A bullish domestic outlook for Vietnam and Vietnam Enterprise Investments

A bullish domestic outlook for Vietnam and VEIL…by Thomas McMahon

Overview

Vietnam Enterprise Investments (VEIL) is heavily invested in the booming domestic Vietnamese economy, which shrugged off last year’s tariff panic and this year’s oil price panic to post record GDP growth for Q1 2026. The Vietnamese authorities have doubled down on an ambitious reform programme which is funnelling public and private investment into strategic economic development, aiming to recreate China’s rise of the 1990s and 2000s, in pursuit of Vietnam’s ‘era of ascendence’.

Manager Tuan Le has focussed the Portfolio on the key themes of banks, infrastructure and domestic consumption, all of which he thinks will generate big winners in the domestic stock market. In the aftermath of the outbreak of war in the Middle East, he has reduced some interest rate sensitive and highly leveraged stocks, such as those in the real estate sector, but leant into the banking and retailing sectors. Even accounting for the impact of high energy prices, the team at Dragon Capital estimate the Vietnamese market will deliver earnings growth of c. 18% this year, while they expect inflation to remain below target even if oil prices average over $100 for a year.

VEIL has delivered strong returns over the past 12 months. The NAV total returns were 25.3% to 31/05/2026 in the recovery after the tariff tantrum of last spring. In 2025 it delivered GBP returns of 15.9% while the two other Vietnamese trusts posted negative returns. The share price total return was even higher at 38.4% thanks to a narrowing discount, which is 11% at the time of writing. The board has taken decisive action with significant buybacks and a 10% tender, and announced a second in the coming months. Nonetheless it remains the largest Vietnamese trust with over £1bn in total assets.

VEIL will hold its AGM on 25/06/2026 at Stationers’ Hall in London. You can sign up at this link.

Kepler View

Stock markets continue to be driven by AI, with surging Asian markets this year largely due to a small group of companies highly geared to the AI build-out. Similarly, the commodity sectors that have done so well over the past year have been mostly linked to AI spend and energy demand. That makes it particularly appealing to find a growth story which has nothing to do with AI and can help diversify a return-seeking portfolio which could be looking dangerously exposed to one theme.

Indeed, we think the wholehearted commitment of the authorities to grow the private sector as a percentage of the economy and a contributor to growth makes the Vietnamese market something close to an open goal. Huge investment is being made in strategic sectors which should provide strong impetus to earnings, 2026’s expected growth being particularly striking in the light of the tariff panic of last year and the energy price panic of this year.

The Vietnamese market continues to be attractively valued, with good share price gains being accompanied by outstanding earnings growth meaning multiples haven’t expanded. Additionally, VEIL’s shares trade on a double-digit discount which adds an extra layer of value. The board’s commitment to buybacks and tenders has already had a material impact on the rating and shareholder returns, providing strong technical support to VEIL’s shares. A mixture of global market worries around the situation in the Middle East and weak overseas investor interest means that we think the exceptional Vietnamese growth story continues to look cheap.

Bull

• Vietnam has an exciting domestic growth story
• Dragon Capital is the largest foreign investor [JS1.1]in Vietnam’s capital markets, with connections and experience second to none
• VEIL is trading on a double-digit discount

Bear

• Trade policy and geopolitics remain risk factors
• Single-country funds bring both currency and political risk
• Higher OCF than generalist emerging markets funds

See the full research on Vietnam Enterprise Investments here >

 
_{Disclaimer
 
Disclosure – Non-Independent Marketing Communication
 
This is a non-independent marketing communication commissioned by Vietnam Enterprise Investments. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.}