Vietnam: a new Asian tiger?

With half of its population under the age of 35 and a rapidly expanding middle class, Vietnam is one of the most dynamic frontier economies. It has also been a COVID-19 success story registering just 35 deaths from 1,168 cases. The effectiveness of its short lockdown meant Vietnam began reopening as long ago as April and the Vietnamese economy is forecast to grow in 2020 despite the pandemic.

When it comes to investing in Vietnam, where are the best opportunities and how do they differ from those of other Asian countries? What’s the attraction of accessing them in a single-country fund versus a broader frontier markets strategy? And how could Vietnam’s relationship with China affect the outlook for the region? The Association of Investment Companies (AIC) has gathered comments from investment company managers investing in Vietnam.

Investment companies with exposure to Vietnam

Investment company

AIC sector

% of portfolio in Vietnam

VinaCapital Vietnam Opportunity

Country Specialist: Asia Pacific - ex Japan


Vietnam Enterprise Investments Limited

Country Specialist: Asia Pacific - ex Japan


VietNam Holding

Country Specialist: Asia Pacific - ex Japan


BlackRock Frontiers

Global Emerging Markets


Pacific Horizon

Asia Pacific


Aberdeen Standard Asia Focus

Asia Pacific Smaller Companies


Fundsmith Emerging Equities

Global Emerging Markets


Scottish Oriental Smaller Companies

Asia Pacific Smaller Companies


Henderson Far East Income

Asia Pacific Income


Utilico Emerging Markets

Global Emerging Markets


Source: AIC/Morningstar (latest available data at 30/09/2020).

Why Vietnam?

Khanh Vu, Co-Manager of VinaCapital Vietnam Opportunity Fund, said: “The main attraction of investing in Vietnam is that the country is following in the footsteps of other ‘Asian Tiger’ economies that came before it such as Japan, Korea and Taiwan. So the future trajectory of Vietnam's per capita income, consumer spending, and of the general wealth of its citizens is fairly clear. Furthermore, Vietnam is essentially the only Asian Tiger country left to invest in – given how far economic development of other Asian Tigers has already progressed.”

Emily Fletcher, Portfolio Manager of BlackRock Frontiers, said: “Vietnam has been a poster child for frontier markets, having experienced strong economic and social development over the past two decades. The country has seen the benefits of more than $149 billion in foreign direct investment inflows over the past 20 years1, supported by accelerating supply chain migration from China – a trend that was established well before trade tensions between China and the US emerged. This has driven huge increases in manufacturing production, such that exports have grown at a compound annual growth rate of 15.8%1 over this period. Domestically, demographics are in favour of sustainable growth.”

Craig Martin, Manager of Vietnam Holding, said: “Vietnam’s GDP per capita is expected to reach $5,000 by 2025, and by 2035 there could be a further 35 million middle-income consumers in the country. We think this provides exciting prospects for investors. Vietnam is a very open economy from a trade perspective, with more than 200% of its GDP in exports and imports. Over the last three decades it has transformed from an exporter of raw materials, to a producer of finished and semi-finished goods, as well as exporting services – such as information technology."

Handling COVID-19

Ewan Markson-Brown, Manager of Pacific Horizon, said: “So far Vietnam can be considered one of the more successful countries at dealing with COVID-19. It has registered just over 1,000 cases and 35 deaths. The country initially strictly controlled movement internally and externally and reduced cases to zero, however after 99 days of no cases, an outbreak did occur in Da Nang. Given the country’s relatively low level of income it stands out as one of the world’s success cases.”

Craig Martin, Manager of Vietnam Holding, said: “Vietnam’s handling of COVID-19 has rightly won praise and admiration from many other nations. Books will be written on how Asia as a whole dealt with the pandemic versus ‘the West’ and ‘the rest’. It is too early to attribute any one factor as the key success factor, but certainly the cohesiveness of society and the single-mindedness of the people in taking on a threat has been a key part of the resilient response. Let’s not forget that Vietnam was an early victim of SARS in 2003, and regularly faces disease risk from Avian Flu and Swine Flu, so arguably has developed better responses, protocols and communications to deal with emerging infections, and indeed pandemics.”

Dien Vu Huu, Portfolio Manager of Vietnam Enterprise Investments Limited, said: “Having dealt with SARS in 2003, Vietnam responded quickly to COVID-19. From early March air, land and sea borders were all but sealed to human traffic though not to trade. Formal lockdowns have been few, brief and localized, which has limited the economic impact while monetary and fiscal easing have been aggressive, with local government bonds now bearing negative real yields. Hospitality and tourism have been affected of course, but domestic consumption has rebounded and stabilised and exports continue to grow. The unfreezing of infrastructure spending has added another driver of growth which is being reflected in the local market.”

Opportunities in Vietnam

Gabriel Sachs, Manager on Aberdeen Standard Asia Focus, said: “We are bottom-up investors of course but from a macro perspective we are very positive on Vietnam and have been building positions in a couple of companies over the past two years or so. At the moment we have almost 4% of the portfolio in Vietnam. The two companies operate in very different sectors – Nam Long is an affordable housing developer primarily based in Ho Chi Minh City and the other, FPT Corp, is a conglomerate which operates primarily in the IT services industry but has fast-growing telecommunications and education businesses. It is by far the leading tech company in Vietnam hiring a third or more of all computer science graduates in the country, many of whom study in FPT’s own campuses.”

Khanh Vu, Co-Manager of VinaCapital Vietnam Opportunity Fund, said: “Currently, the manufacturing sector accounts for less than 20% of Vietnam's economy, but manufacturing contributed over 30% of GDP in each Asian Tiger economy at the peak. This is an indication of the extent to which Vietnam's future economic growth will be driven by the further development of the manufacturing sector – and the COVID-prompted relocation of factories from China to Vietnam will accelerate this development.”

Emily Fletcher, Portfolio Manager of BlackRock Frontiers, said: “The young, relatively well educated, and increasingly connected population has helped steer change in how businesses interact with consumers. With over 51 million smartphone users, representing 80% of the population aged 15 years and older, awareness of mobile internet and usage has increased, sparking further evolution of retail services. Similarly, the global trend of improving health and wellness has not been lost on Vietnam, leading to shifts in nutritional preferences and the way people shop for food. Seen through this lens, consumer related industries remain preferred areas for investment.”

Dien Vu Huu, Portfolio Manager of Vietnam Enterprise Investments Limited, said: “An innovator worth mentioning is Mobiworld Group. It is Vietnam’s top retailer, with 3,600 stores nationwide, selling mobile phones and consumer electronics, and is now moving into small supermarkets. Management has proven adept at deploying technology and systems to roil up fragmented industries, leading Vietnam into the modern trade era.”

Vietnam specialism

Craig Martin, Manager of Vietnam Holding, said: “Vietnam is likely to be the largest constituent of the MSCI Frontier Market index by the end of 2020, and already has many characteristics of an emerging market opportunity (100 million people, $180 billion market capitalisation). Along with China it is one of the few growth stories in 2020 and is positioned for a strong 2021. The manager of Vietnam Holding, Dynam Capital, has a Vietnamese team on the ground, who are able to research and react to market developments in a nimble fashion.

 “We also have the ability to build and manage a concentrated portfolio – we have around 25 positions in the Vietnam Holding portfolio currently – and this focus enables us to deliver on our ESG strategy. Vietnam Holding has been a signatory of the United Nations Principles for Responsible Investment for over a decade – one of the first firms in Vietnam to chart a course of responsible investing.”

Dien Vu Huu, Portfolio Manager of Vietnam Enterprise Investments Limited, said: “As a frontier market, Vietnam remains off the formal radar for most large investment firms who have no on the ground presence or ability to investigate opportunities in this rapidly evolving market. By contrast we have close to 20 analysts able to do this. Our main shareholders are global institutional investors which reflects this asymmetry in access to information. They can simply buy Vietnam Enterprise Investments Limited on the London Stock Exchange and thereby access stocks at their foreign ownership limits at a discount to NAV and without having to open a local trading account.”

Relationship with China and long-term outlook

Ewan Markson-Brown, Manager of Pacific Horizon, said: “Vietnam has had a long and tumultuous relationship with China stretching millennia. Today China sees it as an export market, a cheap manufacturing hub, a place for real estate investment and a potential gateway into South East Asia. It is also a geopolitical rival with claims on the South China Sea among other territorial issues. Managing this relationship will be critical to Vietnam’s rise over the next few decades.”

Gabriel Sachs, Manager on Aberdeen Standard Asia Focus, said: “The country has been one of the fastest-growing markets in the region and we don’t see that changing. The government has handled COVID-19 very well which means the economy is operating rather normally now and the consumer is in reasonably good shape. The intensifying US-China trade spat will likely only improve the attraction of Vietnam as global corporates look to diversify their supply chains away from China.”

Craig Martin, Manager of Vietnam Holding, said: “China is an important trading partner for Vietnam. As China develops and grows, there is likely to be a demand for agriculture and aquaculture products from Vietnam, as well as processed food products. As the US rallies support for a bipartisan ‘us versus them’ approach to China, Vietnam is positioned to be an increasingly important alternative destination for manufacturing – which would further increase its foreign direct investment and hasten infrastructure development. The multiplier effect of this will also benefit the domestic market.”



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  1. UNCTAD Statistics Database as of 30 September 2020.
  2. The Association of Investment Companies (AIC) was founded in 1932 to represent the interests of the investment trust industry – the oldest form of collective investment. Today, the AIC represents a broad range of closed-ended investment companies, incorporating investment trusts and other closed-ended investment companies and VCTs. The AIC’s members believe that the industry is best served if it is united and speaks with one voice. The AIC’s mission statement is to help members add value for shareholders over the longer term. The AIC has 358 members and the industry has total assets of approximately £209 billion.
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