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RNS Number : 0031U  Vietnam Enterprise Investments Ltd  05 August 2025

5 August 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.

A Real-Time Update on Vietnam's Accelerating Reforms

Tuan Le, Lead Portfolio Manager

 

At the beginning of 2025, I described Vietnam's bold reform programme as
setting the stage for sustainable growth and positioning the country as a
high-value investment destination. Six months later, it is time to see whether
the vision is matching reality and what this means for the economy, capital
markets, and our portfolio at VEIL.

 

To quickly recap, the reforms set out to streamline governance, invigorate the
private sector, ignite domestic demand through significant public investment,
enhance capital markets, and accelerate technological innovation. Essentially,
Vietnam set out to surgically remove legacy bureaucratic bottlenecks and
unleash private enterprise, creating an economy structurally resilient to
global volatility.

 

These reforms are already leaving an imprint. Vietnam's GDP growth in the
first half of 2025 reached 7.5%, the highest in over a decade, supported by
strong domestic demand, surging government spending, and exports up 14.4%. The
FDI story continues to defy the sceptics, with registered investments hitting
US$21.5bn, the highest since 2009, and actual disbursements of US$11.7bn, up
8.1% year-on-year. Clearly, investors have not lost their appetite for Vietnam
despite external trade uncertainties.

 

The reshaping of government ministries from 19 to 14 and provincial mergers
from 63 to 34 is now complete. Early indicators suggest these changes are
significantly accelerating decision-making on infrastructure approvals and
investments. Admittedly, some local-level teething problems persist as
provinces adapt to the new structure, but we anticipate that ongoing
government fine tuning will iron these out. Once fully integrated, we expect
these structural shifts will significantly lift productivity.

 

Public investment is humming along at full throttle, with about US$36bn
earmarked for this year alone, up from US$26bn in 2024. Key projects like the
North-South high-speed railway and major highway expansions are not just on
track but running ahead of historical project timelines. This infrastructure
push, vital for lowering Vietnam's high logistics costs of around 18% of GDP,
is creating a tangible tailwind for construction, real estate, and industrial
materials sectors. VEIL has strategically increased exposure to
infrastructure-linked stocks to catch this momentum.

 

Vietnam's capital market reforms are beginning to show meaningful results. The
abolition of cumbersome pre-funding requirements for foreign investors and the
successful rollout of the Korean-backed KRX trading system have significantly
improved market access and efficiency. Investor sentiment has responded in
kind, with the Vietnam Index reaching an all-time high on 28 July, fittingly
coinciding with the 25(th) anniversary of the Ho Chi Minh Stock Exchange.

 

Liquidity has surged, with daily trading volumes now regularly exceeding
US$1.5bn, and July's turnover rising nearly 90% year-on-year. Confidence
around Vietnam's anticipated upgrade to FTSE Emerging Market status is
steadily translating into real capital inflows. These developments reinforce
our strategy of concentrating the portfolio in market-leading enterprises best
positioned to benefit from an increasingly investable and dynamic capital
market.

On the technology front, Vietnam's ambitions are becoming reality, powered by
significant legislative incentives from Decree 182. Global giants like Nvidia
and Samsung are now fully embedded, driving Vietnam's tech ecosystem forward,
while homegrown champion FPT rapidly scales its AI capabilities. This
positions Vietnam firmly in global high-value technology supply chains and
supports our conviction in tech investments.

 

However, despite these positive developments, downside risks remain. Foremost
is the uncertainty around the definition of transshipment. Should restrictive
interpretations materialise, the impact could exceed current market
expectations, weighing on manufacturing, exports, and overall GDP growth.
Weaker-than-expected global growth, especially in key markets like the US,
China, and the EU, may further pressure trade volumes and foreign direct
investment inflows.

 

Domestically, the greatest challenge is sustaining the current pace of reform.
While progress has been encouraging, the real test lies in execution,
particularly in integrating restructured administrative bodies, delivering
infrastructure, and advancing capital market depth. Any delays or
inefficiencies could slow public investment, limit productivity gains, and
defer broader economic benefits. Maintaining momentum in legislative reforms
also depends on ongoing political alignment, with policy slippage or
uncertainty posing risks to investor confidence.

 

On monetary policy, foreign exchange pressures persist, and surging credit
demand has occasionally tightened liquidity within the banking system. This
has led to a modest rise in interbank rates and increased the need for the
State Bank of Vietnam to provide liquidity support through open market
operations. While the likelihood of the central bank adopting tighter policy
measures remains low, unexpected global market volatility or financial shocks
could challenge market liquidity and dampen investor sentiment, particularly
with the Vietnam Index near record highs.

 

Despite the Vietnam Index's strong performance, VEIL's NAV rose 0.9% in H1
2025, lagging the broader market. This relative underperformance was primarily
due to US$1.6bn of foreign investor outflows, which disproportionately
impacted large-cap, fundamentally strong stocks central to VEIL's strategy.
The Index's advance was also largely concentrated in a handful of property and
conglomerate names, particularly the Vingroup trio (VIC, VHM, VRE), which VEIL
is underweight due to limited clarity on funding and execution risks.

 

Nevertheless, the portfolio continues to reflect Vietnam's reform-driven
growth trajectory: banks, riding the wave of accelerating credit growth;
infrastructure sectors benefiting from both public and private sector
momentum; and consumer retail and digital technology sectors, well placed as
domestic affluence and digitalisation gather pace. We remain confident that
these exposures position the fund to benefit from the structural tailwinds now
taking shape.

 

Overall, we remain bullish yet clear-eyed about the path ahead. Vietnam's
reform journey is far from complete, but the foundations laid so far reassure
us that the country is rapidly turning its ambitious vision into lasting
economic prosperity.

 

Top Ten Holdings (54.0% of NAV)

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

                                                                                                    Return %
 1    Mobile World Group    Consumer Discretionary   7.8           1.6           6.2                4.8        2.3
 2    Techcombank           Financials (Banks)       7.0           4.1           2.9                35.4       42.8
 3    Vinhomes              Real Estate              6.9           5.3           1.6                87.1       98.6
 4    Vietinbank            Financials (Banks)       5.3           3.8           1.5                8.2        31.7
 5    VP Bank               Financials (Banks)       5.1           2.5           2.6                (3.4)      (0.7)
 6    BIDV                  Financials (Banks)       4.8           4.3           0.5                (5.7)      (1.0)
 7    FPT Corporation       IT                       4.8           3.0           1.8                (23.7)     (10.3)
 8    MB Bank               Financials (Banks)       4.2           2.7           1.5                15.4       30.3
 9    Sacombank             Financials (Banks)       4.1           1.5           2.6                23.5       58.0
 10   Vietcombank           Financials (Banks)       4.0           8.1           (4.1)              (8.8)      (2.5)

      VEIL NAV             -                         -             -             -                  0.9        6.9
      Vietnam Index        -                         -             -             -                  6.9        9.8

 

Source: Bloomberg, Dragon Capital

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