Vietnam Commentary: March 2012

Portfolio Management Comments

During Q1 2012, Vietnam’s GDP growth slowed to a three-year record as domestic demand weakened and as industrial production experienced a difficult time. Q1 growth showed 4.00% yoy, compared to 5.40% for the same period last year and 5.90% for the last quarter of 2011. The reduced growth was mostly due to slower activities in Manufacturing (3.00% vs. 6.10% yoy), Construction (-3.90% vs. 4.40% yoy) and Real Estate (-1.00% vs. 2.60% yoy). Weaker demand was reflected in retail sales figures, which contracted 6.84% compared to Q4 2011. Industrial production also slowed to 4.10%, from 9.30% in the same period in 2011. Officials reported that the sluggish industrial production resulted from high stockpiles of products1 as well as high interest rates, which may have deterred investment. Average costs for corporate loans are about 18.50%, according to Ho Chi Minh City Securities Corp. Bank lending declined 2.08% from the end of 2011 to March 15, Ngan Hang newspaper reported on March 23, citing State Bank of Vietnam Deputy Governor Nguyen Dong Tien2. Company closures also rose 6%…

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Duxton’s thoughts on Agricultural Investment in the year of the Dragon

Untapped opportunities in selected markets and rising demand for food will remain compelling drivers for agriculture investment in 2012

Nothing during 2011 suggested a weakening of the underlying demand-supply dynamics of the agricultural super-cycle. We didn’t miraculously find more land to grow food, we’re still wondering about how to feed the 7 billion of us on the planet, our cities continue to get more crowded and as you read this, farmers are on their way to reap a record corn crop for a sixth consecutive season in 2012 as global meat demand, fuelled by rising incomes in emerging markets, approaches a quarter of a billion metric tons

 As we enter 2012, agriculture remains as compelling an investment idea as it has it has been in the past years.

Only the broader financial markets have been a bit of a dampener: lingering concerns over the Eurozone debt crisis and a shrinking global economy, weighed down prices of agricultural commodities. However,…

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