RCS - Vietnam Enterprise - Quarterly Insights

Vietnam Enterprise InvestmentsAnnouncement

14/11/2025 07:00

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RNS Number : 5540H  Vietnam Enterprise Investments Ltd  14 November 2025

14 November 2025

Vietnam Enterprise Investments Limited

("VEIL" or the "Company")

Quarterly Insights

VEIL is a London-listed investment company investing primarily in listed
equities in Vietnam and is a FTSE 250 constituent.

Domestic Conviction Meets Foreign Hesitation

Tuan Le, Lead Portfolio Manager

 

Vietnam's equity market entered the final quarter with momentum intact and
domestic investors still in the driving seat. Through 3Q25, the Vietnam Index
(VNI) rose 28.1% YTD in US dollar total return terms, inching down to 27.3% by
the end of October, even as foreign investors withdrew nearly $5.0bn YTD. The
question is why foreigners sold into strength, and why do domestic investors
see something different?

 

Global risk appetite has cooled amid higher global interest rates and strong
returns in developed markets, which tend to reduce allocations to emerging
markets. Profit repatriation by FDI investors has tightened foreign exchange
liquidity and exacerbated pressure on the Vietnam dong. Tariff caution, even
with a clearer 20% baseline, has led some allocators to wait for full
implementation detail rather than pre-position. However, none of this is
structural to Vietnam's domestic story. The direction of travel is being
shaped by a reform agenda that empowers the private sector, lowers frictional
costs, delivers large public investment to improve infrastructure and support
real estate, and is anchored by a banking system able to fund private capital
expenditure.

 

Impressive 3Q25 earnings confirm this domestic growth story. With nearly all
VNI constituents having reported, results were strong, high quality, and broad
based. VNI NPAT rose 21.2% YoY on revenue growth of 7.2% in 3Q25, taking 9M25
to 22.4% and 9.0%, respectively. Profits were driven by solid revenue and
margin gains rather than one-off financial income. This earnings resilience
sits alongside GDP growth of 7.9% for 9M25 and 8.2% in 3Q25, well ahead of
regional peers, supported by infrastructure spending, real-estate recovery,
and resilient consumption.

 

Standout performances were visible in areas where VEIL is overweight,
especially consumer discretionary and financials. Consumer discretionary NPAT
was up over 100% on the highest revenue in five quarters. Major portfolio
holdings Mobile World (MWG) benefitted from sustained profitability at its BHX
grocery chain, and Phu Nhuan Jewelry (PNJ) was supported by the rising gold
price and low-cost inventory. Brokerage profits surged nearly 200% YoY in 3Q25
as record liquidity and margin lending supported returns. This also lifted fee
income for our portfolio's banks, in tandem with steady profit growth from
healthy credit demand and bad-debt recoveries.

 

Sentiment was further buoyed by FTSE Russell's decision to place Vietnam on
the pathway to Secondary Emerging Market status by September 2026. The
significance lies less in any immediate change to fundamentals and more in
tangible progress in market infrastructure. The upgrade reflects settlement
reform, removal of pre-funding requirements, and measures to enhance
transparency and governance. FTSE inclusion should help offset foreign selling
as global trackers add exposure ahead of formal inclusion in the coming year,
with estimated inflows of $3-5bn. Furthermore, we believe the larger
structural re-rating will come when Vietnam meets MSCI's EM criteria, a goal
often referenced in the market as being potentially achievable by 2030 based
on the successful implementation of ongoing reforms.

 

What does this mean for VEIL?

 

We entered 2025 positioned for domestic demand to do more of the lifting, and
recent data reinforces that stance. The real estate recovery has validated our
positioning, with transactions up nearly 20% in the first half of the year and
government revenue from land-use fees already surpassing the 2024 total at a
record $9.4bn. Our real estate holdings are benefiting from this renewed
developer confidence, underpinned by clearer regulation and faster project
approvals that are converting backlog into sales.

 

Infrastructure momentum adds a second pillar of support. Public investment
reached $24.3bn by end-October, up 27.8% YoY, reflecting better execution as
reforms move from theory to delivery. With debt/GDP at about 33% and corporate
credit still moderate, funding capacity remains comfortable. Legal reforms
have also streamlined land-bank monetisation, allowing earlier project
execution. This directly benefits our bank and materials exposures, which
finance and supply these projects.

 

Broader domestic demand continues to support VEIL's consumer exposure. Modern
retail is steadily gaining share from traditional markets as purchasing power
rises and consumers seek greater convenience, reliability, and brand choice.
MWG is emblematic of this trend, using technology to enhance supply-chain
efficiency across its expanding store network. This kind of scalable,
cash-generative growth reflects the durable earnings quality VEIL seeks to
own.

 

That translates into three clear priorities:

 

·    Domestic earnings: We back the companies powering Vietnam's internal
growth cycle. Our core banks are financing the working economy with stronger
fee income and balance-sheet quality, while our retail holdings capture
formalisation and rising household spending.

 

·    Private sector: Reform is handing more of Vietnam's growth to private
enterprise. We hold exposure where execution is visible and capital discipline
is proven, in infrastructure, materials, and real estate with clear approvals,
sound balance sheets, and credible management.

 

·    Capital market infrastructure: Market reforms will deepen access and
liquidity. Central counterparty clearing, broader derivatives, and improved FX
and hedging, together with a $50bn IPO pipeline, will broaden the listed
universe, attract long-term capital, and improve price discovery, reinforcing
the conditions for VEIL's earnings-led approach.

 

Key watch items remain the global trade and rate environment, FX liquidity and
pressure on the dong, and execution risk around major infrastructure projects.
Avoiding the kind of maturity mismatch that destabilised Thailand's projects
in the late 1990s, where long-term assets were financed with short-term
foreign loans, will be important, though Vietnam's funding mix, predominantly
bank-based and supported by improved legal frameworks, reduces this risk. A
further consideration is the risk of a sharp correction in US equity markets,
where gains have become increasingly concentrated in AI-linked names; any
reversal could tighten global risk appetite and spill over into
emerging-market positioning.

 

These factors may affect short-term sentiment but do not, in our judgement,
undermine the core domestic demand thesis that anchors the portfolio. Looking
to 2026, our base case is that profits continue to compound, with domestic
private sector engines leading VNI earnings growth of circa 16%. Over the next
12-24 months, a deeper investor base, new-listing pipeline, and ongoing
market-access reforms should support liquidity and valuation resilience.

 

Top Ten Holdings (50.8% of NAV)

      Company          Sector                 NAV Weight %  VNI Weight %  Weight vs Index %  YTD        1-Year Rolling Return %

                                                                                             Return %
 1   Vinhomes         Real Estate             7.8           5.9           1.9                148.3      123.7
 2   Mobile World     Consumer Discretionary  5.4           1.6           3.8                24.6       7.6
 3   VP Bank          Financials (Banks)      5.2           3.4           1.8                60.4       47.7
 4   Techcombank      Financials (Banks)      5.0           3.7           1.3                52.0       49.3
 5   Hoa Phat Group   Materials               4.7           3.0           1.7                22.2       19.2
 6   Vingroup         Real Estate             4.6           9.4           (4.8)              316.0      287.2
 7   Vietinbank       Financials (Banks)      4.6           3.8           0.8                29.6       27.8
 8   BIDV             Financials (Banks)      4.5           3.9           0.6                2.7        (9.5)
 9   Vietcombank      Financials (Banks)      4.5           7.2           (2.7)              (2.0)      (6.3)
 10  MB Bank          Financials (Banks)      4.4           2.9           1.5                54.2       45.1

      VEIL NAV        -                       -             -             -                  22.6       18.8
      Vietnam Index   -                       -             -             -                  28.1       21.9

 

Source: Bloomberg, Dragon Capital

NB: All returns are given in total return USD terms as of 30 September 2025

 

 

For further information, please contact:

Vietnam Enterprise Investments Limited

Steven Mantle

+44 75537 01237

stevenmantle@dragoncapital.com

 

Jefferies International Limited

Stuart
Klein

+44 207 029 8703

stuart.klein@jefferies.com

 

Montfort

Gay Collins

+44 (0)7798 626282

+44 (0)20 3770 7905

gaycollins@montfort.london

 

h2Radnor

Iain Daly

+44 20 3897 1830

idaly@h2radnor.com

 

LEI: 213800SYT3T4AGEVW864

 

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