Vietnam: On a Path to Progress

Emerging Markets Equity

Touching down in Vietnam on our recent research trip to Southeast Asia, it was evident that the country is an ever-evolving story. The traffic is a force to be reckoned with and much of the infrastructure is in need of modernisation. However, there are plans to spend USD30 billion in the next 3-5 years on updating highway and logistics networks1, and this should significantly improve FDI into the country.


Vietnam’s economy grew 8.02% in 2022, the fastest annual pace since 19972, and the country has been one of only a handful globally to achieve two consecutive years of growth since the Covid pandemic. Furthermore, this strong growth shows no signs of letting up. Along with other countries in the region, Vietnam has reaped the benefits of shifts in global supply chains over the last few years, as manufacturers relocate from China. Big corporates, such as Apple, Samsung and Intel, are eyeing up the country and foreign investment is rising.


Yet, Vietnam has also faced challenges of late, driven by a deterioration in the property market, and a sudden shortage of liquidity due to anti-corruption crackdowns and regulatory reforms of the corporate bond market. This, combined with rapidly rising US rates, compelled the State Bank of Vietnam (“SBV”) to raise rates at the same pace to maintain currency stability. Six months on, our conversations on the ground suggest that the situation has significantly improved, following steps by the SBV to improve liquidity, and a sharp decline in interest rates helped by easing inflation pressures.


Our trip also entailed a site visit with country’s largest property developer, Vinhomes, and we noted the shift towards distinctive urban developments in Vietnam, which were equipped with hospitals, schools and even electric vehicle chargers! Despite issues in the real estate sector, we expect rising GDP per capita to provide structural support to extremely strong housing demand in the coming years. Affordability remains healthy, especially in the mid-tier categories, while housing supply remains tight on the back of a slower pace of licenses issued over the past 2-3 years. This means that there will be an unmet housing demand of one million homes by the end of 2025.


We think the country is at an interesting juncture, and from an investment perspective, it is one to watch over the longer term, with multiple thematic drivers such as domestic consumption and financialisation.

1 Dragon Capital, July 2023.

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