries that will be very good to navigate all of this. The so-called connector countries or sometimes people use this interesting phrase, the bull bearing countries, Vietnam, Mexico, Poland, Singapore, the ones that can really kind of be in between what's happening with the gray powers. We're really well positioned for the unfortunate reality of the way that things are going in the world right now.

And Tom, before I sort of answer the question, I do know that questions do come in. And obviously, we'll endeavor to come back to our viewers to wrap up and answer those questions. There's some great questions coming through. But when we sort of think about why VOF, again, it's in our name. We are an opportunity fund. And what does that mean? That means that we're able to invest across the entire spectrum of cost opportunities in the market across all sectors in the market from private opportunities to public companies. And we were able to respond to how the market dynamics play. At the same time, being an investment trust, a vehicle whereby we're listed in London, we give our investors the ability to access Vietnam through a London listed vehicle is a great platform. We also have this commitment to return capital to shareholders. And we've been doing that consistently since 2011 through buybacks and then since 2016 through dividends. It's important for us to be able to construct a portfolio that generates good cash flows, good income so that we can deliver that -- those returns to our investors throughout all market cycles. And perhaps just to close off, if you think about where we -- that's been happening in the last few weeks, even though the Vietnam index is down, even though that we've seen a big, big retracement and a big fall in many companies on the stock market, the portfolio itself has actually been very resilient. It's been performing quite well. And year-to-date, I think we're just under -- we're about flat at the moment year-to-date. And that's a testament to the efforts that the team have made to restructure this portfolio to capture the alpha, but also to be resilient during times of volatility. And so for us, we think that VOF is a vehicle that's most fit for purpose for investors to access into a market, an emerging market like Vietnam.

Thanks, Mike. So San said, there's some questions we haven't answered. So if you have any questions you'd like us to answer an e-mail, please e-mail us at [email protected]. And thank you for joining today.

That's great. Thank you for updating investors today. Could I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback, which will help the company better understand your views and expectations. On behalf of the management team, we would like to thank you for attending today's presentation, and good morning to you all.