Hello, Inderes viewers. Today I have the pleasure of interviewing Maggie Yi from PYN Elite, and this time I actually get to interview her face to face, as she is visiting Finland. Welcome to the interview, Maggie Yi.

Thank you so much. It's really nice to meet you in person and do the interview in Finland.

You are likewise, and actually before we go to the actual interview, I am dying to ask you, have you liked Finland?

So far, it's amazing, Joni. Sorry, I have been working with PYN Elite for 13 years, and I come to Finland every two years. So it's probably my sixth trip to Finland already. This trip I met a lot of clients and had good communication with them, and over the course of this long career I've made good friends with some of them as well. Yesterday I was in Tallinn, and a client actually showed me around in Tallinn, and we saw downtown, we saw his family and these kinds of things, and I really appreciate their time and their hospitality. So that's something, and I love Finland as a country, but also the Finnish people and their friendship developed over the years. It's something I really treasure.

Yeah, that's so nice and meaningful, and I'm really hoping that I get to visit Vietnam some day, so we can do this the other way around. So happy you are here. We have to do that sometime. Okay, but if we start with the actual interview, we could start off with things related to the market first. Could you summarize to us, how does Vietnam's market situation look currently?

I would say it may be a little bit frustrating for people who are investing into Vietnam. If you look at the international market, obviously there is an AI boom going on, and when people want to invest into emerging markets, other money goes to South Korea and Taiwan. So despite Vietnam having good fundamentals and strong economic growth, it actually receives very little interest, and on a year-to-date basis actually we see foreign investors taking money outside of the country instead of putting money inside of the country. That's something we have observed, and it is a little bit challenging within the Vietnam domestic stock market itself. It has an interesting dynamic, it has a divergence. So there is a group, there is a conglomerate called Vingroup, and Vingroup and its subsidiaries, they represent about a quarter of the whole index. They are good at developing real estate, but when they ventured into other areas, they are taking a very long time to achieve profitability. And at the same time, up until this year and last year, they received a lot of strong government support, so they are favoured by the government. Then their stock, the float is very little. So if there is buying power, even a little bit, it can make the stock performance really good, so Vingroup has been performing really, really well, and the valuation is sky-high, it's 30 times P/B. We never see something like that. It has sucked out the money flow into it, so for the broader market outside Vingroup, I think on a year-to-date basis, it's actually a small decline despite the whole market, a lot of companies, reporting really strong earnings. So we are in an interesting divergence here, and we think probably one reason is that when Vingroup is having this momentum trade, it's getting the retail traders' attention, and on the other hand, we probably need this situation to solve before people have more confidence to put many big bets onto the broader market.

That's true, it is an interesting situation, and yeah, we just have to keep observing what will happen. You are well, in April, FTSE confirmed to upgrade Vietnam from a frontier market to an emerging market, which is great news. So could you tell us about the current situation, what are the next steps, and how has the market reacted to this news?

They made the announcement last October that they will upgrade Vietnam to emerging market pending interim review in March, then it would take effect in this year's September. So when they made the announcement in October, to be very honest, it is 99% upgraded because their interim review is a very easy technical fix. So we already saw the bull market last year. So this year when the decision is made, it is not really a market surprise, so yeah. People are looking forward to something new, so in terms of the next step of the upgrade bringing Vietnam to emerging market, it is estimated to bring, I believe, passive index-tracking fund money, passive flow into the country. Then the mechanism is starting from September. The first allocation will come, which is 10% of the 2 billion moving to your country, then next year in March they will have 35%, then in June 30 another 35%, and in September another 35%. So the maturity of the 2 billion actually happens next year, and 2 billion, to be frank, is a very nice amount, but it is not so huge by itself. So the key exciting thing here is by upgrading Vietnam from frontier to emerging, it recognizes Vietnam's importance, their capital market access to foreigners, and their corporate governance of the state companies. That's an important thing. And the second is a lot of institutional investors, their mandate is to invest only into emerging markets, so actually some of them have been looking at Vietnam for so long. It's just that as a frontier market, without having the mandate, and now by upgrading Vietnam to emerging market, then a lot of money actually could be deployed into Vietnam. This active money, depending on the estimate, there are quite a lot of estimates, really is ranging between 6 billion to 10 billion, then that brings the total sum coming into Vietnam a lot bigger, a lot more interesting.

That would be really good. Thanks for the update on this. Well, given the current situation in the world, we obviously have to talk a little bit about geopolitics and market shocks, and in one of your recent blog posts, it was mentioned that Vietnam's stock market actually tends to recover quite quickly from shocks. So could you tell us, what makes the market so resilient?

So at PYN Elite's Englishman, Steve, he says the good companies with good growth are quality growth, and if we look at Vietnam as a country, it is exactly that, it has quality growth and good growth. So in terms of GDP, in 2023 there was a weak year coming from COVID. During COVID, the cheap-money era and 2022's Fed hiking cycle, everything had a slowdown. Then 2024 was a slow recovery year, and 2025 and 2026, things are really picking up. If you look at the past four quarters, GDP on average is already at 7%. It's honestly rebound at 7%. GDP-wise it really is standing out in Asia, but I guess also globally it is standing out. And when looking at our listed companies in Vietnam, there are 1,000 companies listed on the stock exchange. When we aggregate their earnings growth, we really see a strong pickup in the latest few quarters. In first quarter, the aggregate earnings growth was 35% year on year, and the previous quarter, coming up from a low base, was 50% year on year. We think the whole year the earnings should still grow more than 20%. The first quarter was from a low base, but this entry year's 17% year-on-year growth is very strong. I think that explains why it's so resilient. There are some shocks, and then people quickly panic and sell off the shares, then the stocks become too cheap based on this underlying earnings growth, then people quickly buy them back.

That makes sense, that it's a cycle that works like that. You are well, from PYN's portfolio perspective, has the market shocks from the recent years changed the way you manage the portfolio in any meaningful way?

They add exactly that kind of external shock. We try to better navigate the situation. When we invest into the companies, we also look at the company's size and the company's liquidity. Liquidity is something we consider highly, so we want to buy their stock without moving the price, and we want to sell their shares without moving the price, and in an extreme situation, we could like to do arbitrage. We should sell some stocks that are strong and buy the stocks that are relatively weak, but overall looking at a little bit longer time frame, we really see currently in our portfolio we have the blue-chip best-in-class in Vietnam, corporate governance stocks. Maybe I would say five years ago, we still had quite a lot of the small and mid-cap. We really hoped because they were smaller they could grow bigger, but right now our portfolio are the blue-chip big companies, and that actually has been playing into our benefit. The reason is in Vietnam, the current government leaders have said strongly they want to achieve 10% GDP for the next five years, and to do that they think they have to get help from the top big companies. Conglomerates and big companies, and then they give them very favourable policies like access to bank loans, easy access to bank loans, and easy access to land as compensation for their work. So the big companies actually now grow faster than the small and medium-sized companies, and we see the trend would continue for the coming five years. So that also actually plays into our favor.

Joo, okay. That's really interesting. Well, then a little bit more about politics. Japanese Prime Minister Kishida visited Vietnam more recently, and they pledged to strengthen ties with Vietnam by increasing cooperation in sectors like energy and minerals, and also the leaders discussed ways to deepen the strategic partnership initiative, which was established in 2023, which aims to strengthen cooperation in AI, semiconductors, and space technology. This all sounds very interesting and exciting, and also Japan's visit emphasized economic security as a new priority, so how do you see this situation, and what kind of effects does it have in Vietnam in the upcoming years?

Since the Japanese prime minister winning her election in February, Vietnam is the first country she chose to visit in the region. It highlights the strategic importance of Vietnam to Japan, also Vietnam in the Asian area, and between the two countries in terms of trade. Japan is the sixth-largest trading partner to Vietnam, after China, US, EU, South Korea, and Asia as a region, not individual countries. So Japanese, Japan, trade is important, and the two countries, they aim to increase bilateral trade 10% per year for the next five years. Our company FPT actually, their biggest revenue source is from Japan. They export the software, providing software outsourcing services to Japanese companies. We think they will benefit from this trend, and of course a lot of other companies and FDI and other things. So that's good for trade, and in terms of energy, for energy, it benefits Vietnam. When the war just broke out with Russia and Iran, there was a big shock for our economy, who have heavily relied on Middle East crude, and Vietnam. When the strait closed, they actually needed crude inventory because one of their refineries needs the crude from the Middle East specifically, so actually they got the crude from Japan, because Japan built out very good energy infrastructure. Even they are importers for the oil, but in their country they have 250 days of reserve, and they are happy to support Vietnam, and right before the prime minister's visit they actually gave Vietnam another crude supply. So it really helped them, and during their visit, they also said they will help Vietnam to build up the LNG infrastructure, and the support will come like bank loans support and provide the insurance to the strong forms and also other type of FDI investment. So that will help Vietnam a lot, and in terms of another thing, that's rare earth, that is important to Japan. So Vietnam has the largest rare earth reserve outside of China, but it does not have the processing capacity, and Japan, when China said they banned rare earth exports, actually the Japan manufacturers, they had a supply shock. So it is very natural they are looking at Vietnam's rare earth abundance, and Vietnam passed a law that they say to ban the raw rare earth export, but they welcome international cooperation in how to process and refine them. I think that really comes into play. I think that it would make much sense if the Japanese provide the technology know-how, and I think these countries have so much potential in partnership in the rare earth front, and there are so many other things like renewable energy and also the nuclear power plant development in Vietnam, that we have a lot of room for Japan to participate, so yeah, it's very meaningful.

Sounds like there's a lot of potential in many areas. That's good. You are well, let's talk a little bit about investing in Vietnam. As you already a little bit mentioned this earlier in this interview, Vietnam still receives relatively little attention from western investors. Do you see this more as an opportunity or a challenge?

It's absolutely an opportunity. You know, when we talk about investment, there is foreign portfolio investment, which is hot money, and foreign direct investment, which they look at 20-year, 30-year time horizon at least, so since beginning year 2025. Because of the AI trade and investors, they are allocating money to the AI cloud, so we saw outflow in 2024 and 2025, 5 billion money exited Vietnam. Then this year foreigners also took 2 billion outside out of Vietnam, so for one year and a half foreign outflow was 7 billion in total, but that's hot money, they come and go. Foreign direct investment from the foreign countries, for the same period, they keep dispersing money and they are very interested in investing into the manufacturing business industries in Vietnam, so for this same time horizon, they poured 35 billion money inside into Vietnam, so that's five times more than the hot money outflow. So I think if investors no longer want to chase the AI trade and when they want to look for other areas for their next investment, I think Vietnam looks so good. Yes, so that's an opportunity.

Sounds like an opportunity, yeah, in the future. Well, what would you say is the biggest misconception about Vietnam as an investment?

It's a very interesting question. I thought about it, and then I think I think this is good. I think a lot of foreign investors, as they are not living in Vietnam, what they think about Vietnam, probably Vietnam, the dominating party is the Communist Party and China's dominating party is the Communist Party. So they feel, they think somehow Vietnam is a small China next to China, or is a little brother that follows China's steps very closely, but if you were to ask locals for the past one year, in fact they say South Korea is the model, the reason is they find both Vietnam and South Korea are, compared with China, a smaller economy and an open economy, ready to do business with every country, and they also have strong ambition to develop their industrial manufacturing capability, and they have great ambition in the technology sector, AI and semiconductors. They want to move up the value chain, and since the new government took power, they developed this policy in order to achieve 10% GDP growth. They want to support maybe, let's say, the 10 biggest companies and conglomerates. They give them favourable policies and bank loans and a lot of projects for them to do, and in return they can deliver the GDP, they can support and also grow faster. That really looks like South Korea when they were having their own industrialization period, you know, Samsung, Hyundai, they actually got a lot of support from the government, they received loan support, favourable policies, then they pushed development along with the country into the next level as chaebol. So now my Vietnam friends say they call the chosen Vietnam companies that are getting a lot of favour from the government, Vietnamese chaebol, so they actually think they are South Korea.

Actually, that's really interesting and a good misconception to correct. You are well, which sector in Vietnam looks the most interesting today?

I think maybe I would say two. I would say it is the public infrastructure development. The new government set an ambitious goal of developing public infrastructure. From 2026 to 2030, the public investment budget for the infrastructure is 2.5 times of the previous five years, and if you look at what they want to build, it's 5,000 kilometers expressways, railroads, ports, airports, network, they do want to keep expanding, and bridges. It's really infrastructure, and by talking it's not enough, they actually, the actual speed of work is very fast. So this year, because it was a theme season for me, when I was traveling extensively in the north area and around Hanoi to the suburbs, to the satellite cities, no matter where I go, it's construction activity. You see cranes and a lot of construction activity, and locals actually told me the pollution and the newspapers say the public infrastructure turns Hanoi into a massive construction site. It's actually true. So there is a lot of construction going on, and where the construction activity is booming, actually there the economy is also doing better. People are also richer because of that effect. Yes, and lately, one rally for this kind of construction, you really need both. Next is like the administrative approval for the infrastructure, but also that land previously had people living there. It takes a very long time to move them, but this government, they are very decisive, so they are doing the relocation for 1,700 projects simultaneously, so there is a lot of relocation happening. As we are having this interview, so everything is moving very, very fast. So that way, we think a lot of sectors, a lot of companies will benefit from this great infrastructure build-out. So that's one thing, and another is because Vietnam's GDP is another sector I would highlight is consumer sector. Thanks to the strong GDP growth and thanks to the good earnings by other listed companies, we can clearly see the Vietnamese people are getting richer, and we may look at the listed retail consumer-related companies' earnings. In 2022 it was very high, then 2023 it actually became lower, 2024 was slowly coming out, then now it is coming up. So the listed companies in aggregate, they are reporting the retail sector. They are also reporting more than 30% profit in latest quarter, but the top ones, like our combined investment like Mobile World, the first quarter earnings growth was 70%, and the leading jewelry retailer, the first quarter profit is more than double, and the leading pharmacy retail chain profit grows 70%, so consumer sector is really booming now.

Okay, so sounds like there's a lot of different good opportunities right now. You are well, lastly, let's talk a little bit about what has happened in PYN's portfolio recently. How are the portfolio companies performing, year on?

Of the 1,000 listed companies in aggregate reported 35% growth in first quarter. For our portfolio, it's slightly better, it's 41%, maybe some carryover rules.

Like.

They work, yeah, so that's good. So in terms of fundamentals, we are happy. In terms of share price, a lot of investors, as we look at the strong earnings and the next day the share price doesn't move at all, we also get a little bit puzzled and frustrated, but that's why, right now, these companies are so cheap. For example, Mobile World is only trading at 10 times P/E, with 30%, with 70% growth in first quarter. We think this kind of valuation cannot stay forever. Soon there is likely probably needed the Middle East situation to resolve, then we think these companies should have a massive rerating.

Well, what are the most interesting cases in your portfolio right now?

Actually, there's a lot of interesting cases in our portfolio, but for every investor probably they noticed for the past two months there is one new stock become number two biggest position. That stock is HPG, Hòa Phát. It's the number one steel producer in Vietnam. They produce both construction steel and the steel products used for manufacturing. In first quarter, the total steel product sales grew by 30%. The amount is actually driven by what I described earlier, the strong infrastructure build-out, and this infrastructure build-out, it would last for five years, and from the words of their HPG chairman, he has said this five years is so favourable for the steel demand, and Hòa Phát Steel is 90% used domestically, they don't really export, and then the domestic market is also protected by the anti-dumping tax. So we do not need to worry about the Chinese cheap steel, so just based on the strong infrastructure build-out, we see very good, very strong steel demand. So that's their main business, and then Hòa Phát is also one of the top conglomerates the Vietnamese government would like to support to get 10% GDP growth. So in one huge infrastructure project they want to do in Hanoi, there is a long river called the Red River, and the Red River passes through the city center, but it's not been developed at all, it's just bare land, and the government wants to develop the riverbank. They want to do the river embankment, they want to build out the public areas, nice parks, then commercial areas, residential, all these along the 40 kilometers riverbank. In order to do that, they have to get the big companies to get involved, so the mechanism is that the big companies like Hòa Phát, they build out the land and they help to reallocate the people who used to live along this slum.

All right.

They move the people out and build the resettlement houses for them, so they do this for the government, and in return they're allocated some land along the riverbank, and you could imagine the riverbank passing through, the river passing through the city, and the land is going to be very valuable in future. We did some estimates, so Hòa Phát joined into the project along, they also partner with two other partners, so it's a consortium. This consortium would get land probably like, if we have to put it into numbers, probably in 600 or 700 US dollar billion. Yes, Hòa Phát, the market cap today is 7 billion, so that land in future this consortium will get in the next 20 years could be in the range of 700 billion, we think, for the 20 years. This adds on, it brings a lot of value to Hòa Phát, and because this plan is really in the initial stage, the government will develop for sure, but exactly how this master plan is being discussed and proposed and seeking feedback. So nothing is really finalized yet, and probably that's why the stock is so cheap. We have a very high target price for this company. So I would like to highlight this story for your audience.

These sound very interesting. Thank you. Well, this actually concludes our interview today, so again, thank you so much, Maggie, for visiting. It's always a pleasure discussing with you and hearing your insights.

You're very welcome, and I really enjoyed this discussion of these ideas with you and sharing to your audience.

Thank you, and thank you all for watching. If some questions arise from our discussion, please comment below, and we'll see you in the next interview.